As 2020 begins, we look back at 2019 to see what went wrong, what worked, and what the projections are looking like for the year ahead. The previous post covered Hotel Reputation. This post is going to look at things to review regarding hotel revenue. More specifically, it will look at the room revenue generated at the hotel, but it will be important to analyze other revenue streams the hotel relies on (restaurant, cafes, spa facilities, etc.)
Monthly Breakdown
The first step to do is to review the monthly breakdown of the revenues. Focus on the seasons or similar periods through the year. For example, don’t compare July to January if July is during your peak season and January is not, compare it to August. If hotel revenues aren’t consistent during the season, start drilling down to see where the weaknesses were. Compare not only to last year but to a 3- or 5-year average of the season to notice some trends that need to be stopped or built upon.
Segment Breakdown
After the monthly breakdown is completed, use it to target specific periods that need further investigation. There are several ways guests can be segmented: rate plan booked, guest type, location of the guest, the company the guest is an employee of. Segmenting the guest by rate plan booked is generally the easiest to gather data for with most property management systems.
Like the monthly breakdown, compare how the segments compared to the last year and a larger period before. If you notice a drop in one segment, but an increase in another, take note of it to investigate further. The next action of the analysis depends on the segment that needs to be investigated. Contact a company representative or travel agent to inquire why a company’s bookings dropped or find some local economic reports to discover how tourism fared through the city or region.
One factor to note is a drop in one segment may not necessarily be a bad thing. Perhaps your hotel has a regular client that has been locked into a significantly low daily rate compared to newer clients. If that lower value client drops out, it can likely be filled with a newer and higher paying client or other type of guests.
One way to segment the hotel that is generally overlooked is to analyze the occupancy and ADR generated from different room types. Are the hotel suites getting booked at a very low occupancy rate? May need to lower the rate, market it differently, or work with the front desk agents on trying to upsell the suites at a lower rate to help fill up the regular hotel rooms. Are the rooms with two beds being booked less often than single bed rooms? The hotel may want to eliminate some of the two bed rooms and only have one larger bed. Something else to look at it is room usage of similar types. Some bedding and furniture may become more worn out if it is overused compared to similar rooms.
Market Analysis
Analyzing your local competitive market will be extremely valuable to determine how the hotel is performing overall and help set your hotel rates for 2020 and beyond. The most basic step is to create a spreadsheet listing your hotel’s rates that are available publicly and compare to your competition. Choose hotels that are in your immediate vicinity and comparable amenities. It will be unfair to compare your 3 Star hotel to a 5 Star Resort. Try to compare different periods through the year by using their online reservation systems. Use their rates to help determine how to place yourself in the market depending on the financial needs of the hotel.
A further step of analysis will involve purchasing market reports from STR, CBRE, or another local hotel research firm. The reports they provide are generally accurate to provide you information, such as, occupancy, ADR, RevPAR, and other items of note. They are also valuable in aiding you forecast hotel occupancy for the region soon.
Another area to consider is tourism and economic reports being produced locally, by region, or nationally. These reports can highlight number of passengers coming through the airport, crossing borders, and may have broad numbers for the hotels. That last item is especially true if there is a local hotel tax that hotels must submit records for. The best part of these reports is they are most likely going to be free.
Pickup Report Analysis
A tool that most hotel revenue managers have been using to help them with their analysis is a hotel revenue pickup report. There is a free and paid version on this site.
The pickup report allows you to see exactly what the busiest days were for reservations, which periods get booked up the earliest/latest, and how far out people are booking rooms for future months. The more consistent you are with the pickup report, the better, as it will give you a wealth of information that most property management systems can’t extract easily.
Additional Resources
There are a wealth of articles that can be read to help you analyze your previous year. Here are a selection to help get you started:
- Top 10 Revenue Management Articles and Tips to Read for a Successful 2020 from Xotels
- Revenue Management 2020 – eHotelier Industry Journal
- Top 10 Revenue Management Tips for Winning in 2020 – Hotel News
- How to Get Revenue Management Right for 2020 and Beyond? – Hotel Business Weekly
- 2020: A Vision for Revenue Management in the Next Decade – Hospitality Net
Want to learn more? Send me an email and let’s start the conversation.