Home / ANALYSIS / Front of House / A holistic approach

Revenue opportunities must be optimised holistically.

Discounting is a bad practice to follow; revenue managers must look beyond RevPAR to other options such as RevPASH, RevPAM, and RevPATH, says Binu Mathews.

Revenue management is always in the limelight and will only gain more attention in the days to come. With multiple choices available, hoteliers need to constantly engage customers to retain their competitive edge.

The immediate present will see revenue mangers looking at packaging for profit, focussing on maintaining rate parity, looking beyond RevPAR to RevPASH ( food & beverage revenue per available seat and hour, per F&B outlet), RevPAM (conference and banqueting revenue per available square metre) and RevPATH (revenue per available treatment hour, in spas).

Story continues below

Advertisement

COMMENT Comment on this article

Revenue managers must approach RevPAR by looking at the profitability quotient completely. It is important to understand what will drive more profitability – more occupancy at discounted pricing, or less occupancy at a higher price? The better approach is to offer additional services at higher price, and not adopt discounting to increase occupancy.

The internet’s role in driving RevPAR will grow and revenue mangers will continue to balance the inventory across multiple channels.

There will be larger focus on pushing sales via the hotel’s website to completely reduce the cost of booking otherwise paid to online travel agents and GDSs.

Discounting is a bad practice; packaging for profit is what revenue managers must look at. Revenue managers have to focus on creating offers that are packaged to yield maximum revenue while providing customers with value-added services. Packaging for profit also helps revenue managers differentiate between rates offered across channels.

While packaging for profit, revenue managers must tightly integrate their strategy with customer intelligence, a key requirement for profit optimisation.

Tracking customer purchase history, product preferences, and buying behaviors, help arrive at customer value and forecast customer behaviour to offers. This approach helps develop customer-centric pricing and generate more revenue per customer (MRPC).

Rate integrity is essential to the profitability of a hotel’s operation in the short and long term. In a customer-centric approach, it is important to ensure your customers know that they are always getting a better deal.

This is not possible if the hotel’s website displays a different rate while online travel agents and the hotel’s central reservation office provide another rate. Such a difference in rate will make the customer lose confidence in the pricing, leading to loss of repeat business for the hotel.

Revenue managers must approach optimising revenue opportunities holistically. Focus on RevPASH is already gaining a lot of ground among hoteliers.