The COVID-19 pandemic has brought a tremendous amount of uncertainty to the travel industry, including the revenue performance discipline, with many accommodations resting their success—and, in some cases, survival—in their revenue managers’ ability to effectively anticipate market trends. While this is a challenge unlike any other, it presents the opportunity for revenue managers to demonstrate the value they provide to the broader travel industry.
With 2021 underway, many questions remain unclear, such as when travel restrictions will ease, when demand will return, and how to effectively price inventory when traditional revenue management approaches are no longer reliable. The more informed you are, the more you can make confident decisions. Without the right resources and access to data, forecasting revenue and predicting peak travel demand is difficult to pinpoint. One proven solution to better evaluate market conditions and make data-driven decisions is through revenue performance technology, something 85 percent of lodging properties still do not use, according to Expedia Group data from October 2019.
Having a revenue performance solution in place allows accommodations operators to make more informed decisions and ultimately drive true revenue growth. There are many solutions available in the market that have helped drive clarity and data-driven decision-making.
In tandem with revenue performance technology, post-COVID-19 recovery will depend on operators’ abilities to identify and adapt to new trends. As you continue to evolve your revenue performance strategy this year, here are a few key recommendations to consider:
Think forward, not backward.
Historical data has become less reliable when forecasting future trends or patterns in the current travel environment. It is now more important for accommodations operators to utilize forward-looking demand data as a guide to better understand where the market is heading and how to take the right pricing actions.
Re-evaluate the competition and traveler motivation.
With traveler shopping behaviors and motivations shifting, properties are doing more to inspire customer confidence and offer flexibility. And with more competition for demand, your competitive set is likely providing more assurances to customers. It is important to regularly compare your rates and the flexibility of your policies against similar competitor offerings.
Explore dynamic pricing tactics.
Dynamic prices, even in times of low demand, can help you capture bookings and generate necessary revenue for rebound. Current low-demand conditions have made it difficult to sell higher-priced inventory, so consider new pricing categories for all your room and accommodation types and assess how traveler demand responds from there. Also, consider providing better deals for increased length of stays to help control turnover cost.
Collaborate with your network.
Look to your local tourism authority for access to additional data across your market. This data can help identify your capture rate by comparing your conversion rate against the market average. Tourism organizations and local businesses may also be interested in collaborating on marketing opportunities and deals to promote your property and drive demand.
Experiment with new approaches.
COVID-19 has eliminated many of the levers and incomes revenue managers can normally test. Though most of these options are no longer available, don’t be afraid to test out new pricing approaches, especially if your old pricing models are ineffective. With travelers becoming more price-sensitive, look to add more value to your products to help protect your ADR (average daily rate).
One example of successfully targeting long-term demand during COVID-19 comes from Janet Chen, general manager of the Beimen WOW Poshtel in Taipei. To make early booking even more appealing to travelers, Chen created several promotions that gave discounts based on how far in advance travelers booked their stay. After loading long-term inventory, Chen saw a 150-percent increase in net room nights and a 392-percent increase in revenue. By setting up a long-term booking strategy, Chen is confident that she can capture bookings from travelers eager to explore the world again when it is safe.
Optimizing revenue performance is critical to ensuring the longevity of your property. With the right solutions and tactics, revenue managers can help mitigate loss, drive demand, and position their properties for success post-crisis.