No Need to Be Depressed: Uplifting Revenue Management Tips When Revenue Is Down

One whose title is “chief evangelist” is driven by his mission to deliver good news. And so it went with this week’s European HFTP Hangout presenter, IDeaS Chief Evangelist Klaus Kohlmayr. His aim is to bring hoteliers across the globe good news regarding revenue management in a time where revenue has been severely depressed.

The Value of Revenue Management in Times of Lock-down

The first thing you should do is look for the opportunities within your current situation, drawing out new data sets to build an up-to-date picture of today’s business and expected business going forward. Analyze how patterns have changed for booking, rates and guest behavior.

Some recently noted trends indicate that guest are now booking short-term before arrival, which can put a strain on operations. An occupancy rate can go from 10 percent to 70 percent within a 72-hour window. There has also been a renewed preference for direct versus in-direct booking. The traditional rate structure is now very different than it was a few months ago; advance purchase rates have pretty much gone out the window.

The long-term stay segment has managed to do very well during this time, especially in the United States, continuing to run at up to 60-70 percent occupancy. In the meantime, the leisure market (particularly in drive-to destinations) is expecting to reach similar performance to last year as places begin to open.

These market changes are where you should focus your analyst’s eye, extracting the specific data to review and make responsive decisions.

Forecast from a Fresh Perspective

Data-driven decision-making requires data, of course, and the tools to use it. If you have good data in place, your next step will be to forecast what your business will look like going forward. People are looking at their own data sources such as government regulations, Covid-19 cases and rates of transmission to help drive their travel decisions, resulting in shorter bursts of demand.

Forecasting has become more dynamic and in flux, forcing companies to perform rolling 30-day or 60-day forecasts because the future beyond that is so unclear. Over the next 18 months, the industry will be in a state of rapid, iterative forecasting. You must have the right data in the right place, as well as the right BI or revenue management tool in place to collate and interpret this data.

Pricing and Inventory Management

When you have little revenue and are constrained by government regulations, you need to manage and price your level of occupancy accurately, whether that is at 25 or 50 percent, depending on current government restrictions. A revenue management tool can automatically account for dynamic micro-adjustments in price based on occupancy, which is important in a time when an extra one or two percent in revenue can make or break your profitability. Pricing encompasses rate, room type, product, etcetera — which should each be priced on their own merit — and is an even more critical process in a time of less revenue.


When customers are making accommodation decisions, they are now not only looking at availability, but also at services and sanitation measures a property is taking. Because of this concern, guests are turning to direct booking because the property’s website is the best source of information for its health and safety measures. This has resulted in a stronger performance for direct booking channels versus indirect.

Past crises, like the U.S. financial crisis of 2008, often spur an over-dependency on online travel agencies (OTAs) to generate demand, which may be effective in the short-term but was not positive for hotels in the long-term. This is something to try to avoid this time. A revenue management tool can help you understand your cost of distribution, cost by channel, sensitivity by channel and more — much better than an Excel spreadsheet can.

About HFTP Hangouts

There will be one final HFTP Europe-focused Hangout this summer before the series goes on hiatus through September. It will take place Wednesday, July 1 at 15:00 UK / 9:00 a.m. CT.

Michael Grove, managing director at EMEA and David Bailey, brand ambassador at HotStats will present on the latest insights on the state of the hotel industry from the revenue and expense point of view. Sign up to attend.

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About the Author: Briana Gilmore