For any hotel property to Survive in this highly competitive industry, revenue management is a very important tool. By efficient revenue management, hotel owners can foresee demand and optimize availability and price accordingly to achieve the best possible revenue profits to their hotel property.
We recently got an opportunity to chat with Pablo Torres, an expert hotel revenue optimization consultant and trainer. Pablo with over 20 years of experience, has been helping many hotels improve their RevPAR and GOPPAR by updating processes, changing attitudes and aptitudes, upskilling teams along the way.
In this interview, Pablo answers ‘what is revenue management?’ and how hotels can strategize revenue management to improve hotels performance, more motivated team members and improved guest reviews.
1. What is revenue management in the hotel industry?
Besides the formal definition of right price at the right time to the right customer, etc… For me is the core of the Hospitality business. Every Hotel, bar, restaurant offers a certain service. What comes with it, the experience, the extras, and the level of service is what differentiates it. And how you market it is what can make you unique.
You could have an amazing Hotel, but if you don’t have the right pricing strategy it will be challenging to make a profit. That’s why Revenue (and from some time now, Total Revenue) are key aspects of the business.
2. Why is revenue management important for hotels?
You could have a hotel with 100% occupancy and still lose money. Or an amazing one, with great service, and empty. The strategy designed and followed to maximize the income of the property is what is going to show you whether you run a successful business or not. That is why it’s so important: What you sell, where you sell it (channels), to whom it’s sold (segments) will determine your success as a business.
3. Strategies to use to boost top-line revenue at your property?
I am a Hotel Performance Consultant, so I provide support to many Hotels. The key for it is to run a Total Revenue strategy. Not focus only on rooms, but also apply revenue management to every space of the property: Spa, Pool Club, Golf Course, every F&B Outlet, event rooms. Every sq. meter of the Hotel can generate revenue if the right strategy is in place.
On top of that, upselling and cross selling done well (suggestive sales) can significantly uplift your profit, while at the same time providing a better service to your customers.
4. With revenue management automation in place, how much time does an average hotelier save?
Probably half of the day of a revenue manager is spent generating and interpreting reports at a property without automation or a proper RMS system. The same applies to other roles in Finance, HR, and Front Office.
With the technology so advance, and SaaS companies offering affordable services for a monthly fee, it’s a no brainer to choose to automate as many processes as possible, so that the revenue team can focus -together with sales- on the strategy.
5. How should hotels forecast price after this COVID Pandemic to bring back guests?
It will depend on the segment. Resorts should be doing well, and probably ADR will be going up. City hotels catering for business guests will struggle, as many events/corporate trips have been slashed for now (and maybe forever). In both cases, they’ll have to update their strategy; the former to maximize profit, the latter to try to stay afloat.
6. How to use hotel technology to improve revenues and profitability?
As mentioned earlier, hotel professionals must take advantage of the advancement of the tech stack to focus on strategy. Revenue and Sales should work closer than ever, so that they are aligned on what they expect from the business.
And to be able to do that, many tasks that before used to take much of their working time, can be done now for a reasonable fee by the technology available on the market.
7. Is revenue management stuck in a rut?
If revenue is understood just as a yielding room pricing, then yes. However, if we talk about Total Revenue, there is still a long road to walk when it comes to applying those techniques to other departments, such as F&B, Spa or events.
8. Should an Independent Hotel Outsource Revenue Management in POST-COVID?
That will depend on their size. If we are talking about a small hotel that cannot afford it, they could choose an advanced RMS that can run on autopilot. If it’s a bigger property, then they can decide whether run it internally, or outsource it.
About Pablo Torres
Pablo has over 20 years of professional experience in the Hospitality Industry, evenly split between Hotel Operations and Revenue Management, and Hospitality Consulting and Training.
Since 2011 Pablo works at TSA/FPG, helping Hotels globally grow their ancillary revenue performance.