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Resort Revenue Management For 2021

November 4, 2020 | Thibault Catala, Founder and Managing Director of Catala Consulting

I have heard many people saying that revenue management doesn’t apply to resort properties due to longer lead times, seasonal demand patterns and a different type of clientele. This is absolutely not true. Hotels that are leveraging revenue management correctly are driving higher market share and revenue performance than their competitors.

The principles of revenue management can be applied to many different hospitality businesses, they just need to be adapted to the local market and the trends. Hotels with longer lead times will have maybe less rate dynamicity in short booking windows than busy city centre hotels. However, they will need strong revenue managers and systems to accurately predict and keep an eye out for new patterns occurring months or even years in advance.

This year has been upset by COVID-19 and the many travel restrictions that have been enforced as a result. This has changed travel behaviors and will continue to change patterns for the months to come. However, hotels can still plan ahead. Here are my top three tips for preparing for 2021.

Leverage Winter Marketing Opportunities

With the growing popularity of online shopping we can expect this trend to continue being present until next year. It is important that hotels leverage as much as possible the coming opportunities in order to create a strong base for next year and yield up when demand returns (hopefully sooner than later).

The first opportunity is Black Friday and Cyber Monday, very popular in the US as well in other European countries. Usually the best campaigns are offering heavy discounts (at least 25% to 30% versus public rates).

The second one is the Christmas period and the opportunity to sell gift cards valid for 2021. This shouldn’t be focused on discounted rates rather created around a nice package and some added value around the resort’s amenities. With everyone stuck at home, a gift card for a stay in a resort in 2021 to pamper yourself (massage, spa, tennis, golf, …) would be appreciated.

Lastly, January and post-Christmas period is the perfect time to start pushing some high discount packages and promotions for the coming low demand period of Q1 as well as continuously creating a base for the rest of the season.

Food and Beverage Optimization

Food and beverage revenue is no longer just a small ancillary revenue. Leveraged correctly can drive strong profitability as well as an increase in guests satisfaction. With limited demand (again due to the current situation), F&B revenue management is one way to boost your bottom line without any increase in marketing expenses and by only using the current demand. Your next season needs to be prepared today so consider:

  •       Analyzing your market and competition
  •       Perform a menu engineering with all your menus
  •       Maximize the capacity of your outlets (while maintaining social distancing)
  •       Optimize your table turnover (meal durations and reservations) – using RevPASH
  •       Train your staff on upselling

We have seen resorts starting from scratch with F&B revenue management and we have seen them increase their profitability by 5-10% in just a few months. If you didn’t start yet I highly recommend that you give it a try.

Focus On Productivity

With the limited demand out there, it is more important than ever to start shifting our attention from the revenue to the bottom line. A lot of things have changed in 2020, and Revenue Managers could now become Profitability Managers where instead of optimizing RevPAR they now optimize GOPPAR.

For a resort hotel owner, this also means understanding better the cost structure of the hotel operations. What is my breakeven ADR and occupancy? How many full-time employees do I need and how many part-time, contract basis staff can I take if the occupancy increases?

We have seen some hotels getting ready to have a leaner team as a base then adjust accordingly with variables if the occupancy/demand increases. Consider outsourcing some key positions to give you more flexibility and reduced costs. The Outsourced Revenue Management model along with a strong revenue management system like Duetto is something very popular nowadays.

Thibault Catala is the Founder and Managing Director of Catala Consulting, a revenue management consulting firm based in London. Discover more here: https://catalaconsulting.co.uk

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