In the days before the arrival of the internet, it used to be enough for hotel managers to simply know how many rooms they had and what they planned to charge guests for them. Today, we have a very different playing field and a much more complex system. Managing revenue is more about analysing guest behaviour, forecasting demand and optimising inventory in order to get the very best rates for rooms at the optimum times.
Of course, planning a budget is never going to be an exact science, as any number of things can happen to alter demand. For example, there are short-term events that can have people desperate to reserve rooms at your hotel for one or two nights, while, on the flip side, a sudden storm might put people off travelling completely. However, to ensure better control of expenses and profits and effectively manage a hotel budget, there are some steps you can take to mitigate all but the most unforeseen circumstances.
Let’s Take A Look At Just A Few Of Them:
Understand Your Target Audience
In order to avoid being constantly surprised by the behaviour of your would-be guests, you need to understand implicitly who exactly they are and therefore who you’re attracting – and, more importantly, who you should be reaching out to. If you mostly draw in businesspeople, you’ll have to accept that there are likely to be quiet periods for your property when offices are traditionally on breaks – such as Christmas – and budget accordingly. This is completely different to the tourist market, which is likely to be travelling more over the festive season.
As long as you do your research and learn about your target personas, you should be able to work out when demand is likely to be highest and lowest. Also, once this research has been carried out, it should allow you to work out further marketing strategies that aim to bring in different groups to cover these quieter times and help to ensure fuller rooms. This might include advertising with tourist boards and niche magazines, or targeting particular demographics on Facebook.
Check Out Your Competitors
There is so much information available online these days that it’s easier than ever to check out what your competitors are doing. Don’t think of this as a dishonest type of spying – instead, consider it necessary research if you’re going to stay on top of your game. Use online travel agent sites to look at what hotels similar to yours are offering in terms of rates, special offers, package deals, amenities and services and see if there are any gaps in your own offerings. It might be that doing this allows you to come up with new and more creative ways for marketing your property that you had previously been missing out on.
Carefully Manage Outgoings
This is probably already going to be an obvious step for any hotel managers who are keeping tabs on their expenses, but spending on necessary things like contracts for water, gas and electricity can be a big drain on hotel revenues. It’s vital that you don’t simply let contracts renew, but that you make the most of comparison sites in order to get the best possible deals that you can and the best services for the rates being charged. For example, is there a deal on the market that provides a full service for your boiler each year, rather than just collecting money for gas?These are the types of thing that can make a real difference to your bottom line, so don’t overlook them for the sake of chasing more complex ways of saving money.
Get A Good Revenue Manager
If your hotel is a medium-sized property and fairly busy all year round, then it may be that it’s not enough for the general manager to try to manage the budget or to share it among other staff. Instead, a designated revenue manager can make a real difference. They will be able to collect data, analyse it and use it to create detailed forecasts and performance figures, something there may not have been time for otherwise. Importantly, they will also understand complex terminology such as ‘constrained performance forecast’ (what rooms and rates you will fill) and ‘unconstrained demand forecasting’ (an estimate of demand for rooms). Another area they will be able to help in is ensuring rooms are filled with the highest profit guests – which will mean some strategic turning away of lower profit visitors when there is particularly high demand.
Thanks to their consistent and hopefully reliable forecasts, you should be able to better leverage rates, yield, marketing channels and stay lengths to build a better bottom line.
Implement Clever Technology
If you really want to make your budgeting the best it can be, you might want to go a step further and implement a hotel revenue management system software package. This will have functions that are fully automated to save you time and money and should enhance your financial operations.
At World Hotel Marketing, we have the unrivalled industry expertise you need to provide a comprehensive revenue management strategy that should maximise your revenue per available room. Because it’s data-led and uses our specialist software, it can analyse available information and even take into account difficult variables like the weather and competitor pricing. This streamlining of operations should mean you’re completely in control of your hotel in real time and can become the architect of your own fortunes – which hopefully include a significant boost to your bottom line.