Revenue management learnings from the pandemic: Preparing for future challenges

08:26 PM Sep 22, 2021 | Nikhil Sharma

The entire hospitality industry has been severely affected by the ongoing COVID-19 pandemic. Within it, hotels worldwide are experiencing unprecedented challenges, as the pandemic has questioned the existence of revenue management systems operating on historical data.

This is because revenue management technologies have traditionally considered historical demand patterns such as booking lead times, booking pickup by segments and seasonal stay patterns to assess the best possible room rates and the current market conditions have made this system obsolete.


An economic downturn may create pressure to reduce rates, but history has shown there is logic in resisting this pressure. In an industry where dropping rates can’t sustainably support revenue recovery, an immediate impact might be felt.


This certainly doesn’t help us in the long term to regain ADRs to previous levels. The revenue managers are facing a huge crisis and are finding it difficult to understand and accurately forecast the future of their revenue streams to make appropriate business decisions and devise effective revenue management strategies.

The COVID-related volatility in consumer demand and pricing highlights the need for new ways to support revenue recovery. The following best practices are recommended to deal with unforeseen market conditions.

Comparative Rate

To appropriately adjust rates in the recovery environment, hoteliers can expand the competitor rate shopping. This typically involves comparing rates against five or six hotels with similar amenities in the same area. Higher chain scales might lower their rates to compete with lower chain scale hotels, making it imperative to look beyond standard rate shops. Therefore, we recommend that hotels maintain their rate position comparative to the market. Developing research shows that, in this economy, discounts won’t encourage guests to expedite their travel.

Maintaining ADR Index

Holding rates doesn’t mean simply leaving things unchanged. The hotel should instead focus on maintaining a healthy ADR index. Thus, in markets with significant downward pressure on rates, hotels may need to follow suit. The challenge lies in determining the opportune moment to adjust rates, demanding a very delicate balance and business acumen.

Revenue Management Intelligence

With real-time insights and actionable rate performance, hotels can make quicker and more informed revenue decisions. It will also provide access to competitive business intelligence, personalised room-type mapping including events, seasonal calendars, and key drivers influencing market rates.

Hotel Revenue Management Service

Hoteliers can subscribe to a hotel revenue management service to quote appropriate prices during the pandemic. On average, it has been observed that hotels taking part in a revenue management services have outperformed occupancy, ADR, and RevPAR.

What are some best practices that hotels can follow to increase their revenue?

Though the landfall of COVID-19 has laid down several roadblocks for the hotel industry, below are a few practices that hotels can instil in their operations to continue strengthening their balance sheets while offering top-notch customer service.

● Managing inventory and rates proactively by reviewing rates daily and looking at the reservations that have been booked over the past 24 hours.

● Analysing how far out guests are booking, in addition to ensuring the rate plans are set up correctly and distributed to the right channels, thereby ensuring rate parity across those channels.

● To attract customers, look for opportunities to apply value-added pricing instead of lowering BAR rates. Offering room upgrades, F&B amenities can be seen as more valuable to guests than a certain percent off the basic rate. This is because customers receive something tangible that enhances their overall stay experience.

● Beware of being always on sale. Instead, try using Flash Sales providing discounts for a very short period. These initiatives drive urgency for consumers to book straight away rather than to wait and book later.

● The current COVID market continues to experience very short booking windows, booking within less than 5 days before the stay for all segments. This means that revenue managers will need to adopt a very short-term forward pricing methodology and must be willing to adapt their pricing quickly, as demand patterns change. This also increases the importance of checking external demand data using available sources such as STR, Market Insight, and Google analytics more frequently to identify shifts in consumer behaviour quickly.

The hoteliers must rely on sophisticated, demand-centric revenue management systems, with the ability to collect and analyse real-time market demand indicators to accurately price their rooms during the ongoing COVID-19 pandemic and beyond.

(Nikhil Sharma is Regional Director- Eurasia, Wyndham Hotels & Resorts.)

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