Operating in a fiercely competitive hotel market makes it difficult for independent operators to allocate the required amount of time for hotel revenue management. Unfortunately, this often results in mistakes – and some are big. A single unintended miscalculation, assumption or lack of thought about the guest experience is all that’s required to impact your occupancy negatively. Thankfully, many of the hotel revenue management errors independent hoteliers make are common and easily avoided and addressed – once you know what they are!
You’ve probably invested good money in your hotel PMS, and it is hands-down your best hotel revenue management tool. Despite this, many hotel managers don’t use their PMS fully, becoming nothing more than a room diary and customer database. If you’ve picked the right PMS, then you’ll have access to tools and reports that make revenue management easy and effective. Ignore the advanced rate configuration features and detailed occupancy statistics such systems offer and your rates will be based on assumptions. Purpose-built hotel revenue management software surfaces that data automatically, so pricing decisions are based on real occupancy trends instead of guesswork.
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It’s likely you’re selling your rooms through several Websites, but are you taking the time to manage your inventory distribution? Do you have a plan to distribute rooms and rates strategically across your various channels? If not, then you’ll often face rate-parity issues and, at worse, double bookings. The potential loss of revenue and guest loyalty that results from poor inventory distribution is matched only by the detrimental effect it will have on your RevPAR. To create a rate plan that is light-footed enough to turn on a dime when the market demands, you simply can’t leave channel management to chance.
The experience you offer guests starts from the moment they discover room availabilities at your hotel and view their rates. Guests are smart; they’ll have done their research, compared rates and used their time wisely to read prior guest feedback. By the time they view your list of rates, they’ll probably have a rather solid idea of what represents good value. To ensure you make that all-important, great first impression, you must be one step ahead of your competition with a hotel revenue management strategy that leverages past guest feedback, your competitors’ rates and a clear understanding of how to differentiate your strategy from theirs.
After reviewing your room pricing for the next six months, ask yourself if the numbers were honestly determined after considering your forecasted revenue and prevailing market conditions, or have you made assumptions? If it’s the latter, then those assumptions will lead to a high failure rate – it’s that simple. If you don’t track your competitors’ pricing or analyze local market demand, then your prices will have no bearing on what guests are actually willing to pay.
Hotel rates should be adjustable for each season and perceived market value of rooms, but they should also be dynamic enough to react to your occupancy levels. If your PMS allows, then set it to decrease or increase room prices based on changes in occupancy. This is where AI in hotel revenue management goes a step further, adjusting rates automatically in real time across every channel based on demand, competitor pricing, and local events. For instance, you have the confidence to offer a 10% discount to new bookers when occupancy reaches 80% or more, yet promote a much bigger offer if it dwindles to 30% or less. Room rates should never be static; laminate your rate card at your peril!
One of the most overlooked revenue management mistakes is failing to plan for seasonal and holiday demand. Peak periods bring higher search demand, booking urgency, and pricing flexibility, yet many hotels rely on static strategies and miss valuable revenue opportunities. Our guide to hotel revenue management software covers how these tools handle seasonal demand automatically, along with features, pricing, and options by property type.
Without aligning pricing, promotions, and inventory with demand spikes, hotels lose both occupancy and profit. To stay competitive, it is essential to forecast trends and adapt dynamically. Learn how to maximize hotel holiday revenue with the right strategy.
To increase your average daily rate, it’s vital you allocate time to manage revenue, or if funds allow, then hire someone to do that work for you. Building a sustainable, profitable hotel business that delivers amazing guest experiences is only possible if you avoid the classic hotel revenue management errors detailed above. The good news? Now you know what they are!
roommaster Software is a leading technology provider for the hospitality industry. For over 25 years, roommaster has combined hotelier experience with innovative technology to deliver an all-in-one solution that empowers hotels to attract guests, drive customer loyalty, and increase profits. Our flagship property management software, roommaster PMS, helps manage over 5,500 properties across 100 countries. roommaster develops scalable solutions ranging from a Hotel PMS, Cloud PMS, Channel Manager, Hotel CRM and helps properties enable guests to Book Direct. We believe that everyone deserves a great guest experience, whether they’re staying at a small B&B, a thousand-room resort, or anywhere in between.
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