February 18, 2012

The signs of poor Rate Management

It's becoming quite easy to spot hotels which are not using revenue management. Hotel properties which start-off with strong rates and suddenly drop the rates when they realize that reservations are not what they expected to be. It seems they enjoy those panic situations, one or two weeks into the month, when management figure out that they are not going to make budget and slash the hotel rates to a low BAR level? it's usually too late, but something has to be done, isn't it?

How often does this happen at your properties? Who is taking the call? on another situation, this same hotel will do nothing when reservations appear stronger than anticipated. In many situations, Reservation agents are order takers, they are barely trained on selling techniques over the phone, so it would be up to the hotel to make sure demand patterns are understood. Honestly i don't know which scenario is the bigger sin. This situation is more common among single unit independent hotels and can be avoided if someone is assigned to revenue management the right way.

Hotels who do not maintain a rate parity, for instance they will sell on their own website, Standard Room, 1 Adult, 1 Night at AED 395.00 while they will sell, at the same conditions, AED 425.00 on OTAs and will slash a Groupon/Cobone deal at AED 299.00. 

The way I see it, revenue management does not need complicated process to be effective.  Sometimes our industry tends to focus and discuss the complexity of various tasks. Revenue management is a learned process, but you need to assign it to someone who has a legitimate interest and curiosity for numbers. If there is no one on staff with this knowledge, RSVP Hospitality will assist you in setting up training and process management  to handle training and/or coaching of existing team member. The return on this modest investment can be huge.

Rahul @ RSVP-Hospitality

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