Revenue Management Strategies to Boost Your Direct Bookings

Nov 21, 2019 | Revenue Management | Reading Time: 5 minutes

Revenue Management (RM) is getting a lot of attention in the hotel industry. If you’ve heard about it, but still are not sure what it is and how it works, this article will explain it in a very simple way so you know everything about RM and how you can profit by using RM strategies.

But, in case you’re already familiarised with the term, simply scroll down to the part of the best practices and main strategies of revenue management.

What is Revenue Management?

Revenue Management in the hotel industry or RM is a methodology that puts together a set of techniques that aim to maximize the revenue of a business. Adapted to the hotel industry, the RM manages the balance between occupancy rate and profit of a specific hotel.

Through studies and market analysis, as well as looking at key performance indicators for sales, it’s possible to forecast demand during a determined period of time. Therefore, it’s possible to adopt the best pricing strategies.

Applications of revenue management strategies

revenue management strategies

Whether it’s off-season or peak season, the purpose of revenue management strategies is to maximize sales and profit margins of lodgings, launching appropriate offers at the right moment.

To illustrate the RM strategy: imagine a hotel restaurant that has in its menu “orange juice”. When it’s the season for oranges, the acquisition cost of this fruit as a raw material is much lower than in other seasons, right?

So let’s say that the profit margin of orange juice is 90% and other juices only 40%. An RM strategy could gather those data and apply, for instance, an “orange juice sale” in the hotel restaurant.

The restaurant would sell more orange juice for a lower price, but the low cost of the acquisition of the orange would compensate the profit margin, which in turn provides better profitability.

Another way to create new business opportunities during the off-season is to promote special offers targeting a specific goal. For example, to reach 80% of the hotel’s occupancy. When the target is reached, the room rates can oscillate to higher prices, balancing profitability with consumer demand.

To accomplish this, it’s mandatory that every hotel department is integrated, especially marketing and sales, to avoid misunderstandings. Hotel automation is one way to integrate multiple communication channels, allowing everybody to know what’s going on.

Only with integration, you can apply the RM methodology and take the best advantage of it.

Revenue Management for hotels

Hotel competition is more aggressive now than ever. That’s why revenue management strategies are important for hotels to get ahead of competition and profit all year long.

Here  are some of the good practices of revenue management in the hotel industry that provides relevant benefits:

1. Upsell

Upsell is a sale technique to offer consumers a solution with added value to generate more revenue for the business. 

Reservations are only the beginning of the commercial possibilities of the hotel. In the hotel industry, adding value means offering more than just rooms. That can be done on the hotel website or through email marketing campaigns for guests.


This is upselling – to make clients pay more for a better solution. This way, both sides win.

2. Dynamic rate

Another pillar of Revenue Management is the dynamic rate of the mix of products of your hotel. Besides defining a different price table for off, middle and peak seasons, it is also interesting to note other commercial possibilities, allied to upsell strategies. 

Like I said before, revenue management needs to be applied in every hotel department, not only in sales. Every team needs to collaborate in order to recognize new revenue opportunities. To this end, it’s necessary to gather data of the:

  • market and competitors;
  • hotel’s performance;
  • the behavior of the guests, and so on.

Each of those data needs to be turned into reports that are easily understood so the hotel management looks at the best chances of profitability. Technological tools, like CMS and Business Intelligence, are some of the examples of hotel systems that can help with that.

3. Customer service automation

The battle for attention is hard in the current digital universe. Hence, businesses that answer faster and more efficiently have better chances of beating their competitors.

Therefore, it’s crucial for the success of the revenue management strategies that you keep the same level of quality at the online customer service, in every digital channel of the hotel.

An omnichannel platform for customer service, for example, integrates all communication channels to make it possible to answer travelers quickly, even outside business hours. Moreover, the automated customer service allows hotels to answer room quotations instantaneously, integrated with the booking engine of the hotel.

4. Reputation/ social proof

Even before implementing a marketing digital strategy for hotels, it’s imperative to create a good reputation both online and offline. That way, the hotel is able to generate social proof. In other words: to convert more clients from current guests’ experiences.

In practice, hotel pages can bring statements and comments from previous guests, positive statistics of business, among other resources that express previous guest satisfaction.

Tripadvisor’s stamp is a great sale tool, after all, people make decisions based on others’ experiences to avoid a bad experience with a service or product.

On the other hand, a lot of hotels don’t invest in creating a reputation or making use of social proof to convert more clients. Therefore, they end up prioritizing price strategies instead of value. In other words, they reduce too much their price rate to attract more clients, which not always happen as it was planned.

In the meantime, competitors, who make most of their reputation, create social proof and, consequently, have occupation rates higher at the same price or more.

Thus, it’s essential to structure a strong base for hotel marketing in order to add more value to the products and services of the hotel. Thereafter, set adequate and balanced pricing according to the Compset, and combine all that with other revenue management actions in the hotel industry.

If you are not sure how to create the best Revenue Management methodology for your hotel, don’t worry. You can ask experts for help. HotelMinder, for instance, has a talented team of experts who work closely with partners to enhance hotels’ revenue and even train staff.

The benefits of the revenue management strategies in the hotel industry

In a nutshell, to hit the revenue management means to bring more intelligence and competitivity to lodgings. Allied to RM, there are other hotel technologies, like automated customer service platforms.

Hotel News Now interviewed Revenue Managers to find out what all revenue managers should know. The result you can see in this video:

Furthermore, we can’t ignore the importance of the alliance between marketing and sales, along with all other hotel sectors. In this case, it might be worthy to have a hotel consultant for sales to put in synchrony all gears of the hotel.

That way, predicting and responding to consumers’ tendencies by period and segment, revenue management will be a strong strategy for your hotel to close more reservations, without a doubt. You won’t have to depend on seasonality, and your hotel will have a good occupancy rate all year long.

If you like this post and know a hotelier that needs an update on revenue management strategies, share this post! Let’s all make more money, shall we?

3 comments about "Revenue Management Strategies to Boost Your Direct Bookings"

  • Katie H says:

    Thanks for sharing these insights about revenue management solutions and giving the example of this strategy in the hotel industry. It really helps to highlight the benefits of revenue management systems as automating the day-day business process will lead to better operational efficiency, increased profits, etc. and bringing more intelligence to the business.

    • Paula Carreirão says:

      Hi, Katie! Thanks for your comment. For sure, technology can help hotels a lot regarding revenue and operations. RM systems are a great solution that should be considered by any hotelier.

  • Faiz Ahmad says:

    discuss the various strategies practiced by the hotels to maximum the revenue and target the right business mix

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