Revenue Management Strategy, Starts With the Right Product

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We have all heard the old motto of Revenue Management:

• Selling the Right Room
• To the Right Guest
• On the Right Night
• At the Right Rate
• Through the Right Channel

While there has been some changes over the years the fundamentals remain the same. And if you have read a few of my posts you know how strongly I believe in getting the fundamental right.

When preparing or assessing a revenue management strategy always start with the product. Without a product we would have nothing to create and manage demand for; which is why I am always amazed how little attention is paid to clearly articulation the value proposition of the product.

Here are the 8 rules I’ve previously reviewed when setting room types:

• Rule #1: Start with the assumption you have 1 room type.
• Rule #2: Add new room types only if you can clearly describe the value difference from your base room product.
• Rule #3: A room type can be defined by view (make it good), size (has to be noticeable to the eye) or true product difference in the FF&E.
• Rule #4: A room type is not a bed type, smoking preference or floor number.
• Rule #5: Write the description of the product for the consumer not for you.
• Rule #6: Have strong digital content to support the sale.
• Rule #7: Less is more; fewer room types with strong value will deliver higher RevPAR.
• Rule #8: Measure the ADR, Occupancy & RevPAR for each room type; are you receiving the expected value difference.

Once you work through the 8 rules focus on your online presentation on your own website; it is critically important if you hope to sell all your product for the value you believe each is worth; to help you follow these three guidelines:

• Invest in imagery of your product; a picture is truly worth a thousand words.
• Clearly articulate the value proposition of each room type  in consumer friendly terms.
• If you have premium products at a higher rate identify the three things that make it worth the extra dollar value

Spend the time on your product it will make defining the rest of your revenue management strategy much easier.

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