Taking into account the past and prevailing sales trends, everything points to a continuation of the marked preference for most hotel reservations being made on the strength of information first found online in 2017. Since the Internet first became an international community and marketplace, information about a hotel with an online presence has been written not only by the hotel itself but also by clients.

According to research recently conducted by TripAdvisor, up to 96% of clients chose a hotel based on reviews they had read online; what’s more, 53% of clients deliberately avoided hotels which did not have any feedback or client reviews published online.

Reviews can often be frustrating – however, for the most part, they reflect the truth, and may indicate important areas of improvement in the areas of customer satisfaction and offered services. This is the field of reputation management.

Hospitality industry professionals, seeing the undeniable effect that negative client opinions have on hotel revenue, have added ‘client opinion’ to the list of variables that have a significant part to play in hotel pricing strategy, particularly as a part of the larger revenue management process.

2012 research from Cornell University and ReviewPro show that an increase of 1 point in GRI™ (Global Review Index – a ReviewPro parameter) causes a RevPar increase of 1,46% and an increase in reservations of 0,5%. A hotel’s reputation is composed of several key elements: location, personnel, gastronomy, and marketing, among others. With this in mind, what is the best way to manage your hotel’s online reputation?

Generate positive reviews

Our human nature means that it is easier to recall our bad experiences than our good ones. Therefore, in order to receive as many positive reviews as you can, it is wise to encourage satisfied guests to post leave a review on such websites as Booking.com, TripAdvisor, and HolidayCheck. This can be done during check-out while thanking them for their stay, or by sending an automated email afterward asking them for their opinion and including a link to the hotel’s online profile. Some online portals allow you to install an application on a Facebook page, or a widget on your hotel’s own website.

Do take note that it’s not only on the previously-mentioned websites that guests can leave reviews. Your Facebook page, for example, is a place where direct contact between your hotel and your clients is also possible and can be easily managed. Guests looking for the fastest response possible often post questions on a hotel’s Facebook page. Additionally, Facebook offers the possibility of creating a separate “Reviews” section of your main page, where guests can leave a number of stars and an opinion. Google is also a place where guests can leave their reviews, and also their own photos of your establishment.

Monitor and analyze

Always check for new online reviews on a regular basis. The majority of online portals offer the option to receive notifications of new client comments automatically, however, the best way to keep track is to take advantage of an internet-monitoring tool. Such tools allow you to create your own reports of all references concerning your hotel in community portals, on forums, blogs, in article comments, etc. You can respond to these references, the sum of which combined put at your disposal an advanced analysis of all comments, sentiments, and emerging influences.

Reply to comments

Whether or not you reply to comments counts towards your online reputation as a whole. Don’t be afraid to respond to negative comments – they often provide a valuable lesson or the motivation to make a much-needed change in your hotel. The answer to such a comment cannot, however, be aggressive – TripAdvisor’s recent research claims that as many as 70% of users consider a rude, aggressive answer to a negative review as a major disincentive to book a stay at the given hotel. Please also remember that your replies should not be identical, copy-pasted templates. Just as in real life, approach each commentator individually.

Apply guest observations to real life

Making an in-depth analysis of all guest comments can produce a ranking, which your potential clients eagerly look for. There were no bathrobes in the hotel rooms? Buying bathrobes will be not a mere expense, but a good investment in your reputation. As written above – the better your grade, the higher your RevPar and overall occupancy will be.

Take advantage of the newest technology

If you already have the previously-mentioned tools for monitoring the internet and social media, you can expand your online toolkit further with programs that measure your GRI™ index. They work either individually or in tandem with tools for managing sales or pricing – working to find the correlation between these variables and the price recommendations resulting in ADR value. The most popular tool of this kind is ReviewPro, whose Guest Intelligence experts created the GRI™ online reputation score. Its current use is estimated at more than 30,000 hotels worldwide. Certain of its elements have been incorporated into new functions now available in the YieldPlanet Channel Manager.

The Channel Manager’s new ReviewPro widget gives hoteliers swift access to statistics formed on the basis of reviews collected from such varied sources as TripAdvisor, Facebook, Booking.com, and Expedia. These statistics indicate the main source of your hotel’s reviews, and what’s more, breaks down these said reviews into negative, neutral, and positive categories. This allows you to quickly catch wind of negative or neutral reviews damaging the reputation of your hotel.

Segmentation has always been a very important part of a hotel’s revenue management strategy. This was true even before hoteliers called it “revenue management”. In other words, segmentation has been around for quite some time and has always played and important role in marketing and sales strategies.The question now is, “Do the traditional definitions and way of tracking segmentations still work for hoteliers?”

Traditional definition

The traditional definition of segmentation includes having a clear understanding of customer definition, segments that apply to the property and to the corporate level, and an understanding of the source of business.

At the most basic level, the industry differentiates between rooms sold as a group and those sold individually, also known as transient business. The next level of categorization usually separates rooms booked but the purpose of the guests travels such as business or leisure. Sub-segments are then further developed and customized to unique demand drivers in a market. These are commonly referred to as market segments.

Market segmentation

Initially defined as the purpose of the customers visit to a hotel such as someone travelling on business staying at a corporate negotiated rate. Prior to the inception of the internet and the of the internet as a channel through which to receive hotel reservations, it was relatively easy and sufficient to define market segments as each customer’s reason for travel. If the reservation was made via the telephone directly with the hotel, the reservation associate would simply ask the direct question, “What is the purpose of your visit to the hotel?” If the reservation was booked via a Global Distribution System (GDS), the confirmed rate or rate code would typically provide the reservation associate with the reason for travel. For example, someone traveling on corporate business but not with a preferred company would typically book the public corporate rate. This was obviously long before hotels offered more complicated rate structures. In other words, it was clear and typically very easy to understand the customer’s purpose of travel making it easy to track and measure. But today, we operate in a very different environment and the purpose of our current market segments has become less cut and dry.

Behavioral segmentation

It may be time to rethink segmentation. Perhaps it is time to create segmentation based on the booking conditions, behavior of customers and lifestyle of customers. For example, customers booking through an opaque channel may be traveling for either business or leisure, or both. But their willingness to accept the strict booking terms imposed by an opaque channel makes them a unique group of guests compared to others who do not want to prepay and who want a last minute change and/or cancellation option.
It is important that hotels understand the behaviors of their customers. This will lead to a better understanding of what choices the customers are willing to make. If the hotel knows the specific value proposition the guest is seeking they can price accordingly.
A large global hotel company is a good example of a company that is segmenting with a focus on behaviors. They have created brand targets based on the behaviors of the customers for each of their branded hotels. They actually incorporate profiling questions into their guest satisfaction program. Because each guest defines value differently, their goal is to identify whether or not the target segments are getting the intended experience.

New definition

One could argue that Internet-Merchant and Internet- Opaque could in fact be market segments defined as non-loyal guests traveling on business or leisure. Hotels that define these channels as market segments can easily adopt this definition.
For hotels that prefer to keep channels and market segments separated, it may work better for them to redefine their market segments by focusing on behavior and lifestyle segmentation. Behavior segmentation can be defined as guests traveling for business or for leisure who have specific booking preferences or varying levels of willingness to accept different booking conditions.

Lifestyle segmentation is based on those individuals who select hotels based on their own values and lifestyle choices.

Benefits

One of the benefits of redefining traditional market segmentation and how we use segmentation information is that it will allow hoteliers to ensure the definitions currently in use are reevaluated to reflect the needs of today’s market. Too many hotels use market segments that are outdated or serve little purpose.

Reevaluating segmentation will allow hoteliers to stay ahead of trends. There does need to be some continuity to be able to accurately compare data year-over-year but this should not prevent hoteliers from tweaking the segments in the same way amenities and soft goods in the rooms are refreshed every few years. Or perhaps hoteliers can add behavior and lifestyle segmentation to their existing market segmentation allowing for yet another way to slice and dice the data. Adding another dimension could provide more depth to the hotel’s performance information. It may complicate things in the short-term but technology can help to ease the burden.

Adding another dimension by which to collect and analyze hotel data may very well allow for more accurate and easier tracking and ultimately add value to the accuracy of hotel forecasting.

Another potential benefit to this is the opportunity to increase the accuracy of hotelier’s target marketing initiatives.

In the end by adding another dimension to understanding behavior segmentation, the biggest benefit is a clearer understanding of who and what is truly making up the mix in the hotel, and understanding a hotel’s mix of business is critical.

Lifestyle segmentation is a tremendous opportunity for hoteliers to understand their customers far better than ever before. Having a greater understanding of the lifestyle choices customers are making with regard to their hotel stays will lead hoteliers into the opportunity of practicing one-to-one revenue management which after all, is the future of revenue management.

Once a hotel makes the decision to incorporate behavioral segmentation, they will need the ability to track the data in their existing technology. It will require writing reports to allow them to gather the information. Training must also take place to ensure all of the appropriate team members such as reservations and front desk agents understand not only the new fields and definitions they see but also the reasons for the changes. Ensuring everyone understands the reasoning behind the changes and the benefits they will bring will increase the accuracy of the implementation, tracking and ultimately the results.

Key review questions:
What is the purpose of market segmentation?

• • What is behavioral segmentation and what are the benefits?
  • Which of your customers are price elastic and price inelastic?
  • What are some of the actions or items that a hotel may need to consider in order to effectively implement behavioral segmentation?

BOOST YOUR HOTEL REVENUE WITH PRICE OPTIMIZER

Implementing an Appropriate demand – driven Inventory Control Strategy

Once a hotel knows the cost of each channel, then a demand-driven inventory control strategy, taking into consideration the channel costs, needs to be executed. Applying stay controls can be a very complex issue and many hoteliers underestimate the impact the controls have on revenues — both positively and negatively. If used without a complete understanding of the full impact on all stay patterns, stay controls can ultimately be devastating to a hotel’s revenue (domino effect). If applied properly and carefully, the hotel can truly capture the optimal business. However, if applied without an understanding of the impact, the hotel can miss opportunities and turn away significant amounts of business.

Prior to applying inventory controls there are some items that must be understood and considered. The first is the general rule of thumb that in order to apply any stay control(s) there must be periods of excess demand. Otherwise, the hotel will be turning away business unnecessarily. More about this and its impact will be addressed in the stay pattern management section.

Before any inventory control strategies are implemented it is also important to know the impact of overselling, walk costs, channel management, and managing group wash. Each of these areas has a direct impact on inventory control.

Overselling

Management wants to ensure the hotel reaches its maximum potential capacity for any given stay pattern in order to maximise revenue. Sometimes that means selling out the hotel to 100% capacity. It is often necessary to oversell the hotel in order to achieve this goal.

Overselling is the practice of accepting more reservations for a particular day than there actually are rooms in the hotel. This is in order to compensate for the estimated wash factor. The wash factor is the hotel’s estimate of no-shows plus cancellations and early departures.

Knowing how much to calculate as a wash factor can be quite challenging. The wash factor is determined by taking the historical no-show and cancellation information that is being tracked by the hotel and comparing it to the current booking pace activity. Additionally, it is important to look at the number and breakdown of arrivals. For example, the number of guaranteed reservations versus non-guaranteed reservations will be a factor in estimating potential wash.

When considering an oversell strategy it is important to include all costs associated with this — both tangible and intangible.

“Walking” is the result of what needs to happen when a hotel is oversold and the no-show plus cancellation estimate is too high. This means that a guest has a guaranteed booking at a hotel but the hotel will not be able to accommodate the guest for that night. Therefore, the guest is “walked” to an alternative hotel facility. The process of “walking” can be handled in two different ways. The first is probably the most common practice. The guest arrives at the hotel to find that the room reserved is not available and they will be staying at an alternate location — ideally already selected and reserved by the “walking” hotel. The second and less common practice is when a hotel contacts the guest prior to their arrival to inform them of the alternative hotel arrangements. This latter practice typically happens in a situation of extreme oversell.

The costs associated with “walking” are both tangible and intangible as stated above.

Some of the tangible costs are obvious such as the payout to the receiving hotel to which the guests are being sent, and any corresponding transportation costs such as taxis. These are normally absorbed by the hotel needing to “walk” their guests.

The intangible costs are a little bit more difficult to identify and many times are not weighted as heavily as they should be. Some intangible costs associated with overselling thus resulting in a “walk” are:

• A potential loss of a customer to the competition. This guest may not return again regardless of the efforts made by the hotel to make the situation as comfortable as possible.
• Loss in the hotel’s reputation due to the need to walk the guest. Unfortunately, viral marketing can work in reverse in this type of situation. Customers who have had a bad experience with one hotel can verbally spread the word and the hotel may develop a poor reputation.

A pound value should be put against both of these items so it can be included in future displacement analysis.

One other point that needs to be considered is a cross between the tangible and intangible costs and that is distance between the original hotel and the location to which the guest is walked. This can vary based on the time of year. For example, during a peak time in England, a hotel in Manchester Centre will have a very difficult time finding an available hotel within a reasonable distance. Therefore, the pound value that is placed on a “walk” during peak time in central Manchester should be much higher than it is at other lower-demand times of the year.

The following is an example of how to arrive at a “walk” cost.

The “walk” cost is important to take into consideration when implementing inventory management. If the controls are not appropriately applied, and the hotel has to “walk” customers, it is important to understand the complete impact for the hotel.

That being said, it is important to understand that the practice of overbooking which results in “walking” is a cost of doing business. There is a risk involved but hoteliers should not be in fear of implementing this practice as, if done right, it can greatly help to optimise revenues. As long as the hotel does not find a large number of “walks” being done regularly, then this is something that must be worked into the overall strategy and even budgeted for.

Stay pattern Management

In addition to a demand-driven inventory control strategy, stay pattern management can further enable a hotel to maximize revenues. A reservation’s stay pattern is the combination of arrival date and length of stay.

When maximizing revenue you want to accept the optimal number of reservations for each stay pattern, not the greatest number of reservations for each individual day.

The reason for this is because taking as many reservations as possible for one day could preclude a longer length of stay that includes that day, thus losing potential revenue for the surrounding days. This lost revenue may not be made up by shorter lengths of stays running through those surrounding days.

Example:

Stay Pattern 1 Arrival 10th November, one-night stay

Stay Pattern 2 Arrival 9th November, three-night stay

If all available rooms on 10th November were sold to Stay Pattern 1 and then a request was received for Stay Pattern 2, the hotel would have to turn away Stay Pattern 2, thus losing potential revenue for 9th November and 11th.

A day’s total unconstrained demand is the sum of room nights from guests wanting to arrive on that day plus room-nights generated by guests who would arrive earlier and stay through.

Stay pattern management works to achieve the optimal mix of stay patterns through each potential sold out date by limiting the stay patterns going through that date. Because the overall objective is to maximize revenue and not occupancy, it is possible to have a solution in which a potential sold-out day does not sell out and yet revenue is still maximized.

This lesson will help you to understand the impact of pricing on the bottom line and comprehend the importance of strategic pricing and why it is a priority over tactical pricing.

Once the revenue strategy is secure, it is vitally important to accurately price the perishable room inventory. Industry experts indicate that when a hotel realizes revenue growth through rate, 95% flows to the bottom line, and if the growth comes through occupancy, approximately 50% flows to the bottom line.

This drives home the importance of pricing and the impact of appropriately developing a hotel’s pricing strategy and managing the tactical execution of the strategy.

In the past, revenue management practices had a strong focus on the management of stay controls, such as length of stay requirements in an effort to maximize revenues, and pricing was secondary. Today, the focus has grown to place more of a priority on the importance of pricing strategies.

Pricing strategies allow hotels to charge different room rates for the same or similar rooms according to customer’s characteristics and needs. For example, a senior citizen traveler looking for a discount has different needs, different characteristics and a different willingness to pay than a corporate traveler has. As a result, they may book the exact same room but pay a much different price. Along with the different price there may be certain booking requirements or unique restrictions.

Once the market segments are defined for a hotel, it is up to the revenue manager to ensure a healthy mix of the segmentation.

Since hoteliers offer multiple rates for essentially the same room type it is critical to understand the importance of pricing and all it encompasses. We will continue in the next article to explore strategic pricing and the various pricing-related elements.

Developing a long term pricing strategy is a very important part of a hotel’s overall revenue management process. Proper creation of a pricing strategy and proper deployment of that strategy will ultimately provide the hotel with an opportunity to identify and capture the optimal revenue opportunities.

Too many hoteliers take a tactical approach as opposed to starting with a strategic approach. Developing a long-term strategy allows hotels to look out into the future and do a proper analysis of the realistic needs and opportunities and determine the most appropriate pricing for their hotel in the current marketplace. This is the best approach and is a good start to ensuring the hotel has an eye out to the future and is focused on long term benefits.

Strategic pricing allows hotels to be proactive and provide guidelines and plans for the entire hotel sales team to effectively sell the products.

Pricing guidelines will allow the sales department to effectively and confidently quote rates for the future because they will know the price points for specific demand periods and specific dates. With pricing guidelines, sales will have the opportunity to analyse the potential business themselves and work quickly with the customer without having to take the time to discuss pricing with the revenue director unless there is an unusual circumstance. Ultimately this allows for more empowerment and confidence in the sales department as they will have a solid understanding of the hotel’s future outlook, peak demand times and times of need.

Strategic pricing done right offers the following benefits:

• Reflect overall corporate or hotel strategies such as maximum growth, maximum revenue or new market growth objectives;
• Communicate positioning, image and branding for targeted segments;
• Communicate expectations of product quality, status and value to prospective customers;
• Determine long run revenue flows and ROI;
• Be used as part of the process for building long term customer relationships.

Creating a Pricing Strategy

Creating the pricing strategy should include all of the revenue team members. This is something that has to be done as a team and not by one person alone. Each revenue team member will have a unique perspective and important input. Additionally, this will ensure buy-in to the final strategy is positive across the board with everyone who must support the strategy moving in the same direction.

Creating a proper pricing strategy requires an understanding of customers’ willingness to pay, customer segmentation, consumer psychology, competitive value analysis, market research, value creation and, of course, revenue management.

Every pricing strategy must address the following elements:

• S.W.O.T. analysis – provides a solid understanding of the hotel’s unique attributes, strengths and weaknesses for both services and product.
• Market position – every hotel must put together an analysis that allows careful evaluation of the hotel compared to its competitors. It is important to understand the market position of the hotel within the competitive set. This will be an important part of determining the pricing for the hotel.
• Seasonal demand – one of the fundamentals for a pricing strategy is to understand market demand for the various seasons in the marketplace. Flexibility for seasonal rates must be taken into consideration.
• Day of week demand – in addition to the seasons, it is also important to take into consideration day of week flexibility. What are the hotel’s peak days throughout the week? What are they for each season?
• Customer segmentation – understanding the customer segmentation specific to the marketplace and to your hotel is critical. Every hotel must identify the target customer segments appropriate for the hotel and accordingly create price points to satisfy each segment.
• Special need periods – identify the hotel’s need periods and areas of opportunity for promotional offers. This may include holidays, special events in the marketplace or low demand times. Identify these times and create promotional offers as part of the hotel’s overall strategy. This will ensure the team will not need to create something last minute and potentially miss an opportunity.

The successful development of business is absolutely impossible without innovation in the hotel industry today. It is more and more difficult to engage new clients by using traditional methods – time does not stand still and the requests of the target group change at the speed of light. But how to satisfy the desires of customers in the new year, and, more importantly, how to improve the service through the use of new technologies?

There is no better advertising than a product that speaks for itself – this has been confirmed during the most important event of the last month, the International Consumer Electronics Show (CES 2018), which was held at the Las Vegas Convention Center.

The event presented a huge number of new products and unique innovative technologies in the consumer electronics industry, including those that not only can increase interest in your hotel, but also change the attitudes and help you to see simple things in a new light.

Here’s a list of powerful reasons to consider innovation as the key elements of marketing this year.

Keep up with the times

To keep up to date and stay in line with reality is a difficult task for any kind of business. The 21st century is so much different than the past times due to the rapid development of technology, which gives you free and accessible opportunities to develop and grow your business. The improvement of existing items of daily use and the constant search for alternatives creates the necessary atmosphere in the business infrastructure and makes a positive impression on visitors.

Convenience

Simplicity is synonymous with convenience. Everything that makes life easier makes it more pleasant and less stressful. Modern technologies are aimed at helping people to feel the comfort that lacks in solving complex daily tasks, eliminating problems and in finding answers to questions. What, first of all, is the hotel room – rest, and what can be a more attractive element for a person than comfort, and, of course, relaxation?

Design

In the planning of the upgrade, your hotel is not impossible to forget about the interior space and design. Some of the interior design trends of this year are closely connected with the style of the digital technologies (e.g. Monochrome and Comfort spaces). It means that this connection gives a great opportunity to improve a hotel interior, change your approach to innovations if you didn’t get a chance to do it before. Remember: your style is your calling card.

“There is no better advertising than a product that speaks for itself”.

Functionality

Comfort in the hotel is closely related to the functionality. High level of functionality in the room allows the client to relax and feel in the “hands” of professionals. To spare relieve a guest from unnecessary inconveniences, to replace two actions by one and to facilitate the stay in a hotel are possible with the help of clever and stylish equipment. This is called the luxury and care of guests.

Self-explanatory

Collaboration and cooperation with world brands, improving the digital and interior design and functionality of hotel rooms, tracking trends – all of these are a guarantee of profit for a modern business. The hotel, which has earned authority, thanks to the quality of provided services and its modernity, is doomed to success because its “face” and brand are direct advertising of its services.

In turn, we advise not to ignore the technologies and development of the world of innovation, because technological progress is a direct and obvious way to win the audience trust and, of course, an extraordinary and useful way of thinking about the successful development of the hotel business.