Successful revenue management involves strategically implementing pricing strategies for future room reservations. A hotel cannot simply pick an arbitrary rate for a particular period of time and hope that the rooms sell. Instead, a hotel must use historical information and industry data to pick a strategic price that will draw customers in early on. As that period of time draws closer, the hotel can begin adjusting its prices, depending on the number of rooms available (supply) and the number of rooms requested (demand). By strategically pricing future reservations and estimating potential revenue accordingly, a hotel can maximize its revenue potential.
MONITOR MY COMPETITION
To manage revenue and maximize profits as best as possible, a hotel must monitor its competition on an ongoing basis. It must differentiate itself in order to attract new business and to maintain the business of existing customers. It must keep tabs on how its competition is constantly evolving. For example, one hotel chain could be a threat to business during the summer months, and another could be a threat during the winter. Also, other hotels may come up with better strategies, technologies and have more analytical, creative employees who help lead to extra profits and an increased market share. Hotels with successful revenue management strategies seek to identify the best practices of competitors in order to improve their own practices.
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