Revenue management is about offering the right product

The phrase “Revenue management is about offering the right product, to the right customer, at the right time, through the right channel, for the right price” is often banded about but Revenue Management is more than this and, as Revenue Management professionals, we also need to consider how we “dress the shop window”.

Imagine you’re walking down Oxford Street in London and walk past Selfridges.  You look at their window displays.  There are a few tempting, tantalising items on display which make you want to enter the shop, browse then make a purchase.  Now consider the last time you looked for a hotel on the internet.  Regardless of where you looked online, I can guess that when you viewed a hotel there were so many things listed (and sometimes blindingly obvious e.g. duvet) that you couldn’t really determine the points of differentiation between hotels, so pretty much the choice between one hotel and another boiled down to price.  Not ideal from a hotelier point of view.

Countless pieces of research have been done which show that consumers want choice, but not too much choice, and they want enough, but not too much, information to be able to make a decision.  The human brain can only make a certain number of decisions each day and it will prioritise what it chooses to make decisions on.  So, we need to be mindful of this and, therefore, do three things:

Firstly, we need to be conscious that in the online world consumers do the research themselves so we need to inspire people to stay with us as opposed to another hotel.  The old adage “a picture paints a thousand words” is so true and studies have shown that consumers rely heavily on photos when choosing their hotel.   So, we need to use images to bring our hotels to life online and inspire people to stay with us rather than one of our competitors.  Obviously, price is an important part of a consumer purchasing decision but when there are several products or services at a similar price point, many people actually go on to purchase the one which they feel a positive emotional attachment to (even if it’s the most expensive option they are considering) and images help people make those positive connections.  So, we need our photos to showcase the unique selling points of our hotels, both public areas and bedrooms, to highlight what makes us better than our competitors.

Secondly, we need to talk about what matters to guests.  Who knows how big 48m2 is?  But everyone knows what a fully stocked, complimentary minibar is!  When browsing online, people may spend less than 30 seconds scanning all the information on a webpage, so we need to ensure we remove any “padding” (e.g. “with a desk area so you can catch up on emails” – surely it’s up to the guest to choose what they spend their time doing), we do list the things that people value, such as access to Club Lounges and complimentary Wi-Fi, but avoid the obvious e.g. “instant hot water” and also omit things that aren’t going to make one iota’s difference as to whether people book or not e.g. “oversized chair”.  So, by keeping it clear, simple and relevant a potential guest can see what we’re offering.

Thirdly, we need to streamline what we offer.  There is no point offering 22 different rate options if there are only ever 5 that are ever booked.  We need to offer enough to give people choice, but not an overwhelming array, and make it clear what the differences are between the rates shown.  By offering more than just-enough, we are “peacocking” rather than giving the customer what they want.

So, it’s simple really.  As Revenue Managers, we need to turn around and see us from a customer perspective – tell them what they want, and need, to know and no more.  Do that, and we should see our conversion and revenues increase!