Revenue Management: The Hotel Stimulus Package

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•Guest Column: Revenue Management: The Hotel Stimulus Package

By Jean Francois Mourier, CEO and Founder of RevPar Guru

Hotels are being pummeled by the economy, and the hospitality industry is suffering in every corner of the globe - what else is new? In the current climate, most hotel experts are expecting RevPar (revenue per available room) to drop by as much as 11%, perhaps even more. And with occupancy rates already at all-time lows, this isn't good news for the hotel business. In such a climate, many hoteliers will compete on rate, but this only creates a downward spiral of price competitiveness, and more pain for the long-term growth and sustainability of hotels' revenues once the economy bounces back.

So how can hotels compete in this weak economy, looking beyond discounts? Is it possible to flourish, even during such a travel slowdown?

The answer is yes! I have seen proper revenue management take a struggling hotel from barely surviving to thriving, even as the recession bites deeper. One Miami-based property was struggling to maintain a 45% occupancy rate. After overhauling its revenue management system, occupancy jumped to 90 to 94%, with an increase in revenues of 70%. Too good to be true? Absolutely not! A fundamental building block of revenue management, RevPar is one of the most important metrics of the hospitality industry and absolutely possible with the right system in place.

For hotels, RevPar is key determinant of profitability. It's what keeps the doors open, yet many hotels and chains still handle room occupancy and pricing in an old-fashioned and haphazard manner - reactively and rarely scientifically.

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•Guest Column: Revenue Management: The Hotel Stimulus Package