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How to Solve Hotel Revenue Management Challenges

There are a number of challenges facing hotels when it comes to revenue management including:

  • Sourcing the Necessary Tools and Skill Sets
  • Managing Interdepartmental Communication
  • Competing Against Online Travel Agencies (OTAs)
  • Building Your Reputation and Sourcing Direct Traffic
  • Keeping Up with Changing Guest Expectations
  • Total Hotel Revenue Management (THRM)

With internal and external factors putting pressure on your strategies, having the right tools, training or expert assistance is key.


Are hotel revenue management challenges impacting your ability to form effective pricing strategies and connect your rooms with the right people, at the right prices, in the right places at the right time?

“Revenue Management has contributed millions to the bottom line, and it has educated our people to manage their business more effectively. When you focus on the bottom line, your company grows.”
— Bill Marriott Jr., Chairman, and CEO, Marriott International

In this blog we’re going to look at some of the most difficult challenges that affect the hotel industry when it comes to yield management and getting your hotel rooms filled, and offer solutions, advice and insight into how you can improve your revenue management strategy and increase your bottom line.

The Right Skillset and Tools for the Job

Getting the job done requires more than understanding the inner workings of your revenue management strategy and your yield management. You need to have the right skillset and tools to be able to do the job efficiently, effectively and at best cost.

Look at courses and qualifications in Revenue Management, start at a level which suits your experience – if you’re brand new to the discipline, you’ll need to start with a Beginners course, but if you’ve got plenty of experience, then a more advanced level is appropriate.

Once you know what you’re doing, you need to know how to do it – and what tools are going to be the best fit. Whether you purchase the licenses and technologies required yourself, or outsource to a skilled digital team will depend on your budget, the size of your business, your time and resource management, and the aforementioned skillsets of your employees.

Not having the right tools at the right time isn’t just a hinderance, it’s a money sink that sees you wasting time and effort as well as your budget.

“The biggest challenge for revenue management within the midscale segment is hotel-level engagement. We have made significant investments in applications and tools to enhance decision-making at the unit level. Adoption of these tools is not always immediate—midscale hotel staff in particular are often juggling many responsibilities and resist technology if it places too many demands on their time.“
– Monte Gardiner, Managing Director – Revenue Management, Best Western Hotels & Resorts

Channel Management – Obtaining and Training to Use the Tech or Outsourcing to Experts

Once you have obtained the tools and the skills for the job, there’s another issue – the channels you’re utilising to implement your hotel revenue management strategies.

Properties have to price with the right balance of driving revenue and maintaining brand integrity. Add in the ever-growing complexity of channel availability, channel cost and loyalty programs—optimized pricing becomes a tricky matrix.”
– Kristen Richter, VP of Revenue Optimization, Americas, Radisson Hotel Group

Are you planning on offering direct bookings only – will this be done solely on your website, or through an app? Are you going to sign up to third party platforms and online travel agents (OTAs)?

Before you can even ask yourself these questions, you need to know where your customers are; what channels they visit, what platforms are the most engaged with, what type of custom you’re attracting (such as business, leisure, health travel, etc).

Without knowing exactly where to aim your efforts, and the quantifiable impact each of these channels has, you’re not going to be able to develop a baseline cost figure, let alone determine the most profitable route for your business.

Managing Interdepartmental Communication Effectively

How many departments does your hotel have? Even the smallest of venues is going to have at least a few, and they all need to be operating on the same page if you want to effectively solve the hotel revenue management challenges that will determine your pricing strategies.

For example, if your Cleaning team is taking a certain number of hours to refresh and restore rooms after usage, you need to calculate that time into your planning when determining how often a room can be made available, and with the more stringent requirements that the COVID pandemic has introduced, this time is likely to have increased. This may not make much of an impact when you’re offering rooms for the night or extended periods of time – but if, for example, you’re planning to adopt a Home Office model of room bookings and need to be able to make rooms and facilities available multiple times a day, this will matter.

Effective communication between your teams will help you build a strategy that works smoothly from start to finish, as well as identify potential issues or points of upselling and cost saving.

Online Travel Agencies (OTAs) Dominating Sales – How to Enhance Your Own Digital Presence to Compete

Online Travel Agencies (OTAs) offer customers a quicker, more streamlined experience – but obviously they come at a price for hotels. You cannot afford to ignore the importance of these channels, but at the same time – you need to balance your needs, digital presence and ability to directly influence customers to your own direct platforms with these costs.

“As for (online travel agency) commissions, we continue to evaluate partners that make sense for our target guest. We’re open to working with new partners with flexible commission models. We are not looking to drive volume through third-party partners at hefty costs.”
– Kathryn Barrett, VP Revenue Management, Dream Hotel Group

Distribution across websites makes for a crowded landscape, and you’ve got to be able to stand out (for the right reasons). This is where you must integrate your marketing, sales, and advertising strategies so your revenue management is focusing channel management, engagement, and yield management in the right places at the right time.

On average, a customer shifts over 50 times across desktops, tablets, smartphones, and channels when researching travel online. (McKinsey, 2018)

Your Online Reputation and How to Manage It

As you’d expect, with so much competition and a need to stand out to get direct bookings, your reputation is hugely important.

81% of travellers want greater digital service from hotel brands. (PWC, 2019)

When it comes to how your customers are influenced into making their travel decisions – 63% say they use travel review sites, 46% use search engines, and 35% social media. (Expedia, 2019)

A huge portion of your customers are going to be seeing what people are saying about you, and make their determinations based on this.

Your reputation isn’t something you work at once and then leave – you have to continually monitor, maintain and grow it, otherwise you run the risk of negative comments becoming the focus, or perhaps worse – falling into obscurity, where potential customers won’t even engage with you in the first place.

To ensure a healthy and sustainable reputation, you need a robust digital presence, ownership of your online profiles, and an expansive social media strategy that is flexible yet reliable and relatable.

Changing Guest Expectations – How COVID-19 has Changed Consumer Focus

With travellers having greater access than ever before to real-time booking technology and information, potential guests are practicing their own revenue-management methods in today’s cutthroat environment.“
– Kirk Pederson, President, Kokua Hospitality

The COVID-19 pandemic has fundamentally changed the way businesses across the globe operate, and despite vaccines and new scientific advancements being rolled out to counter the virus, full recovery is going to take time.

There is a much stronger focus on safety (hygiene and social distancing), and expectations for hotels to operate under strict guidelines.

Your customers are going to be focused on what you’re doing for them, and you need to provide them with this information as standard – it’s not enough to have a social distancing policy or sanitising stations in place, you need to add this information to your listings and terms so that customers are aware of it, and reassured to see it comes as standard.

Total Hotel Revenue Management (THRM)

Total Hotel Revenue Management (THRM) encompasses the capturing of untapped revenue and profit potential – it means managing all your revenue sources at every customer touch point to ensure you’re obtaining maximum profitability for your entire hotel and all its assets.

When developing a system of THRM, you need to consider:

  • Function Space
  • Restaurants
  • Spas
  • Retail Areas
  • Room Service
  • Upselling Amenities (for example: Offering pillow or bedding upgrades)

It requires you to look at the big picture and think laterally – what is your space doing, what is in your space, how are you using your space? Then taking those answers and asking, “What else can we do?”

When predicting the demand for your rooms, think in more broader ways – look at the type of customer you’re attracting and what they typically make use of or purchase on their visits. Then you can start predicting additional elements and maximise your profit per visitor.

What to Take Away from this Blog

There are so many different ways to handle your hotel revenue management, but all of them stem from a strategic approach that requires careful consideration of your assets, the skills of your team, the people you work with or bring in, and the investments you make into the future of your business.

If you’d like to discover more about how Virtual Solutions can help you with your digital presence, staff training, website development and more, get in touch today.

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