5 Tips to Timing Your Revenue Management

While there are ample revenue management strategies to increase your return on investment, it’s essential to focus on the timing to ensure you make the most of your efforts.

With some simple steps in mind, hotel and resort owners can ensure better returns from long- and mid-term contract planning, allowing better management of forecasts andrevenue channels.

1. Identify property attributes

It’s important to know the type of property you manage and the booking lead time. Different hotel segments have different lead times. Hence, understanding the guests' booking patterns is key to defining the appropriate time frame. It can be daily, yearly, monthly or quarterly in advance.

You can also review the entire year or plan even further out, depending on the patterns identified. Usually, resort hotels need to be prepared 1-1.5 years in advance, while for city hotels, it’s enough to cover 3 to 6 months in advance. The approach taken depends on seasonality and special events.

2. Set volume targets

In order to achieve specific goals, you need to know the targets you are working towards. Knowing what to anticipate can help you organise and decide what you can achieve via different contracts and how early you need to lock them in to meet targets.

While negotiating, it’s good to consider seasonality and offer a percentage off the BAR rather than a fixed rate in peak periods.

Having a clear target will help you better understand what you need in your hotel at each period.

3. Break it down by Market Segments

Having contracted business is good, and once you have identified the need and peak periods and estimated the contracts, take into consideration the business mix. Leisure guests are willing to pay more without discounts.

However, flooding your hotel with cheaper-rated groups might not be the most revenue-driven approach.

Try to come up with an ideal mix of businesses by season and by various lengths of stay to identify opportunities. Once all factors are taken into consideration, only then can you make sound decisions.

4. Review Forecast Regularly

Once most contracts are in place, you can play around with the forecast to set realistic expectations and identify gaps between targets and forecasted numbers.

It is key to utilise forecasts alongside targets to continuously monitor performance. This is even more important in cases with longer lead times.

5. Review Supplements

Even if rates are fixed, you can always play around with supplements and increase them.

For example, you may be locked into a contract, but the guest may want to add breakfast to it. Feel free to charge a bit more to make up for the lost revenue coming from the rate.

Room type supplements, food and beverage supplements, and person supplements are ideal ways to boost the contracted price by a few Euros and ensure you get the best possible deal.

Long and Mid-Term Contracts Planning

Overall, timing is important, but that’s not the only thing. You need a solid base of knowledge to make the most of the negotiation and avoid being locked into a contract that will onlyharm your business.

Review and apply all the points above before contracting starts, and keep an open mind while negotiating, especially if it’s for a year or more out. You never know what might happen!

Hence, you need to ensure your forecast is as accurate as possible to support your decision-making.