Revenue Management Needs Strategy
A Tough Year for Hospitality
The hospitality industry hit all-time lows in 2020, and Regency properties were no exception. The pandemic forced our teams to consider new pricing strategies while attempting to reach the right audience with the right message during an unprecedented crisis. Not an easy task.
Thankfully, with the help of a robust revenue management strategy, we were able to jumpstart growth and recoup losses in record time.
That said, for many properties, the central problem of 2020 wasn't just the pandemic. It was trying to navigate a pandemic without a clear revenue management strategy.
Without a data-backed strategy, revenue management becomes a reactive guessing game, pandemic or not. This can make matters worse for your property.
When properties play the reactive guessing game, they might see short term gains in revenue (say, after a big spur-of-the-moment room discount). But short term revenue doesn't equal long term profits. And profits, of course, are essential.
A strong revenue management strategy enables your property to plan proactively, not reactively. But what makes a strategy strong? The right goals.
Every property we help manage has a unique goal for the asset: grow profits, flip or sell the property, hold on to the property for the long term. Starting here, we formulate a strategy that outlines specific steps (tactics) for hitting those goals.
Goals provide the north star for your operation; strategies are the maps for getting there, anticipating market and customer shifts along the way.
But wait, you might be thinking, how could anyone anticipate a pandemic? What good is a strategy when facing something completely new? This is a fair question, and it's doubtful that any hotel had a "COVID-19 revenue strategy" in their back pockets when the world began to panic.
However, a strategy helps reorient your property back to your goals, even during difficult times. And the best strategies are backed by data which inform new plans of attack. When you're forced into reactive mode—which you can't always avoid—informed decisions become even more important.
In our experience, strategic decisions always yield better results.
Here's an example. Collectively for Q1 in 2021, the Sioux Falls hospitality market saw RevPAR declines of 20% from 2019 and 11% from 2020.
Also during Q1, the collective Sioux Falls hotels that we manage have seen a decline of 10% from 2019—but an increase of 13% from 2020. This year-over-year increase was driven entirely by rate strategies created to address customer needs and property goals—all of which were aimed not at quick cash but long-term profitability.
To repeat what we stated above: every property has unique goals and, therefore, needs a unique revenue management strategy. When each property focuses on executing their strategy, the aggregate results shine.
At Regency, our revenue management team has years of data to draw on when creating a fresh strategy for your property and its goals. We'd be happy to help you recoup pandemic losses and jumpstart growth in 2021 and beyond.
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