No two hotels operate exactly the same. And that is because no two hotel guests are the same. As such, no two hotel revenue strategies can ever be the same either. Change and adaptability are key requisites to a successful revenue strategy and profit margin.
We take a look back at how some of our clients, from different hotel models, have adapted their revenue strategies to best fit their audience and market demands.
Download our free e-book ‘Revenue Lessons From Hotel Industry Innovators’ to discover more case studies and learn from industry leaders.
1. Diversify Distribution
Ushuaïa Ibiza Beach Hotel was once a standard three-star hotel operating largely on tour operator exclusive agreements. A physical and digital transformation created a five-star beach resort commanding 10 times its previous rates.
Changing out the distribution mix proved a real gamechanger, with the hotel moving from 90% tour operator distribution to 90% of its distribution yielding through OTAs and its direct channels. The revenue team now operate a dynamic distribution strategy, keeping channels open and yielding on price and packages to maximise on profits.
The Results: RevPAR jumped 6% and ADR increased 3.5% for the period June – September 2019 compared to June – September 2018.
“One of the key successes of the hospitality industry is to have everything in balance. In Palladium Hotel Group we think globally, adapting our decisions depending on the business necessities. With our distribution strategy we proceed in the same way; for example, if one market is suffering, we can replace this market with another one,” said Diego Fernández, Corporate Revenue Director for Palladium Hotel Group.2. Adopt Open Pricing
Asia Pacific hotel group Ovolo saw RevPAR and ADR gains in early 2019 after pushing a revenue strategy built on dynamic room type differentials.
Headquartered in Hong Kong, Ovolo Group operates a diverse portfolio, with different demographics and market positioning for each property and brand.
Using Duetto’s GameChanger pricing tool in 2017 has enabled the revenue team to price each property, room, segment and guest independently. This enabled them to target niche markets, driving revenue through Open Pricing and working with dynamic room type differentials.
The Results: Both RevPAR and ADR increased by 4% for July 2018 - June 2019 compared to July 2017 - June 2018.
“Working with dynamic room type differentials, Duetto has allowed us to work smarter, be more nimble with pricing, and I feel gave us a competitive advantage over our competitors in the industry,” said Kanwarpreet Kanwar, Group Revenue & Distribution Director, Ovolo Group.3. Capture Last Minute Demand
Boutique owner-operator Coast Hotels operates a small portfolio of properties in the highly competitive Pacific Northwest market. Destinations such as Seattle, Bellevue and Portland have seen new supply challenging existing hotels and putting downward pressure on rate.
Shared data has helped the revenue teams be more efficient. Using Duetto’s forecasts and pricing recommendations they allow competitors to sell out first, thus embracing the ability to charge higher rates for last-minute demand.
The results: RevPAR jumped 5.7% for January - July 2018 compared to January - July 2017.
“The results don’t lie. Without spending any renovation dollars, we went from a mid-70s RevPAR Index to a high 90s and 100, purely fixed in service and using Duetto as our partner,” said Doug Rigoni, Chief Operating Office, Coast Hotels.4. Drive Direct Business
Germany-based Ruby Group was founded in 2013 with a mandate to deliver ‘Lean Luxury’. Today, the company operates eight hotels in city destinations throughout Europe.
Ruby Group has always focused on driving direct bookings and achieves 50% of all bookings through its direct channels. By being able to flex rates up and down by just one or two euros, the revenue team has been able to maximise on profitability in line with market demand.
The results: Ruby Hotels saw a 25% increase in RevPAR and an 11% gain in ADR for H2 2018 versus H2 2017.
“The key is how do you maximize RevPAR on peak demand days? Because that's when, in highly compressed markets, you do the majority of your business and that's when you win or lose,” said Michael Struck, Founder & CEO, Ruby Hotels.5. Segment To Get Ahead
In 2012, NH Hotels implemented a five-year plan to overhaul its tech stack and revenue culture to refocus on its most profitable business. Improvements included a renewed focus on traditional RevPAR, with attention paid to segmentation and pricing; the roll-out of an advanced pricing strategy, with a focus on TrevPAR (total RevPAR); and finally, a focus on creating competitive advantage.
The Results: NH Hotels saw an 8.5% uplift in RevPAR and a 4.9% increase in ADR in 2017 compared to the previous year.
“GameChanger provides us with real time transactional data with full connectivity to our CMS and PMS. It is safe, fast and reliable in 100% of our properties,” said Fernando Vives, Chief Commercial Officer, NH Hotels.