Revenue Management Strategies during an Economic Downturn or Global Financial Crisis
August 24, 2020|Hotel Marketing
How should you manage your hotel's revenue during a financial recession? This question is very topical at the moment, given the COVID-19 pandemic and its felt impact across the hospitality sector. It can understandably cause quite a lot of panic, mostly because a financial crisis thankfully doesn't happen that often.
Now is the best time to be prepared and get creative so you can minimize the impact of the economic downturn on your hotel business.
Firstly, keep an eye on your competitors. We advise this time and time again, but it could not be more relevant today. It is one of the easiest things you can do as a revenue manager. Look at what actions your competitors are taking and decide if it is something worth doing for your hotel. Remember, it is better to learn from other's mistakes so that you can avoid making your own.
Secondly, online travel websites are a great solution to consider if your hotel does not already use them. As the market becomes ever more competitive, guests are more selective about where they choose to stay. Many turn to websites that allow them to compare hotels easily. These websites often come with a small fee, which may have made you hesitate in the past. Now is the time to seriously consider investing in them and adjusting your pricing accordingly.
It may also be worth checking out websites that you have considered in the past to see if they have reduced their prices. For example, the cost per click of Google AdWords has come down significantly since the outbreak of coronavirus earlier this year.
Another thing you can do is to capitalize on the strengths of your hotel. It is something that often gets forgotten in the panic of an economic downturn.
Ask yourself what makes your hotel unique and how you can use this to your advantage in the current time. For example, because of the COVID-19 pandemic, many people want to avoid densely populated urban areas that typically have higher risks of catching the virus. If your hotel is in a more rural location, promote how much space your property has and how this makes it easy to observe social distancing compared to inner-city hotels.
Another factor to consider is how far guests can travel to your hotel. Generally, guests choose not to travel as far. There is certainly no exception to this when it comes to the COVID-19 pandemic, where regional and national lockdowns have prevented guests from traveling across state and international borders. For this reason, it might be a great idea to bring your marketing strategy a little closer to home and advertise to locals who are more likely able to access your hotel.
Another equally important matter you should look into is your booking terms and conditions. Every hotel has them, but many are left untouched for years. An economic recession may be the best opportunity to review your booking conditions. With all the uncertainty that comes with the COVID-19 pandemic, guests are checking the fine print a lot more closely and are paying more attention to things like your cancellation policies. If your hotel offers more flexibility during the booking process, it could give you that much needed competitive edge.
There are lots of ways hotels already provide value-added features, so make sure you use these to your advantage, too. Your hotel might not have always offered a complimentary breakfast. It is well worth considering now because it is through incentives like this you can keep as many rooms occupied as possible.
There are many more strategies used to counteract the effects of a financial crisis, but these are some of the main ones. Be careful not to do everything at once. For example, flash sales are a proven technique for filling up rooms but bear in mind that other hotels will also be taking the same approach. Always look for promotions that make your hotel stand out.
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