Competition for sales and consumer loyalty is more aggressive than ever before. Hospitality is one of the most cutthroat industries, where every prospective booking is vigorously fought over. Knowing what your customers are looking for is crucial to being ahead of your comp set, which makes predicting consumer behavior one of the most valuable skills that revenue managers can possess.
Unfortunately, it’s not just as simple as offering the lowest rate, and even if it were, a race to the bottom isn’t going to generate profits. Most reports on consumer behavior typically aren’t of much use, since the hospitality industry has notoriously complicated purchasing motivations. In this recent study, researchers found that in addition to factors like price and value, hospitality consumers have four distinct motivators:
- Novelty Seeking
- Relationship Enhancement
That’s a complicated set of factors on its own, which doesn’t even begin to address business or group travel! Luckily, by using advanced reporting techniques, your revenue management system can help you understand what turns a potential guest into a repeat booking.
1. Drill Down Into Your Guest Segments
An excellent starting point to understanding your guest’s behaviors is to know who they are. With advanced reporting, you can go beyond the basics of ‘group, leisure, and business’ and into sub-segments. This article describes some of the advanced segments your RMS can discover: “Individual market segments exhibit unique characteristics relating to future growth potential, seasonal aspects of demand, the average length of stay, rates of double occupancy, facility requirements, price sensitivity, and other factors.” When your RMS can properly refine your guest segments, you’ll be able to understand each one’s potential for profit and avoid targeting the wrong group.
2. Personalization Matters
Knowing your guest’s preferences while they’re on your property will attract future guests. The same fundamental concepts of revenue management for room rates apply to promoting your ancillary services as a value-add and promotional tool. Once you’ve determined your most valuable guest segments, you’ll want to track what they spend, when and on which ancillary department. Once you have that information, you can tailor special offers that are appealing to your most valuable guests based on their specific preferences and behaviors.
3. Monitor Your Distribution Channels
It seems obvious, but having a keen sense of where your property’s bookings originate from is critically important. Your RMS can show which of your distribution channels are working well, and which need improvement. Acquisition costs from underperforming channels demolish profits from the rooms they book, so knowing where to invest and where to pull back will generate revenue and prevent losses. Since mobile bookings are becoming more prevalent, you’ll want to pay close attention to your guest’s mobile booking and purchasing behavior, not to mention making sure your mobile site is appealing.
There are dozens of factors that influence each guest's’ decision-making process. Having the right systems in place can give you the competitive edge with the information you’ll need to position your hotel in the most advantageous way for your guests and your bottom line. Curious about how your RMS stacks up? We’ve created “The 2017 Smart Decision Guide to Hospitality Revenue Management” to show you everything you need to know about your RMS’s performance. Let us know what you think!