Revenue management is definitely worthwhile. Anyone who makes an effort to compile a strategy for their hotel and takes advantage of independent help from an external company can profit enormously. Above all, there is still huge demand in the area of price creation and management within hotels.
It is extremely important to know how to place a hotel successfully on the market and here is an example of this at a five-star hotel in Leipzig with more than 400 rooms. There the average rate per room increased by 25 percent within half a year.
The city of Leipzig with its 500.000 inhabitants flourishes, thanks to one of the largest exhibition centres in Germany and numerous cultural points of interests, like for example the Gewandhaus orchestra Leipzig, bringing many business travellers and tourists. The hoteliers of course want to make a good profit from all of this. Whoever wants to maintain themselves in the market, should plan long term. For hotels of all categories, it is essential to observe the market and to analyse their price strategy in comparison to the competitors. This also applies to hotels in Leipzig with more than 50 hotels all competing for guests. An analysis of strengths and weaknesses is very important. In the case of the hotel in Leipzig with its unique constellation of a large number of rooms and its large event facilities, the hotel is constantly under demand by potential guests. The fantastic location with various possibilities were not always sold at the optimum price to the most optimum customer target group. Observation of the market as well as the search for the potential is a decisive element for a hotel.
Important instruments for a hotel analysis are offered by some Internet Portals, which offer features including Rate-Occupancy-RevPar with up to date statistics for many cities on demand. These statistics also provide market share reports making the market more transparent.
Thanks to this, one can always be one step ahead of the competitors. In the case of the Leipzig hotel the market was not always optimally examined and results weren't improved. A concrete and understandable price strategy and budget image did not exist here for all the market segments. These are the first steps one needs to take to begin to build an efficient revenue management strategy.
Looking at the data available it was possible to see the price ranges and therefore you can establish the break even price and the Best Price Guarantee. In this case the competition was used to get an idea of what was happening to the price in the market. The room price can be targeted to a distinct market segment or group. This is however by far not enough.
Revenue Management is more than just controlling the room rate, it is a lot more! It is controlling and managing all of the available booking channels and what you offer through these channels. From banqueting sales to reservations control, to electronic distribution through to discovering new sales channels. All of this has to be taken into consideration and managed.
About the Author Hans Jürgen Rüffert looks back over almost 18 years of his successful career within the hotel industry. His experience has been obtained in Revenue Management and Electronic Distribution in named hotels and groups within Europe. For more information visit www.revway.com