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Revenue Management Should Mean Planning and Action at Every Type and Size Hotel (Part 2 of 2)

publication date: Nov 9, 2011
author/source: Dr. John Hogan CHA CHE CMHS


By Dr. John Hogan, CHE CHA CMHS

Revenue Management Should Mean Planning and Action at Every Type and Size Hotel  (Part 2 of 2) 

 A Plan for All Seasons  11.9.11

Maximizing Revenues does not automatically mean raising prices, but means reacting to the market, to your competitors to some degree and to the uniqueness of your hotel’s clientele.

Most markets have some kind of seasonal demand. When it is off-season, some rates naturally tend to drop due to lower demand. A proven practice even in off-season is to maintain some high rates because rate alone is not the only driver of business to our hotels. Customers choose hotels partially because of price, but also because of location, brand preference, previous positive experience or simply availability.

Maintaining higher rack rates also allows you the option of some discounting percentages from the higher rates, achieving better REVPAR and operating results.    Part 1 of this 2 part short series provided  tips to maximize revenues in periods of lower demand or weaker shoulder seasons.

Part 2 of this series looks at  High and Excess Demand Strategies

·         High Demand Tactics: (use when you expect 85% occupancy or higher)

  1.    Close deep discounts (honoring mandatory discounts such as AAA and AARP, discount from the rack rate), but recognize a Manager’s Special at a 20% discount could be a good business decision to fill those last 5 rooms
  2.     Use minimum length of stay restrictions carefully
  3.  Reduce group allocations if not picked up according to agreements
  4.  Reduce or completely eliminate 4 or 6 p.m. holds
  5.  Apply stricter guarantee/cancellation policies, i.e. accept only credit card guaranteed reservations with 24- or 48-hour cancellation requirements
  6.  Raise rates to be consistent with your competition
  7.  Evaluate and possibly raise rates for all packages, or limit their availability on certain days
  8.  Save suites/executive room types for full price
  9.  Don’t automatically eliminate sell-through reservations, as a multi-night stay that coincides with high demand night could net a week long stay.  Look carefully at recent history of no-shows and cancellations
10.  Double check all corporate and credit card guarantees - be certain to fill all those rooms

·         Excess Demand Tactics: (use when demand exceeds availability)

  1. · Put in all of the restrictions as you would for high demand
  2.   Be sure you know what is causing demand, e.g.: a one-day vs. a three-day special event
  3.    Apply minimum length of stay restrictions
  4.  Use these tactics during forecasted sold-out days
  5. Consider weekend stay-overs and shoulder nights

·         Follow up on all Situations

  1.    Continually monitor your PMS and CRO statistics
  2.  If you part of a chain or brand , work with your Reservations and Revenue Representatives at the CRO - they are your experts and can greatly assist you with their experience
  3.   Ensure appropriate restrictions are consistent between all channels of distribution (GDS, CRO, PMS, OTA)
  4.  Review and revise strategies
  5.  Communicate strategies to the Front Desk.

Think Tank  Question  

We provide questions to stimulate discussion about the way we do business. There is not necessarily only one "correct" answer - the reason for this section of the column is to promote an awareness of how we might all improve our operations.

Topic: Maximizing Revenues

1. Does someone with responsibility at your hotel specifically review the next 90 to 180 days at least once a week? If so, do they identify trends and take steps to maximize revenues? If not, why not?

2. How often is the marketing plan (or sales action plan) reviewed? Who is charged with this task?

3. When was the last time the topic of "sales" and "maximizing revenues" was presented to the entire hotel staff? It is the best interest of everyone to be thinking "sales" and staff often have GREAT ideas, as they are close to the customers daily.


Hospitality Tip of the Week™: Focus on Planning AND Action

“People blame their environment. There is only one person to blame -- and only one -- themselves.”

Robert Collier ( 1885 – 1950) author of self help, and New Thought metaphysical books in the 20th century.


This is especially true in paying attention to trends in demand and adjusting pricing in hotel revenue management.
At least 25% of our weekly tips focus on sales and marketing. 

We must remember that we must focus on delivering the right services to the right customer at the right price, which means attentiveness to sales and marketing efforts are essential.

   Success does not come by accident or chance.        

 Contact us for assistanceJohn.Hogan@HospitalityEducators.com or 602-799-5375  


HospitalityEducators.com was created to help hospitality businesses address problems via a training and information resource site to help you increase your Hotel's revenue, market share and profitability.  With more than 950 pages of tips, guides, best practices, strategies, plans, budgets, videos and resources, HospitalityEducators.com has become the #1 independent website for  hotel owners and managers.  This site can help you solve your problems now!      Read More 

Special Pricing For a Limited Time for Readers of this column
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KEYS TO SUCCESS  is the umbrella title for my 201-2012 programs, hospitality services and columns. This year’s writings focus on a variety of topics for hotel owners, managers and professionals including both my "HOW TO" articles, HOSPITALITY CONVERSATIONS™, Lessons from the Field™, Hotel Common Sense™ , THE P-A-R PRINCIPLE  and Principles for Success.

Feel free to share an idea for a column at john.hogan@hospitalityeducators.com   anytime or contact me regarding consulting, customized workshops, speaking engagements … And remember – we all need a regular dose of common sense.


     John Hogan, Certified Hospitality Educator (CHE), Certified Hotel  Administrator (CHA),

Certified Master Hotel Supplier (CMHS)


John Hogan is a successful hospitality executive, educator, author and consultant and is a frequent keynote speaker and seminar leader at many hospitality industry events. He is Co-Founder of www.HospitalityEducators.com , which delivers focused and affordable counsel in solving specific challenges facing hospitality today.

Consulting Expertise and Research Interest

1.    Turn-around and revenue management

2.    Professional Development for the Organization and the Individual

3.    Customer Service

4.      Making Cultural Diversity Real

5.    Developing Academic Hospitality programs

6.    Medical Lodging Consulting

7.    Sales Management and training


If you need assistance in any of these areas or simply an independent review or opinion on a hospitality challenge, contact me directly for a prompt response and very personalized attention.

www.HospitalityEducators.com  is a membership site offering a wide range of information, forms, best practices and ideas designed to help individual hoteliers and hospitality businesses improve their market penetration, deliver service excellence and increase their profitability.


Your Hospitality Resource for the Hotel Owner, Innkeeper, Manager and Hospitality Industry Associations

CONTACT        John Hogan, CHE CHA CMHS

United States - Phoenix, Phone: 602-799-5375

www.hoganhospitality.com / Email: info@hoganhospitality.com


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