As we waved goodbye to the year that was 2020, many of us were probably guilty of thinking the arrival of 2021 was going to provide some sort of magical end to the ongoing stresses of running an accommodation business during a global pandemic. So if you woke on the first day of 2021 with a mixed feeling of dread and disdain at the prospect of having to fight through another year of tight financial margins and personal sacrifice, you are certainly not alone.
Although there is a far brighter outlook for 2021, there is still a huge amount of market uncertainty leaving many hotels, motels and holiday parks at a loss on the best pricing decisions to make moving forward. Room rates seem to be the one thing most small to medium sized properties consistently get wrong at present. Whether it be through not changing rates frequently enough, or dropping prices unnecessarily low, poor rate management is making the lives of small to medium business owners harder than it needs to be.
If any of the above resonates with you, or you can happily admit that you don’t know quite as much about pricing rooms as you would like, then you will be glad to know that there are a range of tools out there that take the guesswork out of rate management. The rise in popularity of Automated Revenue Management technology means that small and medium accommodation providers can now gain access to all the benefits of a full time Revenue Manager, at a fraction of the cost.
Keep reading to learn 5 reasons why you should implement an Automated Revenue Management system this year from our Customer Success legend Brook Chamberlain.
One of the main rate management trends seen since the Covid-19 pandemic began is the tendency for accommodation providers to drop prices in order to capture a larger share of their market in periods of low demand. Although this may seem like a good strategy to increase occupancy percentages in theory, it often leads to a price war where all accommodation providers in your market suffer. Because an automated revenue management system regularly looks at changes in market demand compared to your own occupancy, you can avoid unnecessarily selling rooms at rock bottom prices.
Will my busy season still be busy? When will international borders open? Will there be another lockdown? These are all considerations that have probably crossed your mind when trying to set your pricing for the next year. Because most tourism and accommodation markets will continue to be unpredictable in 2021 it is important to make pricing decisions that are reactive to fluctuating changes in demand. An automated revenue management system will check the market against your own occupancy to detect any significant changes in market demand roughly every 2 hours. Prices will be adjusted instantly if required.
The problem with dropping prices to boost occupancy is that it often leads to far higher variable costs, and significantly lower profits. Therefore it is important to strike the right balance between occupancy percentages and your average daily rate. In a lot of cases being fully booked means you haven’t charged enough for your rooms and will end up having to spend significantly more on cleaning and restocking rooms. Automated revenue management systems work to optimise profits, which means trying to get the highest possible rate for each room, even if that means having a slightly lower occupancy percentage.
An automated revenue management system is designed to be just that - automated. This means setting the system up, letting it run and barely needing to touch it again. Rates are based on a minimum, maximum and median prices which act as the hard limits of the rates generated. Competitors are selected in your area that have active revenue managers working for them so you can be confident that changes in market demand are based around real human decisions. This leaves you free to spend more time off site with the confidence that your rates are in safe hands.
Ultimately the objective of any revenue management system is to make your property more money, and it is no secret that an effective dynamic pricing model is the best way to maximise occupancy and revenue percentages. Here at Seekom, we generally see a 10-15% boost in overall revenue for new properties who move from a seasonal ‘set and forget’ pricing strategy, to the RoomPriceGenie automated revenue management system we integrate with. This sort of revenue gain has been the make or break for some properties who have been on the cusp of going under due to the covid-19 pandemic.
Seekom iBex are proud partners of RoomPriceGenie and offer a full 2 way integration to their automated revenue management system. If you are interested in learning more about RoomPriceGenie you can visit their website here at roompricegenie.com. If you are interested in trialing the system, we offer a free one month obligation free trial. Simply send us an email at email@example.com to begin the process.
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