As a hotel revenue manager with over a decade of experience in the hospitality industry, we have witnessed our fair share of economic ups and downs, requiring quick thinking and adaptation to steer revenues in the right direction. With 2023 now upon us, we wanted to share crucial insights from the past year that hotel revenue managers everywhere should take note of to navigate 2024 as smoothly as possible.
The core responsibility of any hotel revenue manager is to implement innovative pricing and distribution strategies that maximise top-line revenues and profits. As the world emerges from the pandemic in fits and starts, it's more vital than ever to have your fingers on the pulse of rapidly shifting consumer behaviours, market demand, and industry trends.
Arm yourself with these five critical learnings before diving headfirst into revenue management for 2023 and beyond.
Table of Contents
1. Flexible Cancellation Policies Are Here To Stay
The pandemic trained guests to expect flexible cancellation policies as the norm. Revenue managers clung to restrictive cancellation policies in 2022, hoping the trend would fade, only to lose bookings to competing hotels with traveller-friendly cancellation options.
As we move into 2023, maintaining flexible cancellation policies will be crucial to remaining competitive in uncertain times. Build forecasting models and overbooking thresholds that account for the volatility of flexible cancellations. Strike the right balance between capturing bookings and mitigating risk. Infuse empathy into cancellation policy creation by putting yourself in your guest's shoes.
Reward loyalty members with enhanced cancellation privileges and market your policies to attract desirable transient bookings from cancellation-wary travellers. With the right revenue management strategies, flexible cancellation policies can maximise revenues, not dilute them.
2. Don't Underestimate the Power of Ancillary Fees
As profits get squeezed from all directions, every potential revenue stream counts. In 2023, revenue managers can't afford to underestimate or overlook the revenue-generating power of ancillary fees.
From resort fees to parking charges to WiFi fees, seemingly minor expenses can drive significant revenue. Ensure fee amounts align with competitor rates and market demand to optimise revenue without deterring bookings. Make it seamless for guests to understand fee structures and add services during booking.
Analyse past fee collection rates and identify opportunities to boost attachment. Make fees like natural extensions of an enhanced guest experience, not inconvenient nickeled and dimed additions. With the right balance, ancillary fees will buoy room revenues all year.
3. Position Your Hotel as a Hub for Hybrid Events
Hybrid events are projected to dominate 2023, blending virtual and in-person attendees. Astute revenue managers will capitalise on this trend by positioning their properties as hybrid event hubs.
Offer built-in A/V equipment, portable green screens, strong WiFi, and integrated streaming technology. Train staff on hybrid event coordination and optimisation. Craft dedicated hybrid meeting packages.
By marketing your hotel as a one-stop hybrid event hosting solution, you can unlock additional F&B, room rental, and virtual attendance revenue streams while keeping pace with event trends. Don't wait for meeting planners to ask about hybrid capabilities - flaunt these services to capture bookings that hybrid-averse competitors will miss.
4. Embrace Data Science To Compete with OTAs
OTA dominance squeezed hotel profit margins in 2022. To regain market share in 2023, hotels must fight technology with technology.
Revenue managers can now harness cutting-edge data science and AI to optimise pricing. Leverage predictive analytics, machine learning, and algorithmic room rate forecasting to dynamically price rooms based on real-time market demand.
Analyse OTA rates daily and respond with strategic undercutting or parity adjustments. Tap into clickstream data, search trends, and consumer sentiment analysis to calibrate pricing to customer behaviour.
With the power of data, hotels can nimbly adjust rates to stay competitive, become less reliant on OTAs, and improve RevPAR. Data is the currency of 2023 - invest in it now to future-proof revenue management.
5. Get Creative With Bundling To Boost Value
With travel prices soaring across the board, travellers are hungry for value. Bundling room nights with F&B credits, spa discounts, or other perks is an innovative way to convey value amidst inflation.
Savvy 2023 revenue managers will get creative with bundle offerings tied to shoulder dates, suite upgrades, or loyalty member perks—structure bundles to boost attachment of hotel services to enhance revenues. Sweeten the deal with extras like welcome amenities or late checkouts.
Billing bundles as "value packages" or "experience packages" catch consumers' eyes, stimulate bookings, and make rooms worth the price. Serve up some creativity and perceived value in 2023 to send RevPAR soaring.
In A Nutshell
As 2023 unfolds, innovating fearlessly, leveraging technology, and honing customer empathy will serve as revenue management cornerstones. With flexibility, foresight, and data-driven decision-making, hotels can confidently navigate any turbulence 2024 may bring. The future remains bright for hospitality revenue. With these critical learnings, hotel revenue managers everywhere are poised to chart a clear course toward continued prosperity.
Schedule a consultation today to discuss how Emersion Wellness's cutting-edge hotel revenue management strategies can unlock substantial revenue and RevPAR gains for your property in 2023. Our devoted team of hospitality revenue experts can't wait to help you implement the crucial insights needed to navigate 2024 smoothly and drive profit growth long into the future.
Frequently Asked Questions
What are some key hotel revenue management trends for 2023?
Some major hotel revenue management trends 2023 include a continued focus on flexible cancellation policies, creative bundling and packaging to convey value, capitalising on the hybrid event trend, harnessing data science and AI to optimise pricing, and maximising ancillary fee revenue.
How can hotels compete with OTAs in 2023?
Hotels can optimise competitiveness with OTAs by leveraging data science and AI to adjust pricing nimbly based on real-time market demand. Monitoring OTA rate parity and strategically undercutting rates when favourable can also help hotels capture more direct bookings.
What is a hybrid event? How can hotels benefit from them?
A hybrid event blends virtual and in-person attendees and components. Hotels can be one-stop hybrid event hosting solutions with built-in A/V technology and staff training. This helps hotels capitalise on additional revenue streams from mixed events.
How should hotel revenue managers alter their overbooking strategies in 2023?
With flexible cancellation policies remaining common, hotel revenue managers should adjust overbooking thresholds to account for increased booking volatility. Forecasting models should factor in higher potential cancellation rates.
How can hotels drive ancillary fee revenue in 2023?
Hotels can boost ancillary fee revenue by ensuring fee amounts stay aligned with market demand, making it easy for guests to understand and add services during booking, analysing past attachment rates to identify opportunities, and marketing fees as extensions of the guest experience.
What makes an effective hotel room bundle or package?
An effective hotel room bundle pairs the core room night(s) with perks like F&B credits, spa discounts, or loyalty member upgrades. Piles should be creatively structured around shoulder dates, special events, or member status to stimulate bookings and attachment.
How has the pandemic impacted hotel cancellation policies in the long term?
The pandemic cemented flexible cancellation policies as the preference for many travellers. Maintaining flexible policies remains crucial for hotels to stay competitive in 2023 and beyond. Forecasting models should factor in the volatility flexible cancellations create.
What data should hotel revenue managers analyse to optimise pricing?
Critical data for optimal pricing includes OTA rate parity, local market demand forecasts, clickstream and search data, consumer sentiment, predictive analytics, competitor rate movements, and algorithmic price recommendations based on machine learning.
How can revenue managers convey value to guests amid inflation and rising prices?
Bundling rooms with perks/discounts, creatively structuring value packages around special dates, highlighting hybrid event capabilities, and marketing flexible cancellation policies convey value to guests facing higher prices.
What skills are most important for hotel revenue managers in 2023?
Critical skills include flexibility, customer empathy, comfort with data/technology, creative packaging abilities, competitiveness, and the ability to identify ancillary revenue opportunities and capitalise on lodging and event trends.
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I'm Nathan Baws, a nutrition nerd, exercise and weight loss expert, and an unwavering advocate for good health. As the founder of Emersion Wellness, I'm passionate about crafting Seamless Weight Loss Programs to supercharge hotel revenue and transform lives. We've pioneered the World's First Plug & Play Weight Loss Programs for top hotels and resorts, sparking a wellness revolution. Beyond my professional journey, you'll often find me hiking, swimming, and riding the waves, embracing every moment in nature. Join me on this exhilarating journey towards diet, health and wellness.