The 10 Biggest Mistakes in Revenue Management (Part 2)
In the dynamic world of hospitality, competent revenue management is crucial to achieving optimal occupancy and profitability. Jan M. Reiländer, Chief Portfolio Manager at HotelPartner Revenue Management, is a recognized expert in this field and is well acquainted with the common mistakes that often occur in practice. With over a decade of experience in upscale hospitality and his role as a lecturer in Revenue Management at the prestigious Hotelfachschule Hamburg and DEHOGA Berlin, he brings comprehensive expertise. In this article and Part 1 of the short series, learn from Jan with concrete examples about the revenue management mistakes to avoid and how to do it better.
Read here:
Mistake Number 6: Lack of Flexibility
Mistake Number 7: Inadequate Internal Communication
Mistake Number 8: Lack of Team Empowerment
Mistake Number 9: Weak Presentation of the Product
Mistake Number 10: Irregular Success Monitoring
Discover Mistakes 1-5 in the first part of this short series here.
6. Lack of Flexibility
Rigid policies and inflexibility in pricing can lead to missed opportunities to increase revenue.
Practical Example: A hotel rejects adapted strategies for last-minute travelers despite available capacity, this results in missed revenue potential.
HotelPartner Tip: Be flexible in your pricing to adapt to changing market conditions and monetize unused capacity. However, this doesn’t mean suddenly setting too low rates to fill your rooms at any cost. It’s about finding a healthy balance between a forward-looking approach and a reasonable level of flexibility. It’s important not to undercut your minimum price threshold to maintain consistency and avoid excessive price fluctuations. Instead, focus on communication—how you sell your last-minute rate based on your other rates, current occupancy, and guest booking behavior.
7. Inadequate Internal Communication
Poor communication between different hotel departments can lead to inconsistencies in pricing.
Practical Example: The revenue team of a hotel lowers prices for a specific period without informing the marketing department, which continues advertising with the old prices.
HotelPartner Tip: Establish clear communication channels between departments to ensure everyone is on the same page and provides consistent pricing information. Coordinate actions with all relevant teams in regular revenue management meetings, including the goals of the action and potential selling points. Remember that even, for example, the kitchen should know when to expect increased demand—your operations are directly linked to your revenue management strategy.
8. Lack of Team Empowerment
The goal of the revenue strategy must be known to and understood by all involved, both in management and operations. Everyone on the team needs a degree of freedom in implementing the strategy.
Practical Example: The hotel management devises a promising strategy and tactics to achieve it but forgets to inform the employees who are in direct contact with potential guests. Consequently, the communication of front-office staff becomes uncoordinated and unprofessional.
HotelPartner Tip: Involve employees in strategy development and provide training. Only those who understand the goal and planned measures can implement them with the acquired knowledge. Regularly ask employees with intensive guest contact for feedback on which strategy elements work in practice and which do not. Once the goal is clear, grant the team decision-making freedom, such as options for price reductions during phone sales, to act as effectively as possible within the defined framework. This is also a crucial part of revenue management.
9. Weak Presentation of the Product
A potential guest decides on a booking based on the information available about the hotel. If the property does not appear appealing, they will book elsewhere.
Practical Example: A hotel has not placed much emphasis on high-quality images and has only written the essentials in the description of its offering on the hotel website or booking platforms. Potential guests do not get a sufficient impression of what the hotel offers.
HotelPartner Tip: Invest in a well-thought-out marketing strategy that clearly emphasizes your unique selling points (USPs). This includes current and high-quality images with clear, informative descriptions on all used booking platforms to present your product in its best form. Honesty in presentation is crucial to meet guest expectations. Your communication about the product and target audience must align, as well as the naming of room categories—do not describe your high-quality product as luxury if you want to attract regular business travelers.
10. Irregular Success Monitoring
The absence of regular effective success monitoring complicates the evaluation of the effectiveness of applied revenue management strategies.
Practical Example: A hotel regularly adjusts its prices but never checks whether these adjustments have actually led to an increase in revenue, allowing declining occupancy to offset any revenue increase.
HotelPartner Tip: Implement clear metrics and analyses—especially of occupancy, RevPAR, ADR, length of stay, and price categories compared to reference periods—to regularly monitor the success of your revenue management strategies. This allows you to make adjustments and ensure you achieve the desired results. Regularly question your own product, goals, and target audiences, and analyze whether your product is still perceived as it should be. A SWOT analysis can help, along with reviewing guest reviews on popular review portals to check your external perception. Additionally, a competitive comparison in terms of factors such as image quality, general pricing in a specific period, or hotel amenities and type can help control your market position.
As you’ve already discovered, successful revenue management comes with many potential pitfalls, but now you have concrete approaches to avoid them. You’ve learned about the second set of classic mistakes in this article; click here for Part 1 of this small series on the 10 biggest mistakes in revenue management by Jan M. Reiländer. If you want to set up your revenue management based on data and be guided by experts who know how to avoid the mentioned pitfalls and more, feel free to contact us for a non-binding inquiry.
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