What is Revenue Generation?
Quite simply, Revenue Generation is how a company sells itself and its products to make money. Revenue generation is not simply sales or marketing; it’s an operating strategy that touches every part of an organization. It’s a plan that allows a business, in this case, a hotel, to utilize strategies and tactics that allow for increased revenue.
Typically, revenue in the hospitality industry is generated through hotel room rentals, meeting space occupancy, and the sale of food or beverages. All of these produce profitable revenue for a hotel or other hospitality industry business such as a food and beverage operation, a theme park, or a cruise line.
Revenue Management revolves around the measurement of what customers from different segments are willing to pay, and this can only be done by measuring and monitoring the supply and demand of your hotel rooms. Your hotel sales strategies should reflect your commitment to the guest experience while emphasizing the importance of booking as many rooms as possible at any given time. Whether it’s the peak season or the offseason, you will want to develop hotel room selling techniques that are designed to increase profitability.
Essential Hotel Room Sales Strategies:
- Hotel Group Sales Strategy
This strategy may require an overhaul of your normal marketing and sales approach. The idea is to sell rooms and meeting spaces to corporate groups; it’s important you can offer a deal for both. Landing these types of sales requires innovation but it can be very beneficial for repeat business if you do. The most cost-effective way to secure group bookings is by connecting directly to planners.
- Hotel Direct Sales Strategy
With this sales strategy, the priority is to earn direct bookings online from as many guests as possible. Direct bookings are the most beneficial booking for hotel operators because these bookings generate the most revenue. There are no agents or other distribution partners that must be paid a commission when a guest book directly online. To implement a direct booking strategy, hotel managers should invest in an online booking system that syncs with their existing website and property management system. Hotel operators should also prioritize their social media strategy when focusing on increasing direct bookings.
- Cross-Promotional Sales Strategy
With this sales strategy, hotel managers need to identify and evaluate various large events that will be taking place in the local region throughout the calendar year. Then, the hotel operator needs to come up with a promotion that can coincide with the event, ultimately allowing them to earn an influx of bookings that they may not otherwise have had. Opportunities that are ideal for a cross-promotional sales strategy include an upcoming industry conference, a concert or a major sporting event.
- Guest Rewards Sales Strategy
Many travelers today, particularly the powerful millennial generation, value the opportunity to earn rewards with the companies that they do business with. Hotels, in particular, have great success with rewards programs. In a guest rewards sales strategy, the manager or operator should develop a system that rewards guests for staying frequently, for purchasing upgrades, and for referring friends and family members. A rewards sales strategy often generates repeat bookings, which are particularly lucrative for hotel operators.
- Revenue Management Sales Strategy
This type of sales strategy aims to maximize the number of rooms booked at any point in the year, regardless of the typical travel traffic at that particular point in time. Typically, a revenue management plan requires hotel operators to drop room rates during the low season to encourage bookings, while raising rates during high traffic times. During these moments, guests are going to be willing to pay higher rates to get a room, so it’s worthwhile raising rates to generate more revenue per available room.
Upselling is the process of selling a more expensive version of the service or product your customer is buying. The methods you use to upsell need to be handled with a degree of delicacy. The timing, tone, and regularity with which you upsell is the key to the success of your efforts. You don’t want to seem pushy so treat it as an exercise in awareness rather than a sales pitch. Make sure guests know what options are available to them but let them initiate any further interest.
Re-marketing allows you to reach out to potential guests who have visited your site without finalizing their booking. Many travelers will visit a variety of different websites to explore their options during the research phase of their online booking journey. With re-marketing strategies, you can access these customers again at different points during their online booking experience and remind them to visit your site again to book with you.
- Incentives or Cross-Selling
Cross-selling is the process of selling an additional, supplementary product or service to complement the product or service your customer is buying. Offering incentives in the form of additional products or services may just be the thing that gets your guest to confirm a booking. Think added-value items like a free massage, or a local tour.
- Build Local Partnerships
Unless your hotel is located in a remote or isolated destination, there should be plenty of other businesses and attractions you can form a mutually beneficial partnership with. Co-promoting with restaurants, specialty shops like ski hire, adventure companies, theme parks, or museums can help lead to easy and effective marketing. And this kind of partnerships can work no matter how the guest is planning their trip – be it to book accommodation first, or create their itinerary before looking for a hotel.
- Make booking easy on your Website
The importance of a good website experience for travelers can’t be overstated. Nothing will drain their excitement quicker than a slow, confusing, or convoluted website. Make sure yours is clean, intuitive, mobile-friendly, and has clear action buttons such as ‘book now’ for potential guests to click. When direct bookings are so valuable, your website has to be a priority.There’s no right or wrong sales idea before you’ve seen the results. Getting creative means you have to experiment and take actions you haven’t taken before.