Why do hotel revenue managers need performance analytics?
Nowadays, it’s a whole new data-driven world! Hotel revenue management tools put the power of data and performance analytics into the hands of hoteliers, which help to boost their bottom line and maximize revenue from each room sold.
However, there’s still confusion out there about the value of performance analytics. According to the 2017 Lodging Technology Study published by Hospitality Technology magazine, when it comes to data analytics, 50% of those surveyed said they’re still in “education mode,” about a third are critical of their analytics exploration efforts, and 34% admit they lag competitors.
Effective use of performance analytics is indispensable to a hotel’s growth. Let’s look at three areas where analytics play an important role in hotel revenue management.
1. Categorize your customers and conquer
All customers are important. But if we’re being completely honest, not all customers are created equal. While some guests simply check-in and out, others spend hundreds or thousands of dollars on dining, entertainment, and spa services. Performance analytics can segment guests according to booking trends, purchase behaviors, and more, giving revenue managers insight on which segments will have a higher lifetime value. You can then target them with customized marketing promotions that increase revenue.
2. Get the price right
You want to fill your rooms in the most profitable way possible. Through analyzing competitors, market share, weather and other key drivers influencing demand, you can develop actionable insights that guide you to sell the right room to the right market segment through the best channel for maximizing room yield and profit.
Starwood Hotels and Resorts provides a great example. The chain optimized room pricing by analyzing how the home weather of their customer base impacted willingness to spend money on a week in Caribbean sunshine. Performance analytics showed the best time to reduce prices and launch promotions, increasing the hotel’s revenue per available room (RevPAR) nearly 5%.
3. Channeling success
Major changes in distribution channels over the past several years – including the costs and benefits of each – have significantly impacted hotel profit margins. Good performance analytics empower you to better understand your hotel’s distribution dynamics and their effect on revenue.
From booking to check out, your customers are leaving a data trail. Using hotel revenue management software with detailed performance analytics, you gain invaluable insights that hold the power to transform your hotel’s profitability.
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