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Gold Medal Revenue Management

Nov 25, 2012  By 

If you’re anything like me, you’ve been sitting in front of your TV in awe of the skills of the Olympic athletes. From the quick hands (and feet) of the fencing team (and the sad, sad loss for South Korea), to the excitement of tennis and volleyball, the summer Olympics bring together every country’s best athletes who are all vying for a gold medal and the acknowledgement of their mastery of their sport.

While we don’t give out gold medals in revenue management, there are properties that stand out amongst the rest as being more successful. Take for example, The Riverside Hotel in Fort Lauderdale, Florida. Last year, the property was awarded both the honor of “General Manager of the Year” and “Revenue Manager of the Year” by HSMAI South Florida. (Can you guess which revenue management technology The Riverside Hotel used to make that happen? *wink, wink*)

So, how can your property win the gold medal in the revenue management Olympics?

Match OTA Rates

The revenue management department is tasked to increase occupancy and maximize the revenues earned from each booking. As such, a gold medal revenue manager will always take the opportunity to encourage customers to book through the channel with the least cost associated to it – the direct channel.

You would be surprised at how many hotels charge more to book through the direct channel than on the online travel agencies (OTAs). Even if a customer calls the reservation line directly, many reservations teams are not authorized to match the OTA rates. Obviously, this doesn’t make financial sense as the OTAs charge hefty commission rates on each booking.

When a potential customer calls directly, your reservations team has the opportunity to close the sale immediately – without those pesky OTA commissions, so why not leverage that opportunity by matching your property’s OTA rates?

Upselling & Incentivizing

As well as matching OTA rates, hotels should be offering incentives for customers to book directly. Because you are no longer paying commission rates to the OTAs, hotels can take a portion of what they would have paid in commissions and use it to offer incentives that will make potential customers want to book directly. Consider offering value-added services like free parking, free airport transportation, free breakfast or free WiFi.

Upselling is another key benefit of selling through the direct channel. As well as offering incentives, your reservations team can upsell your customers on items like spa packages or room upgrades. Upselling is a great way to increase revenue earned from each booking and can counter the cost of the incentives that you are offering customers to encourage them to book directly.

Another note on upselling: It is possible to upsell even when a customer books through the OTAs. Because the majority of OTA bookings are prepaid, they are more likely to be interested in a potential room upgrade because they would only be presented with the difference in price (between the cost of the new room vs. the original reservation). Psychologically, since the decision to make a purchase was made long before (and the buyer’s remorse phase is long gone), they are more likely to consider spending the nominal fee for the upgrade. The best part is that there is no OTA commission charged when you upsell at check-in so all of this revenue goes directly to the bottom line.

Monitor your Competitors’ Rates

Revenue managers should be determining the right price for each available room based upon the rates of the competition. As those rates change, so should yours. Unfortunately, revenue managers often get bogged down in operations tasks and endless meetings, leaving them with no time to update rates on a regular basis. Even if a revenue manager finds time to update their rates daily, rates are still not being optimized. Pricing should be updated in real-time and the only way to make sure that your rates are measuring up is through the use of sophisticated revenue management software.

Overall, good strategy and consistency are the keys to becoming a gold medal revenue manager. But of course, having the benefits of an integrated, sophisticated revenue management system to optimize rates in real-time across all online channels, definitely can’t hurt your chances of winning a gold medal in the revenue management Olympics.

About Jean Francois Mourier

Jean Francois Mourier

Jean Francois Mourier arrived in South Florida in 2003 after a successful and distinguished career in Europe as a trader, financial analyst and director for a number of top firms including Merrill Lynch, ING Barings and others. He joined

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