Free book: 49 Tips to Supercharge Your Revenue
Keeping up with all the latest developments in hotel technology and marketing can be tough, especially for independent hotels, with less time and resources. Fortunately, at RoomPriceGenie we’ve done the work for you and, using the latest research, listed 49 of the biggest ways you can increase your revenue without a large budget.
or
"An excellent introduction and reference for revenue managers and small hoteliers
For its length, I have found few resources that better orient the revenue manager or small hotelier toward improving their business’s performance. I would highly recommend this short read, as it is full of good ideas that, while short, are relatively comprehensive in their scope.”
Sawtooth Lodge, Idaho
49 tips to supercharge
your revenue
start reading below
Introduction
You are now on the path to prosperity
Dear Reader,
First, congratulations on getting this far! Reading this book shows you are interested in improving your business and are ready to take the important steps to make your business goals a reality.
Post-COVID, in our highly dynamic, inflation-impacted travel industry, this attitude is especially important because we can no longer rely on the strategies or processes that we have used in the past to be successful. Historical data is useless after three years of COVID, so today, you need to embrace new ideas and technologies to access the data that will help you reach your ultimate business goal – profitability – more quickly.
How is change impacting the hotel industry?
When I traveled for a year between high school and university 25+ years ago, my hotel selection was directed completely by Lonely Planet references, as I could only choose from the small selection of options available in the Guide.
Today, I can find and book almost every single hotel – large or small – from my phone, using one of the many online travel agencies (OTAs). As we all know, the OTAs have huge marketing budgets and, as such, drive potential guests away from your website to book via their sites, which drastically undercuts your profitability due to the high cost of acquisition.
There’s always hope, even for hotels who don’t have millions of advertising dollars to spare (a.k.a. 99% of them!). Many operational technologies have been designed to help hotels of all types and sizes drive bookings through their direct channel – an absolute game-changer in today’s highly competitive online marketplace. Great news, right?
As you read that, you’re probably asking yourself: if this advanced technology is now available to all hotels, how can I differentiate my hotel from the competition to drive more direct bookings?
Standing out from the crowd 101
You are now holding in your (digital) hands the answer to this very important question; this book will teach you how to stand out from the crowd online, ensuring your property’s ongoing profitability, no matter how the market changes.
This book will take the average reader about an hour to read but I’m confident that the practical, actionable tips it offers will make a significant difference in your bottom line today.
The book is divided into sections, covering different areas of your business, including:
Section 1: OTA Best Practices
Section 2: Pricing
Section 3: Selling on Value, not Price
Section 4: Review Scores & How to Increase Them
Section 5: Your Website & Other Sales Channels
Section 6: Other Business Improvements
If you are still looking for more tips on how to improve your business after finishing the book, subscribe to the RoomPriceGenie blog, where we share many other helpful resources that will also help boost your profitability.
About Me
I am Ari Andricopoulos, CEO and Founder of RoomPriceGenie, developers of the leading revenue management system for smaller hotels. Nice to meet you!
Before we get started, I wanted to introduce myself and share with you how my family influenced the development of RoomPriceGenie’s solution…
Since I was a child, my father and his partner have run a Bed and Breakfast in the Isle of Wight, and I learned everything that I ever needed to know about the intricacies of running a small property from them. I saw how much difficulty they had with their pricing, and as I learned about how big, branded properties managed their pricing (a.k.a. revenue management), I realised there was a huge hole in the market – and I decided to do something about it.
Using the information that I learned from my family, I designed RoomPriceGenie’s revenue management system to help smaller properties cope with the very specific challenges that they face in pricing their rooms competitively to earn the highest occupancy, ADR and RevPAR, no matter how the market changes.
Every day, I work with hoteliers (like you!) who are looking for ways to drive more direct bookings, streamline their operations and boost their profitability, and I’ve put all my years of knowledge into this book, so that you can do the same for your property.
Find out more about me and RoomPriceGenie’s revenue management system – which can boost your RevPAR by 20% (on average), while increasing both occupancy and ADR – at RoomPriceGenie.com.
This tip is our first for a reason: the only way your property can reach and sustain ongoing profitability in today’s uncertain market is by implementing the right technology to optimize your operational processes. It’s an important truth you must hear and understand today
because it will make the difference between your hotel’s success and its failure (preferably, the former!).
First, it is essential for all hotels, no matter what size or type, to implement a cloud-based property management system (PMS) to manage their bookings effectively. You will also need a channel manager, which updates your prices and inventory on the OTAs, and a booking engine, which enables guests to book directly through your website.
These are the essential technologies that ALL hotels need today to stay competitive. If you still use Excel spreadsheets or your database, switch to a flexible, cloud-based property management system ASAP. Your bottom line depends on it!
Why do you need these basics?
As I mentioned earlier, we can no longer depend on historical data as a basis for our pricing, and the operational processes that have worked for us in the past, no longer do.
Can your current “system” send your inventory to Booking.com, Expedia, Hotels.com and your website with a few clicks of a button?
Does it automatically adjust the number of rooms available in your PMS when a guest books a room through an OTA?
If your current tech stack cannot do this, you are underutilizing the full potential of the OTAs and missing out on potential bookings and revenue. In addition, you are also giving yourself time-consuming, manual data entry and administrative work while increasing the risk that human error could negatively impact your bottom line.
While I understand that it can be intimidating or even painful to make a big operational switch, the sooner you make the switch, the sooner you will start reaping the incredible benefits technology offers.
Integration
One of the most important things to remember when shopping for your tech stack is whether your systems can be connected via two-way integrations. Having a two-way integration means that the solutions can automatically share data across the various platforms, both forwards (i.e., inventory and pricing are sent from the PMS to your channel manager) and backwards (i.e., when bookings are made through the online channels updates are sent to your PMS to adjust your inventory).
Here’s an example of the issues that can arise if your solutions aren’t integrated: if you have a non-integrated PMS, channel manager and booking engine, you will need to manually add every online reservation into your PMS and then manually update your inventory across all the online channels, to avoid overbooking your rooms.
Beyond eliminating the hugely time-consuming process of manual updates, integration between your tech stack will also eliminate the inherent risk of human error; in other words, integration between your systems saves you both time and money!
But why change what isn’t broken?
Changing your internal processes may be challenging, but you will eventually need to do so because technology is the only way to ensure your property remains competitive online in today’s highly variable market conditions. Soon, all your competitors will be using these operational solutions, leaving your hotel in the dust, so the sooner you implement these solutions, the better!
Section One:
Online Travel Agencies (OTA)
Online travel agencies (OTAs) – sites like Booking.com, Expedia, etc. – are a great example of how technology is being used to sweep aside smaller, independent hotels.
As you probably already know, the OTAs are expensive, as they typically charge between 15–25% of the value on each booking (in some cases, income including VAT). OTAs used to have a rate parity clause built into their contracts with hotels, which said you couldn’t offer your room more affordably on your website than on their sites; fortunately, strict rate parity clauses are no longer enforceable by law, although the OTAs may still penalize hotels that don’t keep their rates in parity.
When working with the OTAs, there are two opposing strategies that hotels could take to maximize bookings and revenue, both with positives and negatives:
1. Keep the OTAs happy by keeping your direct rates at parity with the rates offered through the site. This will increase your acquisition cost but get you a higher-ranking listing, which could increase the number of bookings you secure through the channel. (More on listing rankings later).
2. Offer a lower rate through your website to encourage people to book directly and eliminate the acquisition cost; however, you may find that your OTA listing will get less visibility and traffic.
Neither is the “right” strategy; it depends on your property’s needs, size, business goals, challenges, etc., but we wanted to provide you with complete information so you can develop a well-informed OTA strategy. Despite the high costs and restrictive conditions, OTAs offer hotel owners excellent service–if they take full advantage of them.
The huge benefits of the otas
The two main advantages of OTAs are their “reach” and the “billboard effect:”
Reach
Using the OTAs, your property is visible to thousands of new potential guests that you would not have otherwise attracted (a.k.a., higher reach); of course, it makes sense that the increased visibility will translate into increased bookings and revenue.
And don’t forget… once a guest has found you and made an initial booking through Expedia, you can turn that guest into a repeat customer who will, in the future, book directly through your website.
The Billboard Effect
The billboard effect refers to the fact that the OTAs provide excellent advertising and exposure for your hotel; using this free advertising, your property is being seen by potential guests, some of whom would prefer to book directly because they know they can often get a better deal. As such, these potential guests will use the OTAs as a search engine to find the properties in a
destination they are most interested in and then click through to book with their chosen hotel directly.
In short, the billboard effect refers to the fact that the OTAs are giving your property free advertising (that translates into $), so why not take them up on that generous offer?!
So, how can you best take advantage of the opportunities offered by the OTAs?
Website visitors are lazy; they don’t want to spend hours reviewing hotel search results pages. Knowing that you want your property to be in the top 15 hotels on the first page on all OTAs search results, how do you make that happen?
fact
“75% of traffic goes to the first 15 hotels on the Expedia results page.” – Read more
There are multiple ways to increase your ranking on the OTAs’ search engine results page (SERP), including:
Advertising
One way to ensure that your property is displayed prominently on the first page of the search results is to pay to become a “top pick”. The cost of acquisition will be around 5% more, but it can be a worthwhile investment if it results in 20% more bookings and your property isn’t at 100% occupancy. You can’t guarantee the ROI on this type of advertising for all types of properties, so it’s crucial that you evaluate your ROI on an ongoing basis during the trial phase of your advertising campaign, before deciding to pursue this
strategy long-term.
Organic Search
There are also organic (a.k.a. unpaid) ways to boost your page ranking (without advertising). The OTAs want to earn the most commission-related revenue possible; therefore, it is in their best interest to put the hotels with the highest conversion rate in the highest page position. (FYI – The conversion rate is calculated by dividing the number of times your hotel is booked against the number of times it is clicked on, and it is a metric that the OTAs use to determine the efficacy – and revenue potential – of your listing.)
fact
“According to Expedia, if your OTA property profile has high-quality content that is regularly updated, you will rank higher, and, as a result, you will get more bookings.”
Unfortunately, it’s not as simple as updating your content and pricing: the OTAs also take a longer-term view in determining which hotels to feature. They want hotels to offer as much booking capacity as possible on their website, so the more inventory you give them, the higher your property’s position on the search engine results page will be.
As such, if you are not busy on a given day/date range, we suggest offering all your rooms to the OTAs to improve your page ranking. There is an exception to this rule: if you are a city hotel in a large tourist city, this strategy wouldn’t be the best for you.
Here’s why: if you offer too much of your inventory at a low price (as a strategy to increase your page ranking and occupancy) and then a last-minute event is announced, you risk selling all your rooms too cheaply (with a high acquisition cost). If you are a city hotel in a large tourist destination, we recommend balancing your inventory on the OTAs and the direct channel to reduce your risk.
The OTAs constantly test to see what type of content has the highest conversion rate; because of this data, they know what content will attract guests.
I’ll give you one guess as to which type of content converts the most bookings… the answer is high resolution, emotionally engaging photos – and lots of them! For your OTA listing, the ROI on professional photos is HUGE, and I highly recommend getting them
done ASAP.
fact
“60% of travellers rank bathroom images as important, so ensure your photos are taken from the best possible angle and show as many details are possible”
High-quality, professional photos become even more important as your room rates become more expensive. Budget hotels’ listings can list practical features, but higher-priced luxury hotels must have many gorgeous photos to demonstrate how luxurious the property is
to justify the price point. Regardless of your property size or type, professional images will help boost your property’s reputation and ranking online, so it’s a win/win.
To summarize, the more high-quality photos you have, the more rooms you sell.
People want to know precisely what they will be getting if they book with your property. Tests done by the OTAs show that – time and time again – rich, descriptive, factual text sells hotel rooms; flowery language doesn’t. The text should be sales-oriented, focusing on the key benefits that the guest will experience by staying with your property, and should be written in simple language. If you have the budget, hire a copywriter to draft or copy-edit your text, to ensure that it is as clear and factual as possible, while appealing to potential guests.
A standard error hoteliers make is listing only some of the features and amenities offered by their hotels in their OTA listing. This often happens because the hoteliers don’t know which matters to potential guests. There’s a
straightforward way to determine which amenities and features guests love most at your property: go through your online reviews to see which are most commonly complimented. Once you know which features and amenities are your guests’ favourites, highlight the most popular ones on your OTA listings.
If guests often compliment your property’s location, your listing should say that guests love it because it is in one of the best areas of town. Describe what guests can do nearby and how close your property is to your destination’s most popular tourist attractions.
If previous guests compliment your garden or your pool, describe it and mention how popular it is. If you have strong, free Wi-Fi, mention it in your listing. If you have a safe in the room, mention it in your listing.
In short, the more amenities that you mention in your listing, the more likely potential guests will choose to book with your property over the competition.
The basic rule to manage OTA availability is this: give as much availability as possible to the OTAs if you’re not likely to be fully booked (as they reward you for sharing your inventory), but limit availability when OTA sales will limit your direct sales.
You may wish to restrict OTA supply during busy seasons to sell more of your rooms to customers through direct channels (i.e., phone or website), decreasing the acquisition cost and boosting your profit.
The optimal way of managing room demand is through price. If your property is so busy that you will be at 100% occupancy without the OTAs, I recommend increasing your room rate to increase ADR and RevPAR.
The exception to this “rule” would be when demand is very high for a concert or other local event; in this case, you wouldn’t want to charge too much because you might discourage your regular guests from booking with you. In this case, you can control demand by other means, such as adding a minimum stay requirement
or by only selling directly. Both increase your revenue without raising the price. (Keep reading for more pricing and, supply and demand-related tips!)
In short, if you set your pricing right, there is no reason not to list your rooms on the OTAs, except under exceptional circumstances.
Maintaining your presence on more OTAs requires more work, including setting up your profile and updating your content and photos on all the sites whenever anything changes at your hotel. That’s why we suggest that you include a channel manager in your basic tech stack; your channel manager will make it relatively straightforward, on a day-to-day basis, to be listed on as many channels as you’d like, without causing extra work or added headaches.
As we discussed above, being on the OTAs gives you additional reach and the benefit of the billboard effect; therefore, the more OTAs you are listed on, the more people who will see your rooms and the better chance that you will have to convert the sale (either through the OTAs or direct). Evaluate each channel’s performance on an ongoing basis. If you find that you aren’t converting bookings on a certain OTA, you can remove your inventory from the site and re-allocate it to a more profitable channel.
You should be making your rooms available at least twelve months in advance across all online channels for two main reasons:
1. The more availability you allocate to the OTAs, the higher your property will be ranked in the search results, both in the short- and long term.
2. If your property is not listed when potential guests want to book, you won’t get any bookings.
Even if you get very few reservations made 11 months in advance, there is still no harm in being available to accept bookings.
OTA statistics show that hoteliers who respond to reviews, especially negative reviews, get more bookings, so it is in your best interest to respond to all your online reviews across all your online booking channels.
This comes with a common-sense caveat: make sure you positively respond to negative reviews, accept criticism and share what you will do to address/solve the problem. Don’t be defensive, and never attack the guest.
Responding to all reviews gives potential guests the impression that they will be better cared for, and in reading non-defensive responses to negative reviews, the impact of the negative review on their decision making is softened or even eliminated.
fact
“According to Revinate, 91% of travelers say that responding to reviews improves their impressions of your hotel.” – Read more
Section Two:
Getting your Pricing Right
I cannot overstate how important it is to get your pricing right. RoomPriceGenie was created specifically to help hotels improve their pricing based on current market demand. We help you set the right price, at the right time, for the right customer, to ensure you secure the booking.
Because fixed costs in the hotel industry are so large, almost all of that would be profit.
What would you do with that extra 20%?
You could afford to close for longer during the winter season or do the renovations you’ve been wanting to do in your hotel.
All of this is possible if you are getting your pricing right – and the only way to do that in today’s highly competitive market is to use automated pricing technology.
This might sound like a “get rich quick” scheme, but it is true; if you do not update your rates according to demand daily, you leave money on the table. The best way to update your rates daily, without extra work, is technology.
Here’s why… When making travel plans, most people choose the location first and then choose a hotel within that destination, which means that the number of people visiting your area is reasonably fixed.
But how do they decide which hotel to book?
Price makes a big difference for potential guests in deciding which hotel to book; even more importantly, potential guests are looking for the room that offers the best value (which also meets their booking criterion).
One signifier of value is whether the hotel is offering a discounted price; hotels that discount their prices are highlighted on the OTAs’ search results page, making it more likely that potential guests will see your listing and book with your property.
Let’s look at an example:
Woodlands Luxury Spa – €150 €75/night
Does this discounted room rate look as if it provides more value than if the room was originally listed at €75/ night? It does to potential guests because they now believe that the room originally had a higher price (and, therefore, more perceived value); as such, they are more motivated to book the room because of the discount.
The better the value your property offers – a combination of price and what guests will get for it – the more likely people will book your hotel.
fact
“According to Sullivan and 20|20 Research, value for money is a top criterion when guests choose a hotel.”
Larger hotels know this, so they hire full-time revenue managers and use expensive software to ensure their prices are right, every night.
Great news: you can do the same – without hiring a revenue manager or buying expensive pricing technology that offers features you would never use – at a fraction of the cost using RoomPriceGenie’s revenue management system. Learn more about our revenue management system, which was designed specifically for the needs of independent hoteliers, at RoomPriceGenie.com.
If you do decide to DIY your pricing, the following tips will show you how to get started.
Research shows that hotels that price their rooms higher than the competition tend to make more profit overall in both good and bad times.
That means hotels charging too little could be losing valuable bookings. You must remain aware of changes in supply and demand in your destination and update your prices accordingly. That being said, always keep it in the back of your mind that, on average, you are probably charging too little – so if you tend to fill up your rooms early, try increasing your rates and see what happens. You may be surprised to find that your bottom line increases as well!
As mentioned in Tip 10, if your occupancy is lower than it should be, you are likely charging too much. If you are at a higher occupancy level than expected, you may be charging less than the “fair” price; in this case, you will need to reduce your price to slightly below the “fair” price to ensure that you sell more rooms in the time remaining (as a hotel room is a perishable item).
If you change your prices regularly, you will get an approximate feel for how much a change in price affects the demand for your hotel; this factor, in economics, is called the ‘price elasticity of demand’. The more elastic the demand is, the more bookings you’ll get if you decrease your prices.
Won’t guests get upset if I implement dynamic pricing, which fluctuates as the market changes?
In May 2023, ZHAW University conducted a study of hotels that implemented dynamic pricing to evaluate the effectiveness and impact of RoomPriceGenie. The study showed that, while initially, many hotels were afraid of using dynamic pricing because they were worried about guests’ responses to the change in their pricing strategy, they saw that guests were able to adapt and, generally, would support the change. Read the full study here.
While it is possible, in very busy times, to charge more than normal for your hotel rooms and still hit 100% occupancy, this isn’t always a good idea.
As the ZHAW study showed, consumers are very comfortable with hotels changing their prices within a reasonable range. Everyone expects to pay more during school holidays and peak tourist season; however, if you price your rooms outside of what consumers consider reasonable, potential customers could become upset. From a behavioral economics viewpoint, you could say that this practice violates their idea of what is “fair”. Usually, customers see this behavior as “price gouging” and seek to punish the behavior, meaning that they will not book with you.
In some cases, although customers may pay a lot for a room out of necessity, their idea of value depends on the price. If they pay a very high price, their satisfaction and, importantly, their review score will be lower if the experience doesn’t live up to the expected value. Ideally, you should do everything possible to prevent your guests from feeling they got bad value because that will significantly impact your property’s reputation, especially over time.
There is an exception to this rule: if you are a hotel located near a stadium where a major sporting event is happening (or any other major event), you can get away with charging thousands for your rooms during the event. In this case, you don’t expect guests to return anyway, so you can get away with it without damaging your reputation.
As a general guideline, assuming you have reasonably high repeat business and no huge events taking place in your destination, I would set your maximum room rate at 50-100% more than your average price.
It may be tempting to sell your rooms at a very low price if you have very low occupancy. On a short-term basis, this makes sense; if it costs €30 per room for variable costs and you can sell ten rooms for €60 /night each, that’s €30 you have made against your fixed costs.
Long-term, this strategy doesn’t work for two reasons:
1. It can negatively impact your hotel’s reputation, as potential guests will often get a lesser impression of your property if the room rates are too low. If you price your rooms at budget hotel prices, potential guests will assume that your property falls into that category, and this can result in you not getting as many bookings as you had hoped.
2. It lowers potential guests’ price expectations for the future. Next time, if you try to charge €150/night to the same client who paid €40/night last time, they will almost certainly perceive it to be bad value, even though your room is worth €150/night in the busy tourist season.
One exception: if you sell to a tour operator that hides your price within the package price, you can sell your rooms at a lower rate to boost occupancy. This strategy does not cheapen the brand or lower future price expectations in the same way, as it is not a publicly available rate; however, this strategy does pose another risk. If the packages are later unbundled and listed on OTAs, the discounted rates will undercut your current pricing and mess up your price parity. For this reason, I would advise not to pursue this strategy on a long-term basis.
Overall, I recommend setting a minimum price at approximately 60% of your average price to avoid long term damage to your hotel’s reputation.
There are three key advantages to offering discounts on the OTAs:
• Your lower prices attract more guests.
• The psychological effect of seeing a discount increases guests’ perceived value of the offering.
• Your page ranking on the OTA increases.
The three possible risks from selling your rooms at a discounted rate on the OTAs are:
1. You sell your rooms too cheaply.
2. You undercut your rate parity, causing problems on other channels.
3. You end up offering your rooms cheaper on the OTA than your website; as such, you earn less money, plus pay commission, for each booking (when that guest might have booked direct if your OTA price hadn’t been discounted).
I know some very small properties that rely on Genius Dynamic discounts to boost their page ranking; if you try this tactic, I recommend not making these discounts too significant.
Another alternative option is to increase the commission you pay, increasing your ranking. It is now possible to specify which days you want to increase commission so you can drive more business on days you would not expect high occupancy and need more visibility.
I would advise against using:
• The “mobile-only” discount, as it stacks on top of other discounts, meaning you could sell your room too cheaply without realizing it.
• Discounts that are visible to the meta-search sites, as you would break rate parity and diminish your ability to drive direct business.
• Genius country rates.
If you really want to use discounts on the OTAs, here is my best recommendation: Use controllable OTA discounts, which you can replicate across all OTAs and your website. Use RoomPriceGenie to counteract these discounts with commensurate increases. Consider using increased commission on quiet days to increase ranking on the OTAs.
Did you know that room prices are reduced by 15 to 20% on average (compared to longer-term prices) in the couple of days before guest arrival? This is an average, so it does not always hold up, but hotels with availability generally want to tempt last-minute guests into booking their hotel. If you are not reducing your prices as the booking date gets closer, a last-minute booker will likely choose to book with one of your competitors who do.
Hotels in your neighborhood are typically your strongest competitors. If your competition offers better-perceived value than you, more people will book with them. If you are nearing full occupancy, you can comfortably charge higher prices (which may be perceived as lower value by potential guests) and still earn bookings. If you have very low occupancy, you need to offer better value to customers; in other words, you need to lower your prices.
Remember that large hotels have full-time revenue managers, whose job is to determine the real-time supply and demand, and price their property’s rooms accordingly. If there is a concert scheduled in your destination, they will know about it, and update their rates accordingly; conversely, because they have more rooms to sell, they can also see earlier if demand is expected to be lower at certain times of year.
By looking at what large hotels in your destination are charging, you can take advantage of their work and their internal data, for free, by copying some of their pricing decisions.
If you are fully booked on Saturday night but not very busy on Friday or Sunday, what are your chances of being fully booked on that Friday? Unless you reduce your rates for those days, the chances that guests will choose to book with you are reasonably low because many guests want to stay both Friday and Saturday night. In this example, Friday and Sunday are “shoulder nights,” which can be very difficult to sell and result in a significant loss of income, so you need a strategy to manage them effectively.
There are two good ways to manage shoulder nights (and I suggest that you use both):
• Price: If Saturday is more popular than Friday, you should charge more for Saturday than Friday. This strategy encourages bookers for Friday only and puts off bookers for Saturday only; guests booking for both nights pay more on Saturday but less on Friday, so they could break even. This strategy should result in more bookings for Friday night and fewer for Saturday (compared to your competitors).
• Minimum Length of Stay (MLOS) Requirement: The second way to manage shoulder nights is to set a two-day minimum stay requirement so that guests must stay both Friday and Saturday or Saturday and Sunday.
Group bookings
Should you take a group booking that will take up more than half your hotel for one night only? It depends on how busy you are, but remember that if you are full that night, you are preventing guests who would have booked for two or more nights from booking, which can result in a big loss of revenue.
One final tip: with groups, never offer free cancellation because if they were to cancel, you would be left with no guests for the whole period.
Using price rather than minimum length of stay (MLOS) requirements gives you the option to obtain bookings from more potential guests – both people who want to stay one or two nights – meaning, on average, you can charge a bit more; however, there are some circumstances where this is no longer the case.
Imagine a big local event is taking place on a Saturday night, so every hotel in the city will be completely booked; because of the event, you could charge five times your normal rate and still be fully booked. As mentioned earlier, you may wish to do this if you know that these guests won’t be repeat customers;
however, if you don’t wish to charge that much, you will need another way to benefit from the situation and that is where implementing a minimum length of stay requirement is a smart strategy.
Minimum length of stay requirements are very useful for nights when the “fair” price that would bring you the most overall revenue is higher than you want to charge. For example, if you could charge €200/night (market value because of the event in the example above) but don’t want to charge more than €150/night, implementing a minimum length of stay requirement will reduce demand and increase income, without going above your maximum price.
Customers love free cancellation policies. Some leisure customers will only book hotels with free cancellation and are prepared to pay a premium for it; business customers are also happy to make free cancellation bookings when they think there is a good chance that they will have to travel for work, as it reserves their room at a good price, with no cancellation charge, and they have the ability to cancel the day before if the need for the trip falls through. In addition, some customers will cancel their original free cancellation booking if they see that the price has gone down so that they can re-book at the lower rate.
As a hotel owner, how should you deal with this?
The most important thing to remember is that the cancellation costs you nothing if your hotel isn’t going to be full anyway and you can always resell the cancelled room. This means that you can safely offer a free cancellation option (charging them a few percent extra for that flexibility) in times when you are not busy.
The only time free cancellation can be detrimental to you is if you have high occupancy and the cancellation comes too late to find a new booking. In times when you are busy (high demand), you should look at what effect a potential cancellation could have on your bottom line:
Do you get many business people booking and cancelling at times when you should be full? If so, do you end up worse off than you would have been if you didn’t let them book originally?
If so, don’t offer free cancellation in times of high demand to prevent losing out on valuable revenue during your peak season.
As a hotel manager, you know that some of your guests will cancel; now, imagine accepting more bookings to cover those you anticipate will cancel. That would be amazing, right?!
Suppose you are a large hotel with 100 rooms. In that case, you can safely overbook your rooms because your estimate will likely be close to correct, ensuring you’ll have enough inventory to cover potential over-bookings. On the rare occasions when you are unlucky, you can chauffeur the extra guest(s) off to a better hotel with sincere apologies, and they (likely) won’t be too upset.
You may decide that it is worth it for the six extra bookings in the short-term, but consistently overbooking will eventually impact your level of service and, therefore, your online reviews and perceived value to future guests. As such, my recommendation for small hotels is to use overbooking as a pricing strategy very sparingly.
fact
“D-Edge Hospitality Solutions reported that the global cancellation rate of hotel reservations reached 40% (with the direct website channel keeping the lowest cancellation rate).” – Read more
Let’s look at an example related to upgrades… Assume that you have two room types: Standard (€80/night) and Deluxe (€110/night). If all the Standard rooms are booked, and you have three Deluxe rooms available, consider giving two guests free upgrades for your Deluxe rooms one day beforehand, to free up the more affordable inventory for sale.
Upgrading early ensures that you offer availability to both price-sensitive and luxury-oriented guests, and you are more likely to reach 100% occupancy. If your Standard rooms are more popular, then upgrading is making your property more attractive to your potential client base by freeing up more of the Standard rooms for sale. Also, by upgrading the two guests, they will likely leave as more satisfied customers, making it more likely they will write a positive review for your property.
Who should you upgrade?
We will discuss this topic in greater detail later, but in general, it is best to reward clients who have paid you more (over time) and incentivize those who may become repeat customers.
The first people to upgrade are repeat clients. Obviously, they come to your destination more frequently so you should reward them for their loyalty, because there is a good chance they will book with you again – especially after a free upgrade.
Secondly, you should upgrade people who have booked directly with you. This policy should be explicitly stated on your website and in your booking engine, as it’s a great way to incentivize people to book directly.
It’s common knowledge that giving guests options is good, but too many choices are a burden.
The consensus in behavioral science is that the best number of choices is three (this is not always exact, but it is a good rule of thumb); as such, you should offer three specific options that represent something desirable for different types of guests, which will steer people in the direction you want them to take (booking with your hotel).
There is more on the subject on our blog, but here’s a quick overview:
1. The first price is the bargain, no-frills price. This is for people who are very price-sensitive and don’t mind mild inconveniences, such as non-refundable rooms, no breakfast or parking included, etc.
2. The second price is what you want most people to book, so ensure that it offers a lot more value and makes you more money.
3. The third price is considerably higher than the second and is designed for guests who want the best and are not price sensitive. Apart from earning you extra revenue, the other benefit of the third price is that it makes the second price look affordable. This should not be underestimated as it uses the anchoring effect of our brain, which is a cognitive bias that encourages us to rely too heavily on the first piece of information we are given about a topic; in this case, that means that customers will assume that the second option is much better value and, as such, will be more willing to pay for it (even if it is priced higher than the “fair” price) because of how much higher the third price is.
If all the above tips are overwhelming for you, we have good news: most of what has been discussed in Tips 10-23 (all of Section 2) can be achieved with minimum effort at a low price, using RoomPriceGenie’s revenue management system. We offer a 14-day free trial, and the solution is offered on a monthly contract, so there is very little risk and so much to gain.
In fact, in a 2023 ZHAW University study, participating hoteliers experienced a 20% increase in RevPAR (on average), with both occupancy and ADR also increasing, after implementing RoomPriceGenie’s revenue management system. In addition, the hoteliers reported increased perceived pricing competence and success by approximately 20% after using the solution.
So, Tip 24 is…
Go to RoomPriceGenie.com and sign up for our 14-day free trial to see how RoomPriceGenie can transform your hotel’s business and increase your overall profitability TODAY.
Section Three:
Selling on value, not price
Pricing is very important, as already discussed, but it is not everything. The more value that a potential guest perceives your property to have, the more likely they are to book with you.
We will discuss the importance of value later in the section on Customer Reviews, as reviews have a significant impact on your property’s perceived value to potential guests.
Offer free coffee and tea throughout their stay. Again, this is a cost-effective value-add but is highly valued by guests, so it’s a win/win situation for everyone.
Your hotel should aim to always offer as much value to guests as possible, but only by offering value-adds that don’t cost you very much, financially; for example, instead of offering a free breakfast (which incurs a cost for you), offer guests free parking (which costs you nothing) if they book direct.
Ideally, customers will appreciate the value provided by your hotel so much that, within reason, they won’t be bothered by paying a slightly higher rate.
A bonus: guests review hotels based on the value they perceived in their stay (rather than the actual price they paid), so many of the things that will improve your property’s perceived value will also yield more positive reviews and a better online reputation.
What types of value-adds could your property add to boost your bookings and perceived value?
Friendly, helpful service greatly affects the guest’s perception of a hotel. If you can take them to their room, do so while showing them the amenities, telling them about local activities, recommending restaurants, etc.
You can also offer more value in other ways. A welcome drink (inexpensive for you to offer) will be very well received by guests after a long trip. It also is something that many luxury properties offer, which can also improve guests’ perception of your property – even if it isn’t a luxury property.
Of course, when offering extra value, you need to ensure that your potential guests know about the value before booking it. Include this messaging on your OTA listings and hotel website, and make sure it stands out. Be specific.
If you offer tips on hikes or walking trails nearby, mention it in your hotel’s description: “A favourite for hikers because of our in-depth knowledge of local trails and free maps.”
If you offer free tea and coffee for their stay, mention it: “Free teas and coffees included throughout your stay.”
If you have comfortable beds (examine your reviews to determine if this is the case), say: “Our large, comfortable beds and quiet location are particularly appreciated by our guests, who love getting a good night’s sleep every time they stay with us.”
It is very important to communicate these benefits as clearly as possible, as it will increase potential guests’ perceived value – and make them happy to pay more.
Having said that, keep one or two value-adds a secret – such as offering a welcome drink – because these positive surprises will be the things that inspire guests to write positive reviews about your property.
Section Four:
Customer Reviews
Today, positive online reviews are an absolute must for your hotel’s long-term financial success. Customer reviews and review scores are important factors in convincing guests to book with your property; “83% of users usually refer to reviews before deciding on a hotel, while 76% depends on guest-uploaded travel photos for decisions.”
Interestingly, research has shown the content of the reviews is much more important than the average review score itself. People want to read stories from other guests like them, so descriptive reviews have an especially strong impact on booking decisions.
One final note: your ranking is based on reviews from the past 1 to 1.5 years, which means that no matter what you’ve done in the past, you can change it over time; so, get to work and you’ll be on your way to better reviews, a higher ranking and more revenue in no time!
fact
“Transactional data from Travelocity illustrates that if a hotel increases its review scores by 1 point (e.g., from 3.3 to 4.3), the hotel can increase its price by 11.2% and still maintain the same occupancy.” – Read more
You can also email guests a few days after they’ve checked out to provide them with the link directly, which can be more effective because, in many cases, guests will receive the email soon after returning home and will have more time to follow through on writing the review.
The first key to getting good reviews is simply to ask for them; after all, “4 in 5 hotel customers who have been asked to leave a review do so.”
When guests are checking out, ask them if they had a good stay and let them know that, as a business, you rely on good reviews. Ask them to please review their stay and give them a card, linking them to the OTA (or your website) where you want the reviews left.
You can also email guests a few days after they’ve checked out to provide them with the link directly, which can be more effective because, in many cases, guests will receive the email soon after returning home and will have more time to follow through on writing the review
Another important factor in getting good reviews is resolving – or, at the very least, listening and sympathizing with – issues before the guest checks out.
If a guest notices a smell in the bathroom at their hotel, they will think of it as detrimental to their stay and rate the hotel lower because of it; however, if the hotelier had asked the guest how the room was during their stay, they might have mentioned the smell, giving you the time to address their issue and avoid a negative review.
That’s where real-time customer satisfaction surveys are so useful. By asking guests to complete online or in person customer satisfaction surveys during the guest’s stay, you will uncover any problems guests have while they are still there, making the issue (potentially) fixable. It can even be as simple as increased communication; on their day of arrival (after check-in), ask them if they are happy with their room and do everything in your control to address any issues that come up immediately to ensure that your guests always leave happy.
When an issue is discovered during a guest’s stay, there are two different courses of action that you can take:
1. If you have other rooms free, offer to move them to another room. Doing this will fix the issue and you will almost certainly not get marked down a point in the guest’s review.
2. Even if you don’t have free rooms, you should still acknowledge their complaint and explain why and how you plan to resolve the issue for them (if possible). Consider offering the guest an extra value added item (especially if you can’t fix the problem) to make up for the issue – such as a free breakfast or a free bottle of wine – as this can often make the difference between a negative and a positive review.
If you take either of these routes when you find out about a guest’s complaint during their stay, it’s unlikely that the guest will write a bad review.
If something goes wrong that is outside of your control, you must still show the customer you care and that you value their satisfaction. For example, if a guest had to wait in a long line to check in, you could offer them a complimentary welcome drink. This type of thoughtfulness and attention to detail doesn’t cost that much but leads to goodwill. You are showing that you care, and it is difficult to be angry at someone who is doing their best and is genuinely apologetic.
If it is a larger issue – like noise which kept them from sleeping – you could offer them a discount on their next stay as an apology. This strategy is good for two reasons: it shows that you care about their experience and want to make it right, and it gets them to return to your property (boosting your revenue).
These are just suggestions, but if a guest’s experience is below where it should be, I highly recommend that you use whatever strategies you have at your disposal to demonstrate that you are trying to make amends. This also helps with review scores and to get repeat bookings.
fact
“According to data from Revinate, the average review score is 4.1 out of 5. How does your hotel compare?” – Read more
Friendliness costs nothing but is one of the most
important factors in a guest’s stay. Having kind and helpful staff will always improve a guest’s stay.
Your property should implement specific policies to ensure that standards are followed in all guest-facing interactions, from booking to check-out. You could even make a checklist for each client and ask staff to tick off what they have done to maximize guests’ satisfaction during their stay.
High-quality hotels have regular training sessions to retrain staff on the level of service they expect, and as such, their service is consistently good. Smaller hotels can do the same in a less formal way, with the same positive outcome.
Customer satisfaction equals perceived performance minus expectations; in other words, the more you outperform a guest’s expectations, the happier the customer will be. For this reason, keeping a couple of surprises up your sleeve is a good idea.
Of course, the first will be your fantastic, helpful guest service or, when they leave, you could give them a package of cookies for their journey home.
Research shows that arrival and departure are the times that stick in guests’ memories, so enhancing one (or both) of these experiences will likely lead to a better review score. Remember that you should be looking to give thoughtful but not expensive value-adds.
On a related note: the owner of a very well-run hotel told me that he organizes surprise meals for his staff to show recognition for their hard work and dedication to customer service, which has been very positive for morale and staff retention. In short, happier employees results in happier guests, so incentivizing your team to stick to high standards of service is a win/win.
Your PMS enables you to keep notes about your guests, their specific needs, their habits and any other pertinent information – all of which will be helpful for you to improve your personalized service offering the next time the guest books a stay with you.
At a basic level, saying, “Welcome back, Mr Smith. It’s good to have you here again,” is a great way to make a guest feel seen, appreciated and start their stay off on a positive note. In addition, remembering what room he stayed in before, that he likes an extra pillow and that he always requests an early wake-up call will go even further to show the guest that you are providing the best quality service possible. All this info will be easily accessible from your property’s PMS (another very good reason for implementing a PMS at your property!).
Whenever possible, use the guests’ names when you talk to them, and reference things they previously did or told you about; for example: “Good morning, Mrs. Jones. How was the Siam Pearl restaurant last night?” (This is, of course, assuming she told you she was going there for dinner, or if you recommended it to her.)
Attention to detail and personal service go a long way and keeping good notes in your PMS is vital to be able to offer personalized services to each guest.
Section Five:
Your website & other online sales channels
Your website is your face to the outside world and should represent you in the best possible light. Even more importantly, your website should also be designed to encourage people to book directly through your site.
As we discussed in an earlier tip, the billboard effect shows that some guests will find your property on the OTAs and then click through to your website to see if they can get a better deal – and you need to do everything within your power to make sure that they do book directly; that’s what this section will help you to accomplish.
One massive advantage of marketing in the Internet age is the ability to track the behavior of our potential customers and the real-time results of our marketing campaigns. Using Google Analytics, you can see how many people arrived at your website, how they found it, what pages they visited and for how long. These analytics show you what works and where improvements can be made to your website to increase your conversion rates.
To install Google Analytics, you add a small piece of code to each page of your website, which will track where site visitors come from and what they do on your site. You can also set up other metrics to track, such as click-throughs on a specific link or completing a booking.
The most important analytics to track are:
1. Number of Unique Visitors – This is the number of people who have visited your site within a specific period of time. In this metric, someone who visits your site multiple times would still be counted as one unique visitor. There are many ways to increase the number of unique visitors to your website, including (but not limited to):
• Advertising
• Public Relations: Getting media to cover your hotel, sharing your content, and linking to your site
• Search Engine Optimization (SEO)
(I will go into detail about each of these tactics in a later tip.)
By tracking the number of visitors to your site and being aware of seasonal variations, you can better understand how successful your marketing efforts are and identify strategies that will prove more effective for future campaigns.
2. Conversion Rate – The rate at which you convert people who visit your site from lookers into bookers. This is a very important metric and one you can improve by making your site more conversion focused.
3. Bookings by Source – How many bookings do you get from each source? If you are not getting a lot of bookings from Google searches, then you should focus on improving your search engine optimization to help potential guests find you online. If you are getting more bookings from certain OTAs, work to increase your ranking on those sites. Also, re-use your more effective listings on the OTAs that have lower conversion rates to boost your ranking and conversions there as well. Ideally, you should know the cash value of each source and focus your marketing time accordingly to maximize your ROI.
Like your OTA profiles, your website must present your hotel in the best possible light, using high-quality, high-definition, professional photos. Aim for 30 to 50 different pictures, if possible, including photos of all room types, bathrooms, common areas, garden, breakfast, all amenities, the pool and anything else that shows the guest the best of what you have to offer. The photos should be large and highly visible.
Also, as with your OTA listings, you need to describe all the amenities and benefits offered to guests. Ensure that the visitors know all the wonderful things they will experience at your hotel and what sets your property apart from the competition.
Some hotel owners fall into the trap of putting too much personality into their website. Your personality is, without a doubt, great, and I’m sure the people who book through your website love what you’re offering; however, statistics show that, with a few exceptions, keeping your website “standardized” will get you more bookings in the long run.
This makes sense because “standard” appeals to the mass market; it doesn’t offend or put anyone off.
The copy on your website should be written specifically to get people to book with your hotel. I find that many hotels’ website copy is understated and avoids showing off, but this is not effective in marketing; instead, hotels should proudly tell their potential guests how and why their property will make their next trip as wonderful, comfortable and delicious as possible. Focus on what makes your property stand out and offer regular call to-actions (links to your booking engine) to encourage direct bookings.
I recommend having a professional copywriter look over your website copy or, if you have the budget, have them write it for you. It’s money well-spent because it will increase your conversion rate and, as a result, your revenue.
Before your customers book through your website, they will want to ensure they cannot get a better deal elsewhere. This is why you should always state on your website that you offer a “Best Price Guarantee” and back that up by clearly showing your OTA rates for comparable rooms on your website and in your booking engine.
As we discussed earlier, strict OTA rate parity requirements are no longer legal, so you could always offer a lower price on your website (keeping in mind the negative impact that might have on your OTA rankings), or you could keep rate parity. Either way, you should always incentivize direct bookings by offering potential guests upgrades and value-adds if they book through your website, so they know they have gotten the best available rate and the best value by booking with your property.
A final note… At times, the OTAs will (by reducing its commission) be able to offer your room at a cheaper rate than is stated on your website. If you offer a “Best Rate Guarantee” and a guest finds this price, you must honor that rate.
Mobile-friendly websites are becoming more and more important every year. “Between 2016 and 2021, the portion of online travel sales via mobile has been steadily increasing compared to desktop or laptop, from only 36% to nearly 50% of all digital travel sales.”
The younger generations (i.e., Millennial’s and Gen Z) are very valuable demographics, as they prioritize spending their money on travel and they are very comfortable using their cell phones to research and book an upcoming hotel stay; as such, the number of mobile (and app) bookings is expected to grow exponentially each year. In short, if your website isn’t mobile-friendly, you’re losing out on revenue from this valuable demographic.
Your hotel’s website must look amazing and function equally well on mobile phones, tablets and computers. It also needs to load quickly, as slow load times lead to customers going to another, better performing site to book.
“70.9% of travelers say online reputation influences their choice of accommodation, and a whopping 81% say they always read reviews before booking a hotel, with particular consideration on the company’s response to guest reviews.” As such, you must include verified guest reviews on your website and present them prominently throughout the site.
Share your TripAdvisor and Booking.com ratings on your site (using their widgets) because most travelers trust those ratings and they are a must-see before booking; therefore, when potential guests can see your property’s review scores on your website, they won’t need to click away to TripAdvisor, where they might be tempted to book through the site or, even worse, book with another hotel.
The higher your property appears in online search engine results, the more people will click on your listing, and the more people will book with you.
How can you rank higher on the search engine result pages (SERPs)?
There are whole books written on this subject, and the algorithms that establish rankings are changed regularly, so I can’t give you a complete answer but I can outline some general principles that will help you get started.
How does Google determine which property is placed where in the SERPs?
External links – links from other credible websites to yours – are important to improve your SEO because they are seen as a vote of confidence in the quality of your site. Contact local travel sites, bloggers and any other related sites that you think may be willing link to your site and ask them to do so. By having as many external links to your site as possible, you should see a boost in your ranking and traffic to your website. Keep in mind that links from dubious websites will penalize your site so don’t believe anyone offering you unrealistic SEO schemes that are supposed to boost your ranking overnight.
Another important part of SEO is content. Your ranking will increase if you provide high-quality content – including photos, videos and blog content – on a regular basis.
Loading speed is very important to Google as well. Make sure your website is tested and optimized to load quickly. This is good for SEO and business, as a slow-loading page makes people click away from your site out of impatience.
In summary, it’s important to implement the above tips to improve your SERP ranking, but as this is an ever-evolving field, I recommend hiring an expert to manage your website’s SEO if you have a budget. If you don’t have a budget, it will be important for you to do the research necessary to stay on top of SEO best practices, on an ongoing basis, to see the best ROI on this tactic.
Your site must include strong content to encourage conversion and enable effective search engine optimization. Besides that, engaging, interesting content can also be a way to attract new visitors to your website.
Use a blog feature to offer value to searchers by sharing the best local destinations and restaurants. If someone Googles “Things to see in London” and your site has a blog post about cool, lesser-known things to experience in London, then people will click on your link to read the article. When booking a hotel, there’s a reasonable chance they’ll choose yours as you have shown yourselves to be helpful, trustworthy experts, and it will help boost your search ranking.
In general, the more information, photos and videos your site includes, the more value you are providing to the potential guest and, as a result, you will earn more bookings and revenue.
In addition to using the OTAs to boost your online visibility, you can also do your online advertising using pay-per-click (PPC) advertising, which charges you whenever someone clicks on the ad and is, as a result, redirected to your website. Like search engine optimization, this is a very specialized practice that is best left to the experts, but if you do want to do it yourself, it will require a significant budget and time to test different marketing strategies to determine what earns the best ROI; however, if you can secure bookings for a lower price than on the OTAs, then it could be considered profitable.
Here is a quick overview to help you get started…
The market leader here is Google Ads. Using Google Ads is fairly straight-forward; you select key phrases that you think people would be searching for when looking for your property (i.e., “hotels in London”) and, assuming your bids are priced correctly, when someone searches for one of your search terms, your hotel will be one of the sponsored results at the top of the search engine results page (SERP). Depending on how popular the search term is, you will need to bid a varying amount of money to earn the placement, which makes this type of advertising complicated and expensive. You are charged based on every click on your ad, no matter how long the person stayed on your site or whether they completed a booking. As such, I would always start your bids low and slowly move them up in price. Monitor how many bookings you convert from the ads, and if your cost per booking (total PPC cost divided by total number of bookings) is reasonable, it may be a good way to get direct bookings.
You can also try Meta ads, which will help promote your property through Facebook, Instagram and Messenger. Meta ads appear in your audience’s Facebook Feed, Instagram Reels and Messenger Inbox. As with Google
Ads, you pay-per-click on your ad. This can be an effective advertising tactic, as it allows you to target your ads to the people who are already interested in or looking for what your property has to offer; however, it can be challenging to get strong ROI without the support of an expert digital marketer, as the algorithms that govern the best practices are always changing.
As with SEO, PPC advertising is a very time consuming and costly tactic, so it is often best left to the professionals; if you have a budget, hire a digital marketing expert to manage your ads to ensure you earn the greatest ROI from the channel.
If you don’t have a budget, it is still possible to do it yourself, but it will require a great deal of research, ongoing monitoring of your results, testing new types and formats of ads and trial and error. Of course, with both PPC advertising options, you will need funds to invest in your monthly cost-per-click budget, so this may not be the best tactic for hotels with smaller marketing budgets.
Metasearch sites, such as Trivago and Kayak, aggregate all the available OTA rates for your property to show the searcher the best possible prices, all in one place. These are very popular with potential guests because they know they will get the best rate without doing much research. Two of the most important metasearch sites are TripAdvisor, which is trusted for having the most reviews, and Google Hotel Ads, which shows your hotel when potential guests search on Google Maps or in a regular Google search.
I suggest registering for these sites.
Connecting your hotel to Google Hotels is an easy way to get more visibility for free. Once set up, Google will show searchers your property’s address, phone number and website link and can also show your direct booking links. In addition, with Google’s free booking links, your room rates for the searcher’s itinerary will be shown in your Google listing with a CTA to book. Users who click on your link will be taken directly to your website booking engine. There is no cost for clicks on free booking links, so it’s a fantastic way to boost your property’s visibility at no extra cost.
In addition to the free booking links, Google offers Google Hotel Ads, a (paid) cost-per-click advertising option. While Google Hotel Ads offer very similar information to the free booking links, the search results ranking is based on different things for each: on the free booking links, hotels are ranked according to how appropriate/useful the hotels are based on the user’s search preferences, whereas Hotel Ads (paid) are ranked based on hotels paying to participate in Google’s ad auction (the more that you pay, the more likely your hotel will be placed higher in the results).
To learn more about getting started with Google, please visit their “Starter Guide for Hoteliers.”
Section Six:
Other business improvements
This section shares more tips on how to boost the ROI on your OTA listings, covers the importance of upselling and segmentation and free publicity, using public relations.
Every time a guest stays at your hotel, offer them a discount on all future stays booked directly through your property’s website – either by giving them a physical card at check-out or emailing the offer after check-out. This is a win-win for everyone. The guest feels special and rewarded for their loyalty, plus it might make them feel even more positive about their stay, which could increase the chance that they leave a positive review.
If the guest does book directly on a future trip, you will eliminate your acquisition cost and have created a repeat customer, the most profitable of all guests.
I suggest creating a loyalty program which rewards repeat guests with points that can be redeemed for upgrades, discounts on future stays, etc.
As a rule, you should reward customers who book with you again because repeat customers may provide you with a lot of business in the future and have been shown to be the most profitable guests. Go above and beyond to do everything you can to keep them happy
Always ask for email addresses when a new guest checks in so that you can contact them after their stay to keep your hotel front-of-mind. Every few months, send them a newsletter with special offers, news from the destination (such as upcoming festivals or events) and anything else you think may interest them. Whenever you write a new blog post, you could send it to your list to entice them to book another trip to your destination, and another stay at your hotel.
Use a free email platform like Mailchimp, which makes it easy to manage your list, and create and distribute professional emails, without any tech or coding hassles. It also automatically manages your list, including unsubscribe requests, ensuring that you are only emailing the people who want to hear from you.
A word of warning: no one likes spam, so you should never send more than one email every two weeks (maximum) or a month (ideal), otherwise it is likely that your guests will unsubscribe or, even worse, report your messages as spam.
tip
“Revinate offers great free email marketing certification training.” – Learn more
Here is a question for you: how often do your property’s suites fill up on their own?
If you’re like most hoteliers, the answer will be “Not often.”
Do you ever sell out of doubles and then miss out on potential guests because they don’t want to pay the price of a suite (but would have booked a double)?
This is where upselling comes in: rather than upgrading a guest for free, you can try offering the upgrade as a paid option. While this upgrade fee wouldn’t equal the full room rate, many people will happily pay more (knowing they are getting a great deal) to stay in the nicer suites. And it will help you free up more double rooms to sell to price-conscious guests. Win/win.
In addition, cross-selling is a great way to increase your non-room revenues. Ask yourself: apart from your rooms, are there any additional, valuable products or services you provide, or could provide, to your guests? With cross-selling, both at booking and/or upon arrival, you can encourage the guest to spend more money at your hotel on these services.
An obvious upselling opportunity is an on-site restaurant; for example, you could offer guests a special rate for daily breakfast service or the set menu, which can only be purchased during the booking process. Since guests will need to eat and know that they are getting a good deal, they may decide to book those meal options as well.
Ask local attractions if you can sell their tickets to your guests at a discounted rate; as an added bonus, you could earn a commission on each sale. Especially during slower periods, this would be a win/win for both you and the local attractions, as you’ll be bringing them more traffic than they might have been able to get on their own.
fact
“According to Forbes, nurturing your existing guests is five times more cost-effective than winning over new ones, positively impacting your revenue.”
If you have a few of these offers, you’re able to provide your guests even more value by giving them suggestions on where to go and offering discounted rates to visit those places.
Here’s the best part: up-selling and cross-selling doesn’t need to cause more paperwork or headaches; many tech vendors offer upselling functionality through solutions that integrate with your PMS to easily facilitate these transactions.
Segmentation is a complicated subject, and it can be difficult for small hotel owners to implement, but I will discuss it briefly to give you some ideas.
Segmentation is the process of separating your customers into groups by demographic information and then designing specific offerings that will appeal to their unique wants and needs.
Let’s examine how larger hotels might use segmentation. For example, a large casino hotel in Vegas can collect guest data, over time, which shows that certain types of guests tend to gamble large amounts of money during their stay. To entice that type of guest to book with them, they can offer them a discounted room rate of only $50/night, as they know that the guest will more than make up for the loss of room revenue with profits from the casino. The same principle can be applied to customers who spend a lot at the restaurant or on the golf course.
They also know that some clients are more price sensitive, so they offer deals to entice them to book, especially during low season or low occupancy.
In some ways, you may be already doing some form of segmentation. By offering returning guests extra value through a discount on their next stay, you reward people who might give you more business in the future. Similarly, by giving free room upgrades to those who book directly through your website, you are encouraging people to book in a way that earns you more revenue.
The key to effective segmentation is good data. The more data you have access to, the easier it is to develop targeted offerings for custom segments of guests, which are more likely to convert lookers into bookers.
What is it that attracts people to your destination?
What are the guests doing when they arrive?
Talk to your guests to find out the purpose of their visit. Using these answers, develop cross-marketing partnerships with local organisations, designed to boost your visibility to travelers already coming your destination. To incentivize the partnerships, you could offer the partner organisations commission if someone books through you (and vice versa).
If people are coming on business trips, what is their business? Does their company send other people here often? If so, ask the guest which person in their company organizes the trips and contact them directly with an offer or discount for any future bookings that they make with you for their employees.
Maybe they are coming for a chess tournament in the area. In that case, get in touch with the organizers of the chess tournament and ask to be featured on their website.
Maybe many of your guests are mountaineers. If so, go to the local mountaineering association and ask to be featured on their website; you could offer all members who book directly a special welcome pack with hand-warmers and a packed lunch.
This is a fantastic opportunity to secure more bookings for your hotel and, usually, at lower commission rates than through the OTAs.
Don’t let these opportunities for additional revenue pass you by!
Summary
I’m hoping that you found this book helpful and inspiring. In the end, having the right attitude is necessary to improve your business. You must be open-minded about possible improvements and commit to implementing new things; some changes you try will work, and some won’t, but you’ll never know for sure if you don’t try.
Finally, I want to reassure you that your hotel has great potential. As you are busy running your hotel, you may have yet to make the most of that potential, but by reading this book, you have made the all-important first step.
All the advice in this book is relatively inexpensive to implement and will help you boost bookings, stand out from the competition, and increase your overall profitability and operational efficiency.
If I’ve done my job properly, you’ll feel inspired to start making a change so act today. Your bottom line will thank you for it!
If you have any questions or want to discuss any of the strategies that I’ve mentioned in more detail, please contact me at [email protected].
If you are interested in learning more about how to improve your pricing, sign up for our free RoomPriceGenie Academy course on Revenue Management here.