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Irregular revenue management for irregular times

We all know what is happening. With COVID-19 hitting our world and devastating our economies, everything is changing very fast, and so should we. Good news is we don't need to relearn how to do RM, we need to open our minds and discover new approaches to the same old skills.


Thing is, COVID has taken away our main activity (main as the one we do the most often, a few times a day) - playing around with prices in response to changing demand. We won't do that for a while. But since RM is not just about that pricing game, it is also distribution, reputation, segmentation, competition and so much more, there is still a lot of work that needs to be done.


So let's get to the point, what do we recommend that you do in this irregular time?


Don't drop your price


Dropping your price so you can gain market presence and get more bookings sounds good to you? Sounds like a suicide to us right now. Unless you have a perfectly clear idea of the market elasticity, don't go there. Remember, if you have aggressive price reductions, getting your ADR back up there will be a nightmare, once things start going back to normal.

If you feel like you can do it, don't forget the following. Consider all factors: drill down to the micro-market level, there is no universal solution or universal answers we can get now. What is happening with trading in other local industries and what are their commercial aspects? What is the political and social context on the market? 


Go manual


Pricing

Switch off your RMS if it is using historical trends to define future optimal price. At this point in time any trend in data that is used to forecast the optimal price has a major deviation with COVID-19, even if you adjust the algorithm, you will achieve little accuracy on a future price and inventory. Also remember to make sure you tag the COVID effect for future years.


Competition

Starting fresh has never been so relevant! Yes, a neighboring hotel targeting the same audience as you do, is your competitor. You should be aware of their product offering, marketing activities, distribution channel, and overall pricing. This does not mean, though, that you need to follow their RM steps if there is nothing to follow. Maybe instead, you could find that one RM market star, even if you would not normally consider the hotel your closest competitor, and have some quality inspiration for future RM.


Segmentation

Clean up. Unless you had only been open for a week when the hotel shut down, there is no way your CRM is all clean. Take the time to put your data in order. Only then analyse it, put it in graphs, tables, simply have fun. Which markets are you going to favour on your strategies? Business, leisure, MICE? Review your existing value proposition and communication strategies for these segments.


Work as a team


Analyse and involve other stakeholders at the hotel and make the call together, more than ever RM needs to produce the best of the interplay. Overall, go back to the basics, review short, medium and long term strategies. Get ready to recognise the early stages of recovery throughout your segments and markets. Make sure your value proposition is ready for those segments to come back first. And yes, prioritise. Do not try to apply solutions for all your markets at once.


Experiment 


Think about those random ideas, you have always wanted to try but never did. This IS the time to try them out. Be bold, experiment. To give you some directions, be creative with payment conditions (lay-by, instalments, pre-paid vouchers), digital marketing (new personalised content), distribution (new travel agencies, tour operators, GDS).

Mainly, remember, that even though our job might be changing right now, it is still the core of your business.


Written by Edmundo Arguelles & Anna Lebedeva


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