7 Strategies to Rev Up RevPar



Reports on RevPAR as the hotel industry closes out 2019 are not overly encouraging. According to PWCs November 2019 Hospitality Directions U.S. Report, “although U.S. hotels have experienced RevPAR increases in 112 of the last 115 months, growth continues to decelerate, with two of the three declines coming in June and September of this year.” The report goes onto state that examining the fourth quarter of 2019, “the near-term lodging outlook suggests continued deceleration in top-line metrics.”

With this slowdown in revenue and steeper competition for guests’ business and loyalty, hotel operators are looking for as many ways as possible to maximize RevPAR and create new revenue streams — or widen existing ones.  Here, HT looks at seven technology-based strategies for bolstering RevPAR on the guest room side and beyond.

1 Implementing yield management tools

Yield management tools — which are typically integrated with the property management system (PMS) — can prevent hotel staff from engaging in the common revenue-sapping practice of quoting room rates that are lower than they should or could be. Such solutions can also be leveraged to optimize rates offered within a given property’s booking channels, including direct online booking, channel partners, and reservations call centers, ensuring that room rates offered via these engines are consistent with those available offline, says Lance Echols, principal of independent revenue consultancy RevLogic Hospitality Consulting. Echols notes that yield management tools “turn reservations managers into revenue managers, which is more important today because of the introduction of numerous niche brand flags.” 

Myrtle Beach Seaside Resorts has seven mixed-use condominium hotels in the Myrtle Beach, S.C., area. The operator harnesses the Yield Management module from Maestro PMS to determine “suggested sell” guestroom rates and strategies based on historic performance data and forecasts. Mandatory rates are then implemented in the revenue management system through an integration with the property’s Maestro PMS property management system, preventing reservations personnel from registering guests at any room rate other than the optimized one. 

“We create optimized rates across dozens of room types and multiple seasons,” notes Helen Staton, director, reservations and revenue management. “Rates are uniform in Maestro for our reservations staff and also across all booking channels,” widening revenue streams.

Similarly, the 1886 Crescent Hotel & Spa in Eureka Springs, Ark., has seen “a marked increase in revenue on both occupancy and average daily rate” following the creation of an interface between the Maestro Yield Management module and IDeaS G3 RMS. The yield management solution streams real-time data pertaining to reservations, demand and booking changes to the RMS, which applies revenue optimizing algorithms to open and close specific rates over time. This maximizes rates offered in the PMS.


2 Harnessing RMS with dynamic pricing capability

As hotel operators strive to squeeze more revenue from guestroom types that are in high-demand, more hotels are seeking RMS technology that allows for dynamic, demand-based pricing at the room level. The objective: to do so without raising room rates across the board and risking business as a result, say IDeaS and Kriya RevGEN

At the Mandeville Hotel  in London, room-level, dynamic demand-based pricing facilitated by IDeaS’ G3 RMS has sparked a 5% boost in ADR across all room types, states Enrique Pacheco, revenue manager. 

“If (the RMS) detects high demand in a certain room type — for example, with superior doubles — it will increase the price for that specific room type but leave deluxe rooms at the same rate,” Pacheco explains. 

3 Using business analytics tools to gain insight into consumer sentiment

Business intelligence tools like Maestro’s Analytics BI allow hotel operators to data-mine at a macro level to gauge overall guest sentiment, as well as at a micro-level to assess individual guest sentiment.

Data of this kind can be harnessed to identify areas of hotels’ business (including rates, rooms, facilities and amenities) that need attention if revenues are to improve. Analysis of data over time identifies trends and indicators that guests’ sentiments are changing; hotel operators can act on these trends before competitors do. In addition to bringing to light issues with past guests’ stays and experience and affording hotel operators a competitive edge by allowing them to react to trends in a proactive manner, segmented data provided by business intelligence tools increases the likelihood that offers best fit guests’ needs and will be an incentive not only to book the hotel in question, but also to book it directly, sources point out.

4 Applying AI and predictive analytics

Artificial intelligence (AI) can play a role in optimizing revenue management and uncovering new revenue opportunities by analyzing a myriad of data points and variables to determine the right rate at the right time and secure the maximum number of bookings at the highest rates possible, say Echols and other sources. 

RMS offerings like Hotelitix, from the company of the same name, perform analysis of this type using AI to extract data from hotels’ PMS systems, with which they integrate, and from data sources in the marketplace. Applicable influences — for instance, room rates in the overall market, competitors’ room rates, hotel occupancy, pickup, and booking pace/patterns — are continuously monitored, enabling operators to make proactive, real-time rate decisions 365 days out.

Additionally, data derived from business intelligence solutions that harness AI and machine learning can be integrated into RMS, according to TravelClick, an Amadeus company,. Then, using forward-looking data, hotel operators can establish ideal rates and inventory allocation parameters as well as measure (and base future initiatives on) projected performance against that of the competitive set, including alternative non-hotel accommodations in a specific market. 

5 Integrating the RMS with customer relationship management (CRM) systems and PMS

Tracking guests’ ancillary spending on amenities (spa treatments, golf, etc.), onsite dining, and transportation, as well as room upgrade consumption (at the property level or, even better, at the guest level) is possible when the RMS is connected to a CRM system into which data from the PMS is fed. With records of all ancillary spending and offers consumed by individual guests during their stay at a particular hotel or at all hotels within a chain, hotel operators get a better understanding of the total revenue they can make per booking, states CellPoint Digital. 

Such knowledge then forms the basis for marketing available rooms more aggressively, offering more competitive prices, or bundling in complementary ancillaries — all of which have strong power to up the RevPAR ante. For example, if the RMS “knows,” via integration with the CMS, that a business guest typically orders room service or dines at the hotel’s restaurants throughout his stay — generating an average of $25 in incremental profit per night — a discount or specific perks can be promoted to that individual to win his business going forward and forge a new revenue stream.

6 Adopting group room revenue optimization solutions

Solutions that optimize revenues from accommodations booked by individual travelers have become a staple among hotel operators. The next step, note solutions vendors like The Rainmaker Group, a Cendyn Company, and Oracle Hospitality, entails utilizing group room revenue optimization solutions instead of manual methods of determining group rates. It also involves taking advantage of these solutions rather than giving individual sales managers the power to negotiate rates and employing guesswork in deciding whether to accept proposed group business. 

One resort in south Florida rolled out The Rainmaker Group’s grouprev group revenue optimization solution to attain several objectives, including winning more group business by using automation to determine the best possible group rates and account for the displacement of transient business when creating group rates for RFPs. The solution relies on algorithms to generate pricing recommendations that strike a balance between a group’s willingness to pay a certain rate and the probability that the resort will win the deal, according to the vendor. In doing so, it takes into consideration the value of the group in question versus additional forecasted demand for the time period, along with other market conditions and policies that govern properties’ function space and catering services. 

One year after deploying the solution, the resort reported a 7.6% uptick in booked group room nights, as well as a total group revenue lift of 5.3% and a 4.2% increase in group room revenue. Its “won RFPs” conversion rate rose from 6.6% to 6.8% during the same time period.


7 Deploying tools for applying advanced revenue management tactics to inventory for function spaces

While strategies for boosting RevPAR have traditionally centered on guest room revenues, a report by Oracle Hospitality and Starfleet Research  identifies a trend toward “total revenue management” and the use of next-generation sales and event management technology to manage revenues from function space. Adopting such technology, the report states, makes sound business sense considering the strong potential of meetings and events that utilize function space to improve hotels’ overall revenue picture.

Sales and event management options such as Oracle Hospitality’s OPERA Sales and Event Management Standard Cloud Service utilize forecasting models and analytical modeling to identify demand patterns and develop pricing strategies for function space. They account for variables and challenges that do not come into play on the guest room RevPAR side, but have strong potential to increase or decrease RevPAR to be garnered from function space. Such variables include, but are not limited to, changes in function room capacity based on layout, as well as the potential impact of ancillary revenues (e.g., from food and beverage served at group functions), the use of function space by multiple groups during a certain period, and the fact that function space, unlike guestrooms, can be sold in different configurations for different types of events.

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