Understanding Revenue Management

Revenue management is a term you’ve likely come across during your time as a self-caterer. But what does this mean in reality? And how can you harness the principles of a revenue management strategy to benefit your business? Waving goodbye to jargon and exploring the steps you can take to enhance your profitability and bookability, we take a deep dive into the topic of revenue management and the steps you can take to implement a strategy of your own.

What is revenue management?

Simply put, revenue management is the process of using data to predict customer behaviours and, in turn, making business decisions around pricing and distribution based on these insights. The principles of revenue management are something the airline and hospitality industries have been using for decades and is transferrable to the self-catering market. We understand – the term revenue management can feel daunting. Fear not; we’re here to break this down and help you realise how this works in reality. In basic terms, it all comes down to regularly considering your property’s position in the marketplace to get the most value out of every booking.

The price is (or isn’t) right

Your price isn’t always right. It’s almost impossible to manually predict and adapt your pricing based on current market trends. While your reservation diary might be jampacked, are you yielding the most value from each of those bookings? Could you enhance your pricing and still have a busy booking diary? The answer is yes.

Ensuring your price is right is one of the key principles of effective revenue management. After all, revenue management is about managing revenue. And successfully managing revenue should result in greater profitability. So, how does this work? Well, you can flex and adapt your pricing based on booking behaviour. But booking behaviour is constantly evolving. Self-caterers can often miss a trick, especially if you only explore your pricing once or twice a year. That’s where dynamic pricing through with Beyond comes in. Not only does dynamic pricing help you take the guesswork out of pricing, but it also provides you with bucketloads of data. 

Fusing your self-catering experience with Beyond’s technology will ensure your properties are booked at the best price and at the best time. It continually updates your pricing using intelligent algorithms formulated by considering occupancy, demand, and events in your local area. It does the groundwork for you, meaning you’ll get more value from each booking without lifting a finger.

SuperControl’s founders (Robert and Melinda Kennedy) have put dynamic pricing in action through their own self-catering business, Orroland, and have seen an 80% increase in average daily rate since 2019. Importantly, they found repeat guests were happy to pay the slightly enhanced rate on offer. Why? Organised bookers are willing to pay a premium to secure their dates. After all, they’re booking in advance to organise a stay around their plans, meaning those particular dates are of great value.

Dare to distribute

To OTA or not to OTA – the age-old question! While you might be cautious about listing your properties, booking channels drive visibility in a crowded marketplace. More visibility means more demand. Platforms such as Airbnb and Booking.com can reach millions of potential guests daily. Ensuring you have a robust distribution strategy in place is another of the principles driving revenue management. After all, you need to stand loud and proud in the marketplace to put your pricing tactics into practice.

The world is changing. We use Deliveroo to scout our evening meals. Uber to book transportation. And booking channels to find our next holiday. People love technology that makes their lives easier. With platforms like Airbnb providing a full week’s itinerary in moments, millions of travellers are using booking channels to find their next escape. In fact, Orroland has seen a 28% increase in OTA bookings in the past five years, with over half of its bookings coming from channels.

Taking a trial and test approach with booking channels opens a world of possibilities.  Best of all, you can quickly list your properties on a multitude of platforms using SuperControl’s channel manager. If you’re already utilising booking channels, you can take steps to optimise your listings to increase visibility and improve your likelihood of appearing up top in search results.

The devil’s in the detail

Adopting a ‘set and forget’ mindset to your pricing and distribution strategy can be detrimental to your competitive edge. Instead, you should utilise data to drive your decisions. Data is key in revenue management and sets the foundations of your overall strategy. It’s how you determine if your chosen tactics are working and enable you to pivot depending on market conditions and insight surrounding your property.

But what data should you track and why? It’s worthwhile considering:

• Booking lead times: Booking lead time is always adapting throughout the calendar year. Since COVID, the way in which guests book breaks has changed. You might find your booking lead times are a lot shorter than before 2019. It’s important to keep track of this to identify trends and understand how this alters dependent on seasonality and local events.
• Revenue: Regularly assess how much revenue you’re generating from bookings and additional booking extras. SuperControl’s revenue report enables you to understand how much income you’ve generated compared to what you could have taken if a property was fully booked.
• Occupancy: SuperControl users who adopt Beyond Pricing have access to a multitude of market and revenue-focused data including occupancy. These insights provide you with powerful statistics around exact occupancy % for any given time, providing the opportunity to compare against average market occupancy.

…And that’s just for starters! You can also consider using tools such as Google Analytics, Facebook Insights and SEMrush to access a vault of valuable information surrounding your online visibility and performance.

Are you interested to learn more about how SuperControl can support your business to adopt a revenue management strategy for you self-catering business? Get in touch today.