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Hotel Revenue Management And Marketing: A Killer Combo To Generate Revenue!


Hotel Revenue Management And Hotel Marketing.
Hotel Revenue Management And Marketing: A Killer Combo To Generate Revenue!

People who are outsiders to the hotel industry assume that a hotel has only departments - housekeeping, front office and FNB. However, open closer inspection, one realises hotels have additional departments. They are hotel revenue management and marketing.


Without these two departments, one cannot run hotels. Other departments depend upon revenue and marketing. If a hotel does not market itself well, it does not earn revenue. If it does not earn revenue, what will be the use of housekeeping, front office and FNB if no guests are coming!


Like all departments in the hospitality industry, hotel revenue and marketing department needs to go hand in hand.


Hotel Revenue Management: What Is It And Why It Matters

revenue management.
Revenue Management is the backbone for hotels.

Every hotel needs revenue to run and hotel revenue management is essential if you want to generate more revenue. Before we understand hotel revenue management, we will need to understand yield management.


Yield Management


Yield management involves analyzing, forecasting and anticipating customers' demand to earn more revenue through hotel rooms. It is considered to be a subset of revenue management. It involves selling the right room to the price customer at the right price.


Yield management focuses on fixed inventory which is supposed to sell within a limited period. The hospitality industry involves hotel rooms. It is also more tactical since revenue managers need to change room rates, cancellation policy and offerings based on demand. The focus here is to maximise revenue from hotels within a specific period.


Hotel Revenue Management


Hotel Revenue management, on the other hand, is a broader concept. It is the practice of predicting and forecasting customer behaviour and then optimizing pricing, product

availability and distribution to generate maximum revenue from your inventory. This involves data collection and analytics to make calculated predictions and decisions.


Revenue Management requires a more strategic approach since one is dealing with inventory other than rooms. It includes restaurant sales, bar sales, spa bookings, gym bookings, amenities with extra charge etc.


It involves the usage of amenities in the hotel rooms as well. Since these factors are interrelated to one another, a hotel revenue manager has to take a long term view of the costs associated with them.


Hotel revenue management is also more strategic in approach, for it has to give consideration to different elements of the hotel business and use key performance indicators like Revenue per Guest, Revenue Per Room, Gross Operating Profit Per Available Room.


Yield management is considered a part of revenue management, while revenue management is broader than yield management. Both need one another - without yield management, you will not be able to generate revenue from room inventory and without revenue management, yield management will not be effective.


Hotel Marketing: Why Is It Important

hotel room
The room may look tempting. However, unless you market it - you will not gain audience.

I am sure many of you’ll are familiar with the concept of marketing. Marketing involves activities that are conducted to promote the buying or selling of goods and services. It involves delivering value to the target group by offering a great product, at the right price, at the right place with the help of the right promotions.


Hotels need to engage in marketing to sell their products and services to gain customers from their target audience. Hotels now engage in advertising, public relations, promotions and offer to gain customers.


Nowadays, the internet and social media have emerged as an integral part of marketing - especially Facebook, Instagram and Google Ads. Maintaining and promoting a hotel’s website is also an integral part of marketing.


Since the hospitality industry is a service, it involves the 7 Ps - Product, Place, People, Price, Promotion, Process and Physical Evidence. All these Ps of the marketing mix are essential for hotels, without which hotels will not be able to fulfil their objectives. And what is the main objective of the hotel? To generate revenue! This is where hotel revenue management comes into play.


Hotel Revenue Management And Hotel Marketing: The Two Sides Of The Same Coin


To generate hotel revenue, you need to help of marketing. Without proper marketing, you will not be able to generate adequate revenue for the hotels. Revenue managers need to allocate rooms to various channels and sell product inventory to gain maximum revenue.


The marketing department needs to promote the rooms and product inventory to gain customers. Both these departments need to work together to play off each other strengths and support one another.


For example, a marketer needs to promote the rooms and amenities of an emerging hotel. It is the revenue manager that can give insights into the various parameters of the hotel business such as demand forecasting, room rates, the rates of competitors, the occupancy rate and many others. With these, the hotel marketer can formulate a marketing campaign.


Hotel revenue managers also need extensive data to forecast demand, and set room rates accordingly. Marketers can use guest segmentation - the process of dividing hotel guests into different groups. They can then pass this information to the revenue managers who can adjust the prices accordingly.


The Hotel Marketing team can also provide information regarding the popularity of different platforms like social media, OTAs, hotel websites etc. In turn, the revenue department can provide marketers with information regarding revenue-generating platforms and occupancy rates.


To Conclude


Hotel revenue managers and hotel marketers need each other. Revenue Managers focus on generating revenue for hotels, while marketers look for ways to increase the reach of hotels. More reach means more revenue. Both have converging functions and many times, it's always better to have the same people handling marketing and revenue.


Selling room inventories, product inventories and amenities need marketing. Efficient marketing can only happen with the help of data and analytics, which are required for revenue managers and marketers for demand forecasting and campaigning respectively.


Bigfoot Hospitality is a hotel revenue management and hotel marketing company that helps you with hotel management needs. Read our blogs to know more about the hospitality industry and its trends.