Revenue Management Impacts Brand Reputation: Here’s Why
You can optimize revenue with brand positioning that drives bookings. Your brand reputation is the public’s perception of your business. The Four Seasons stands for luxury, while a small, privately owned three-star hotel may stand for comfort on a budget. There are customers at every price point.
Your property size doesn’t matter. Incorporating revenue management principles throughout your hotel’s operations does. The Franco Grasso Revenue Team has worked with over 2500 small and medium hotels and increased their revenue and profitability because we include all revenue-generating activities into revenue management.
That includes an actionable plan that improves your brand reputation.
If potential customers can’t find you online, they won’t book with you. Your visibility matters and impacts your profitability.
5 Ways Revenue Management Impacts Brand Reputation
Historically, hotels separated sales, marketing, and revenue management. Each department or business function operated independently of the other. But that’s not how hotels work. Instead, they’re interlocking and interdependent on one another.
That interdependence is why it makes sense to create shared goals like Total Revenue Per Available Room (TRevPAR). Such goals foster communication across the departments and drive profitable bookings.
It starts with a solid online presence.
1. Your Online Visibility
Your customers start their hotel search online and expect a well-photographed and well-reviewed online presence. Quality photographs, plenty of recent reviews, and good ratings on Booking or TripAdvisor bring you more customers. Even a well-curated breakfast can help boost your brand reputation and revenue.
Travelperk reports that 29% of travelers rely on reviews, and 22% rely on room photos. This statistic seems low since earlier reports put reviews closer to 81%. Nevertheless, we know people read reviews and look for ratings.
For example, when hotels have effective revenue management and boost their online ratings by nine or more on Booking or 4.5 or more on TripAdvisor, this combination often means they can increase room rates by three to five times more than expected.
To give you a sense of what’s possible, we’ve seen 3-star hotels with a 9+ score sell rooms at 1,000 dollars or more a night during peak events. Similar hotels without revenue management and a lower score didn’t cross $200.00 on the same nights.
The digital billboards of Google and OTAs can help you drive direct bookings and increase ancillary revenue with amenities like F&B and parking.
We’ve seen a direct correlation between a hotel’s brand reputation and revenue per available room (RevPAR). Find out how one hotel doubled revenue while cracking TripAdvisor’s Top Ten.
2. Engage with Guest Reviews Quickly and Proactively
Brands that respond quickly to guest reviews, questions, and complaints build credibility and burnish your brand reputation. This shows your staff cares and pays attention which can lead to more bookings.
Ignore them, and your competitors will outrank you online, capturing more visibility and customers. It will be tough to undo.
Not only that, but paying attention to what your customers bother to post online can deliver gold when it comes to improvements.
For example, what if your guests complain about the lack of an early check-in or late checkout?
Of course, you want to accommodate your guests, but sometimes you’re not able to accommodate these requests. Here’s how you can please your guests, gain a positive review, and maintain your revenue management numbers.
3. Tailor Prices and Promotions to Customer Segments
Every hotel has different types of customers. There’s the business traveler, the leisure traveler, the summer family traveler, the groups of friends traveler, and everything in between.
Each of these customers has different motivations for traveling and needs once they’re there. Some are price-sensitive, while others have a larger budget. As a revenue manager, you rely on historical data to make pricing forecasts while you review promotions, corporate contracts, and other information to make rate adjustments.
Appropriate rate adjustments are a vital part of effective revenue management. Take business travelers. They tend to book close to the date and will likely compare rates on the OTAs. You may have corporate agreements to ensure these travelers obtain a certain rate. That doesn’t mean you can’t release your inventory strategically.
For example, if your data shows you need to drive online occupancy, you can lower your rates weeks in advance on your online channels and raise them when the business travelers are more likely to book. This way, your business travelers won’t complain they found a lower rate on an OTA.
For family travelers, you can look at your room type and get creative with amenities or discounts on nearby attractions to boost the perceived value. Instead of adding $30 to a double room and calling it a triple, revenue management can help you dynamically increase that room value from $50 to $500 and maintain happy customers.
You can also use customer data to upsell and cross-sell to create ancillary revenue, no matter whether you run a city hotel, a mountain lodge, a seaside resort, or a tranquil country inn.
4. Keep an Eye on Spillage
Balancing appropriate pricing with bookings can be tough. When hotels release inventory early and book up at low rates, that’s known as spillage, and it’s an expensive mistake.
As a revenue manager, you know the importance of monitoring your channel manager and releasing just enough rooms. Then, release more at higher rates as you get closer to check-in. That way, you sell your rooms at market rates.
Yet, spillage is common.
Sometimes, it’s due to starting prices being too low. Other times, it’s a lack of control of the booking window or low pricing for tour operators or wholesalers. There are many reasons for spillage.
Imagine that you sold out your Paris hotel rooms. You were excited that you’d sold them so early, and then you discovered that those dates are when the Champions League quarter-finals are, and you sold for below-market rates. Oof!
Combining technology and communication with the sales and marketing departments can prevent such snafus and improve profitability.
5. Don’t Forget About Spoilage
In some ways, hotels are like a produce seller. That avocado slowly ripens until it’s suddenly ready to eat, and if you don’t get to it soon enough, poof! It turns brown. Your unsold rooms ripen like unsold produce. The closer it gets to the “sell by” date the more you frantically start lowering rates.
This is known as spoilage and is also an expensive problem.
Sometimes, this happens because the initial rate was higher than the market accepted, and you didn’t lower the rates to match the competition. Maybe your cancellation policy is too lenient, or your dynamic rates changed too fast.
Sales, marketing, and revenue management can work together to share information about customer segments, upcoming events, and channel and distribution strategies. This aligns your pricing with your brand reputation.
Hotels are complex ecosystems, and there are multiple ways to improve your brand reputation with effective revenue management. If your online presence is outdated, you can start by updating your photos and implementing a review program to collect current reviews. Our statistics show that 8 out of 10 guests will leave positive reviews even at higher-than-usual rates if you provide excellence and quality.
As you integrate revenue management with brand reputation, you’ll see profits soar. Download the Guide to Revenue Management here and improve your profitability today.
About Revenue Team by Franco Grasso
Revenue Team by Franco Grasso is worldwide leader in the field of revenue management consulting & outsourcing. In more than 15 years, they have supported more than 2,500 hotels in more than 30 countries on 5 continents. The average growth in revenue per new hotel is 20%.
Combining the power of technology and AI automation with human expertise and daily consultation, the dedicated revenue manager plans and executes the optimal commercial strategy for a specific property.
Revolution Plus, their RMS, is included in the outsourcing service. The 24/7/365 service is on a "No cure No Pay" basis, so it's risk-free. No fixed fees are required. Fees are based on a percentage of the achieved incremental revenue versus the best historical year, or versus budget, or any benchmark the hotel decides.
Revolution Plus is a sophisticated revenue management system designed specifically for the hospitality industry. This AI-driven platform enhances your hotel's sales and pricing strategies by analyzing extensive historical and real-time data from multiple sources, including current and past hotel performance metrics, market trends, and even weather conditions. Revolution Plus offers automated pricing recommendations and dynamic rate adjustments via autopilot, increasing room occupancy and profitability.
