Open for Business: How to ensure a hotel is revenue ready from day one
The rapid pace in which hotels have been constructed and opened in the Maldives over recent years is leading many in the industry to question whether these properties are adequately prepared for the challenges they face in optimising their revenue potential. This is especially apparent in the face of strong competition from the existing properties, in addition to the well-resourced and established global hotel chains.
Many hotels across the region struggle to reach their optimal revenue potential due to the poor pre-opening preparation and a lack of in-depth pricing strategies to address varying market demand and conditions. It is no longer enough to build a great property, ensure the rooms are nicely decorated and have staff in place to service potential guests. An integral component to the pre-opening process should be considering the optimisation of room type configuration, as well as the implementation and integration of revenue management technologies with the hotel’s IT infrastructure and platforms.
There are many areas that must be covered throughout the pre-opening phase of an independent hotel, ranging from establishing market segment revenue and sales strategies, undertaking comprehensive competitor evaluation, pricing research, pricing processing and forward planning of market demand cycles. It is also important that properties follow a structured, standardized approach to pre-opening to ensure consistent and effective results from day one.
Hotels under development should consider addressing their pre-opening processes in two stages to allow for a mixture of onsite training and strategy preparation. The strategy setting process (in which pre-opening revenue, marketing processes and actions are developed) should be undertaken a minimum of six months before a hotel has their soft open. It should ideally consist of:
- Strategic hotel analysis that includes a study of the micro market and overall economic factors that could affect the hotel’s performance.
- Finalised competitor analysis, including competitor value and benefits positioning.
- Set pricing structures based on market conditions and hotel positioning.
- Established channel strategies according to product positioning and market environment and cement “product positioning” (i.e. Hotel Descriptions, Room type descriptions etc.) through all channels.
- Market segmentation strategies and action plans with a particular focus on business with long lead times (wholesale/groups etc.) This should be developed in collaboration with the sales and marketing department.
A pre-launch process is also critical in ensuring that all stakeholders are fully trained, aligned with strategies and capable of implementing appropriate revenue management strategies across rooms and ancillary revenue streams. This process should be undertaken three months prior to a hotel’s opening, and be focused on checking that all pricing and operational systems are in place and that all tools and processes that track key competitor performance data, including daily competitor performance and competitor pricing activities, are functioning.
Key tools used to support daily revenue management processes should also be developed at this time, focused on the construction of a comprehensive 365-day demand calendar and the evaluation of tracking actuals and on-the-books (room nights and revenues) business by market segment.
All staff working alongside, or within the hotel revenue management team, should be provided guidance and support during the hotel’s crucial soft opening period, which occurs between 60-90 days after its initial opening. Once a new hotel has opened, continued staff support and additional training will ensure that staff members are able to meet their defined strategic goals and handle developing market expectations.
Throughout the entire pre-opening preparation process, it is important that both the corporate revenue management team and general hotel managers are briefed at regular intervals, given honest feedback about any potential issues, notified of successes and alerted when critical milestones have been achieved. It is key to re-evaluate the original assumptions and planned strategies developed during the opening, as pre-opening plans and post-opening realities often differ.
Hotels need to be flexible in the initial stages of the opening so that they can adjust strategies and respond to outcomes and evolving market conditions. This allows a hotel to prepare staff and get overall management buy-in for the hotel’s approach to revenue management, which will help ensure that their revenue management systems are used effectively.
If a hotel is to succeed in Maldives increasingly competitive marketplace, it must be able to meet the challenges of varying demand upon opening. The success of a particular hotel or resort can be determined in the initial few months, both in terms of industry reputation and financial success. This makes the implementation of an appropriate and flexible revenue management program essential to a hotel’s entrance into the market at the right price, in the right channels and at the right time.
To help hoteliers in the Maldives delve deeper into better revenue management tactics, Hotelier Maldives will be holding the second edition of its Revenue Management Concept Workshop this year. Scheduled to be held December 4 and 5, the workshop will have an overview of revenue management and also focus on market segmentation, pricing, forecasting, revenue management tactics, channel management, strategy setting and implementation, amongst other important topics.
The two-day workshop, organised by Hotelier Maldives and IDeaS, will be facilitated by Tracy Dong, the Lead Advisor of Asia Pacific region at IDeaS Revenue Solutions – a SAS Company based in Singapore. For enquiries about the workshop, please reach out to Bunaanath Yoosuf (via email: email@example.com, or mobile: +960 7910848, +960 7910858]. To learn more and register your attendance, please visit drive.ideas.com/rmmaldives17.