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Welcome Anywhere Property Managment System > Blog > Hotel revenue management

Derived rates are powerful tools that independent hotels can use to compete with the big chains.

As well as saving busy general managers a lot of hassle, being able to dynamically adjust rates across a batch of rooms in one fell swoop can boost revenues.

As derived rates are becoming more common, let’s dive into what makes them tick and why they’re worth leveraging at your independent hotel…

The basics

Derived rates are typically offered as a tool within a PMS (property management system) and are linked to the hotel’s online booking service and channel manager.

Historically, and without any form of derived rates tool, hoteliers have had no choice but to adjust room rates individually whenever it was within their interests to make wholesale changes.

This manual approach is time-consuming and not exactly ideal, which is why the automated features offered by derived rates are a big selling point for those who adopt them.

The idea is to set a base rate, then use that rate as the foundation on which all other rates are automatically calculated. For instance, your room-only rate could be a good starting point; the lynchpin which defines how other rates are worked out, if you will.

When you run a discount offer, for example, this price will be derived from your base rate, with a percentage of the total subtracted to match the desired promotional discount.

The same applies for room rates which include extra services, such as breakfast, an evening meal or even a spa treatment package.

Once everything is set up according to your liking, you can simply let the derived rates tool do all the hard work, so you can focus on delivering a great guest experience elsewhere.

The benefits

Aside from the obvious advantages that derived rates offer in terms of efficiency and fewer pricing errors, they bring other perks to the table for independent hotels.

For instance, you might want to adjust your rates to reflect seasonal changes, or to complete more effectively with your local rivals. There may also be times when you need to lower prices to stimulate sales when you see a quiet patch on the horizon.

Whatever clever tactics or new strategies you want to try out, derived rates will give you the ability to do so without forcing you to jump through hoops in your PMS and channel manager.

Mistakes happen, and derived rates go a long way to avoiding common errors made by hotel staff. For example, if you lower your base rate, but forget to change your discounted rate, this can create confusion among potential bookers. With derived rates active, you’ll never need to worry about such a slip-up taking place.

Derived rates also make channel management far more effective, by enabling you to make wholesale changes to rates across a range of OTAs in seconds. In a competitive marketplace, this can give you the edge, or at least enable you to respond quickly to whatever new curveball your closest rivals have thrown your way.

Wrapping up

There may be a bit of work involved in perfecting your derived rates setup, but once the cogs are whirring you’ll be glad that you put in the effort with this fantastic form of rate management.

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In episode 3 of the Welcome Systems podcast, we invite founder and CEO of Right Revenue, Adrienne Hanna, to unpick the contentious subject of rate management for hotels.

This fascinating insight into what is often considered the 'dark art' of hotel management asks one of the industry's foremost experts in the field the following questions:

  • What’s the biggest challenge facing hoteliers in the digital age?
  • What’s a ‘strategic rate strategy’?
  • How can hoteliers overcome ‘not enough time’ syndrome?
  • How can hoteliers maximise their use of their own website and OTAs?
  • How do you effective track and measure your rate strategy?
  • How should hotels deal with bargain hunters?
  • Does the AirBnB model threaten the hotel industry as we know it?

Enjoy:

https://soundcloud.com/user-568165456/welcome-systems-podcast-ep3-finding-time-for-proper-rate-management-featuring-right-revenue

Find out more about Right Revenue here: www.rightrevenue.co.uk

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Our latest guest post comes courtesy of Booking Suite's Idan Velleman, who digs deep into the many benefits technology can offer the modern hotelier when it comes to setting and managing competitive room rates.

For any property owner, managing prices is a time-consuming business. You need a lot of data to help you do it, but at the end of the day, the final decision on pricing is up to you. There’s an art and a science to setting rates, and chances are, you rely on a little of each.

To start, there are so many factors to consider. You have to take into account your competitors’ rates, your historic and near-term occupancy, your reservation history, local events, and your unique business strategy. Where does all that data come from? For many properties, it arrives on paper or via a downloaded Excel spreadsheet. You take all of the contributing factors mentioned above, stack them up against each other, and plan your rates. There’s the science.

For most properties, however, managing rates isn’t all science. After considering the data, you also weigh-in with your personal experience and history. After all, you know your property better than anyone. The data informs decisions, but it doesn’t make decisions for you.

And that’s how it should be. You need to retain control. Given this, the idea of using technology to aid your revenue management strategy might be unsettling. It might also seem like the safer bet to continue to manually implement your revenue strategy all by yourself.

However, we at Booking.com are firm believers in the potential of technology to help properties better run their businesses. In this article, we’ll take a look at how technology can help you improve and run your revenue management strategy. Most importantly, we’ll also examine how technology gives you more control and flexibility when it comes to setting the right prices for your property.

The case for technology

Revenue management systems save you time. If you don’t have software to help, setting rates can take up a good portion of your day. You might be a small business owner doing it on your own, or lucky enough to have a member of staff dedicated to rate management; however you do it, the effort is worth it, because setting the correct price is vital to your business.

Just imagine, though, if you had the ability to automate the tedious elements of the data collection process that are part and parcel of setting rates. Revenue management systems do just that, by collecting and analysing diverse data sets relevant to your property’s rates. The majority of properties do not have the time or knowledge to consider vast amounts of data as a whole, but a revenue management system can use such information to recommend optimal rates, which the hotelier can then push out through their channel manager with ease.

How it works

But how exactly do revenue management systems work? Which factors does this technology take into account when making rate recommendations? Most revenue management systems (including the BookingSuite RateManager) operate using advanced algorithms to analyse factors such as your unique PMS data, occupancy rates, market demand, competitors’ rates, events, and more, to give you relevant rate recommendations.

Revenue management technology streamlines work which usually takes hours into a matter of minutes. Ultimately, these rates are optimised for your unique property and market, and may help improve your bottom line.

Stay in control

Above all, revenue management software still gives you control when you need it most.

Let’s consider an everyday example not related to revenue management. Nowadays, many people rely on their smartphone’s map for directions while walking around a city or driving to a new destination. Complicated software works behind the scenes of your phone’s map to give you suggestions about which route to take. But other factors may come up on your journey. Let’s say the GPS tells you to go a certain way, but you happen to know that making a left turn at that intersection is difficult at rush hour. You therefore adjust your route, so that you can turn left when you have a traffic light to help.

Sometimes, it makes sense to follow your GPS' instructions at every single turn. Other times, however, you need to adjust your decisions based on your own knowledge and expertise. In such moments, we're able to pause the directions, change them, stop and review the map. We can take time to consider the best route.

Using technology to optimise your rates is similar to the example above. You still have the final say over your prices, because you know your property, your guests, your competitors, and your strategy best. That art will never leave your side, but it's a science that you can automate, and that will make your job easier and your hotel more profitable.

[/fusion_text][button link="http://suite.booking.com/?utm_medium=referral&utm_source=guest-post&utm_campaign=welcome-technology-in-revenuemanagement" color="default" size="" type="" shape="" target="_blank" title="" gradient_colors="|" gradient_hover_colors="|" accent_color="" accent_hover_color="" bevel_color="" border_width="1px" shadow="" icon="" icon_position="left" icon_divider="no" modal="" animation_type="0" animation_direction="left" animation_speed="1" alignment="" class="" id=""]Find out more about BookingSuite[/button]

 

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[caption id="attachment_14323" align="alignnone" width="600"] John Jones, Welcome Systems Ltd (left), Bernard Willems, BookingSuite (right)[/caption]

Welcome Systems Ltd is the first UK hospitality booking software company to partner with BookingSuite, a unit of Booking.com dedicated to supplying accommodation providers with smart services and tools to deliver enhanced guest experiences.

The result is a seamless integration between ‘Welcome Anywhere’ and BookingSuite’s RateManager tool. Launching on January 9th 2017, the new service will help hoteliers manage their pricing with instant rate recommendations, saving valuable time and money and increasing both revenue and occupancy.

Welcome System’s Managing Director, John Jones, explains:

“Welcome Anywhere is a zero-commission hotel booking system for hoteliers who need to make smart decisions on room-pricing and require a flexible rate strategy that takes their competition into account and delivers profitable room tariffs.

“The advantage of our new partnership with BookingSuite is that their RateManager tool automatically assesses and recommends the best rates for hotel rooms, and predicts occupancy up to 360 days in advance.”

BookingSuite’s RateManager is now directly integrated within Welcome Anywhere so that any pricing changes recommended by the tool can be automatically communicated and updated. This means no duplication of effort is needed for hoteliers to benefit from the recommendations offered by the tool.

Jones continues:

“Welcome Anywhere users are now able to increase their competitiveness and automatically flex their pricing based on RateManager recommendations so that guests will always receive the best deal and hotels maximise their bookings on a 24/7 basis.

“Our test partners love the new feature and have already recouped the cost of their BookingSuite RateManager subscription during trials. We’re expecting huge demand for the system on its launch.”

Welcome Anywhere Plus now offers a two-way interface with the BookingSuite RateManager. For further details, contact our team on 0330 100 10 90 or by clicking below:

[/fusion_text][button link=" http://welcome-anywhere.co.uk/bookingsuite/" color="default" size="" type="" shape="" target="_self" title="" gradient_colors="|" gradient_hover_colors="|" accent_color="" accent_hover_color="" bevel_color="" border_width="1px" shadow="" icon="" icon_position="left" icon_divider="no" modal="" animation_type="0" animation_direction="left" animation_speed="1" alignment="" class="" id=""]CONTACT WELCOME[/button]

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How often do you update your room tariff? Does it reside on the check-in counter, laminated and curling slightly at the edges? Or is it something you constantly monitor, change and adapt to fit market conditions and demand?

Bearing in mind this post is labelled ‘B&B rate management’, it may sound like we’ve inadvertently strayed into hotel chain territory with the last suggestion, but in the dynamic, digital marketplace in which we now find ourselves, every accommodation business owner has to get serious about strategic rate management.

That includes you!

In fairness, though, you’re probably not blessed with the presence of a revenue manager. You’re a small business owner who has to pour their heart and soul into every area of the operation. You clean the rooms, cook the breakfast, welcome guests through the doors and do everything in your power to ensure there’s a healthy number of bookings in the diary.

Rate management? Who’s got time for that in the B&B trade?

You have! And you know why? Because it can be devilishly simple.

So simple, in fact, that we’ve set ourselves a challenge; we’re going to attempt to provide the simplest B&B rate management guide you’ll find on the web - in just three steps.

Here goes…

1. Pick the right tool

Do you have a hotel booking system? No? Well, it’s time to invest in one. Thankfully, they’re now incredibly low-cost and, in some cases, packed with features that were once only present in expensive, large hotel property management systems.

Online travel agencies (OTAs) are increasingly jumping on the rate management bandwagon, too. Booking.com, for example, has recently introduced BookingSuite, which offers properties of all sizes the ability to get a handle on market demand and competitor pricing. It’s powerful - and genuinely useful - stuff.

If you’re a B&B owner, it really is worth checking out the new connections offered between hotel booking systems and OTAs - they’re capable of taking a great deal of the work off your hands when it comes to rate management.

2. Deciding how much to charge

Check out your competitors. What are they charging? Do they appear to be full regularly? If so, there’s a chance they’re either A) well-priced, or B) too cheap. Go with your gut instinct; if you wince at the rates being charged by the competition, price your rooms aggressively.

Don’t focus solely on the small properties, either - take a look at the big boys, too. You have a far more interesting proposition for guests when compared to soulless chains, and if you can match or beat their pricing and extol the virtues of staying with an independent operator, you should be able to steal some of their business.

3. Get strategic about price increases

When is your B&B most in demand? Are there tangible peaks during certain times of the year? Is there a local event on the horizon that will signal a higher demand for accommodation in the area?

You know your market better than anyone. You know your guests like the back of your hand. There’s nothing wrong with charging a little more when demand is higher - it has been a tactic long used in the hotel trade.

That’s it!

Simple, eh? No spreadsheets, no calculations and no finger-in-the-air guesswork - just good, honest common sense - that’s all your rate strategy needs.

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Expedia logo
[fusion_text]Managing rates and keeping on top of competitors in the hotel industry is difficult. Rather encouragingly, the OTAs appear to be taking note of this with Expedia the latest to jump on the revenue management tool bandwagon.

Rev+ is their attempt at providing hoteliers with actionable data and analytics and comes at no additional costs to their hotel partners.

We're yet to lay our hands on it, although we've been very impressed with Booking.com's take on revenue management (more on that very soon...), and it's great to see other OTAs following suit.

We'll hand over at this juncture to hotelmarketing.com, who have the inside scoop:

[/fusion_text][button link="http://hotelmarketing.com/index.php/content/article/expedia_launches_revenue_management_tool" color="default" size="" type="" shape="" target="_blank" title="" gradient_colors="|" gradient_hover_colors="|" accent_color="" accent_hover_color="" bevel_color="" border_width="1px" shadow="" icon="" icon_position="left" icon_divider="no" modal="" animation_type="0" animation_direction="left" animation_speed="1" alignment="" class="" id=""]Read Article[/button]

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Boosting B&B revenue

A study conducted by TripAdvisor in 2015 found that smaller independent accommodation operators were providing the biggest boost to the UK’s overall average rating.

What’s more, B&Bs appear to have led that surge in quality with those based in the UK enjoying an average review rating of 4.16 our of 5. That helped put our nation’s independent hospitality businesses in a lofty second place out of fifteen major tourist destinations. Only the Italians managed to score higher (and they do have Lake Garda, so we’ll give them that).

So, B&Bs in this country are, quite simply, brilliant. But they face something of an uphill struggle when it comes to boosting revenue and increasing margins. The overheads involved in the running of a B&B aren’t insignificant, and if you add in the endless hours required to keep the business afloat and guests happy, the bottom line for the owner isn’t always that palatable.

With that in mind, we’ve put together a few tips for boosting revenue in B&Bs, because we think there are a few simple things owners of such businesses can do to make their end of years figure look rather more attractive.

1. Invest time in TripAdvisor

Yikes. Why start here? For one very good reason: TripAdvisor is perhaps the most important sales channel available to B&Bs and, if you’re ignoring it or pretending it isn’t there, it’s time to dig your head out of the sand and meet the public.

Firstly, update your listing with a brilliant description and photos and, if you can afford it, pay for a Business Listing (the benefits make it worthwhile). Then, spend time digesting reviews and replying to as many as you can. As the business owner, you get the last say, so put your best foot forward and show the world why you’re an attentive B&B owner who loves their business and its guests.

Nearly every guest will use TripAdvisor to check you out. You should be doing the same, because putting your head above the parapet shows you care and will attract more people to your establishment. More guests equals more revenue - it’s that simple.

2. Up-sell

Forgive us for introducing a somewhat car dealership-ish term, but up-selling in the hospitality industry is absolutely vital if you are to uncover latent revenue opportunities. What’s more, there are plenty of easy ways to do it.

If you have graded rooms, always offer the best ones to the guests who have booked standard rooms when they check in. If you operate a taxi service into the local town, make people aware of the fact when they arrive. Perhaps breakfast comes in two flavours (excuse the pun), with one being a premium affair; again, up-sell to those who booked the continental.

3. Forget you’re a B&B

It’s always a shame to see B&Bs drop that very label and instead call themselves a ‘guesthouse’ or ‘small hotel’. Be proud of what your property is - there’s a huge amount of tradition woven into the term ‘B&B’ which many guests love. However, in order to boost revenue, you need to think bigger.

Implement a hotel booking system, not a B&B booking system (you no longer have to spend a fortune in order to do so); apply hotel marketing tactics to your website by stealing the best content and layout ideas from your larger competitors; if you have room, erect a proper check in desk.

Do all you can to offer a hotel experience to guests, but remain close to and proud of your roots.

4. Use OTAs, but don’t rely on them

You should absolutely be using Booking.com as a B&B operator. They will act as a beacon for your establishment and introduce lots of new guests. The trap you should avoid, however, is becoming too reliant on them.

This usually manifests itself in returning guests booking again through the OTA on which they originally discovered your B&B. That’s another 15% commission, gone. So, instead, always tempt people to rebook through your own website (because you implemented that hotel online booking system, didn’t you?).

5. Allow dogs

Even if you’re not a dog person, allowing pets into your B&B will instantly unlock the door to more bookings and - you guessed it - more revenue. You can charge extra for furry guests and the fact you allow them through the door will endear you to the thousands of people who holiday with their four-legged friends every year.

Summary

We hope the tips above help you in your quest to raise the revenue your B&B generates. Here are the takeaways: think like a hotelier, connect with guests on TripAdvisor and embrace every opportunity to up-sell additional services to guests.

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Welcome Anywhere hotel booking system

Hospitality and restaurant booking software business, Welcome Systems Ltd, has released a brand new rate manager especially designed for busy pubs with accommodation.

Mark Ellis, Marketing Director at Welcome Systems, explains:

“This new module is part of our Welcome Anywhere package, and enables pubs with rooms to make pricing plans a reality through the quick set-up and management of special offers and seasonal rates.

“Incorporating a ‘fast-rate wizard,’ Welcome Anywhere works flawlessly on mobile devices so pub owners can react quickly to changing market conditions and provide a wide range of guest offers.”

Welcome Anywhere also makes it easy to connect room bookings to tills so food and drink bills can be added seamlessly to accommodation charges and allow for centralised revenue reporting.

Mark continues:

“Pubs with rooms are increasingly well placed to rival their big hotel competitors, but many need to improve their digital offer to meet the expectations of savvy online travellers.

“Historically the pub market has avoided new technology which it views as being too expensive. However, Welcome Anywhere offers a free, one-month trial, and costs from as little as £30/month.

“Eliminating errors such as missed room postings and giving guests quicker service with just one single bill on checkout makes this a must-have for pubs’ booking and bills management.”

Winner of the prestigious ‘Pub of the Year’ 2016 title, The Horse & Groom in Bourton-on-the-Hill, is already a keen supporter of the new Welcome Anywhere product.

Tom Greenstock, Proprietor of the Horse and Groom, says:

“We’ve gained recognition through several other awards but Winning the Pub of the Year is the icing on the cake: it’s the award that every publican dreams of winning.

“We offer five rooms and the advantages of using Welcome Anywhere have been tremendous.

“The system never sleeps, so if someone in Australia books a room in the middle of the night everything’s handled automatically while we’re busy looking after our guests. There’s no chance of human error - once a room is booked, its availability is removed.”

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Welcome Anywhere rate manager

Hospitality and restaurant booking software business, Welcome Systems Ltd, has released a brand new rate manager especially designed for independent hotels with restaurants.

Mark Ellis, Marketing Director at Welcome Systems, explains:

“This new module is part of our Welcome Anywhere package, and enables independent hotels to make their pricing plans a reality through the quick set-up and management of special offers and seasonal rates.

“Incorporating a ‘fast-rate wizard,’ Welcome Anywhere works flawlessly on mobile devices so that hotel owners can react quickly to changing market conditions and provide a wide range of guest offers.”

Welcome Anywhere also makes it easy to connect room bookings to tills so that food and drink bills can be added seamlessly to accommodation charges and allow for centralised revenue reporting.

Mark continues:

“Independent hotels are increasingly well placed to rival their big chain competitors, but many are seeking to improve their digital offer to meet the expectations of online savvy travellers.

“Historically the independent hotel market has avoided new technology which is often viewed as being too expensive. However, Welcome Anywhere offers a free one-month trial and costs from as little as £30/month.

“Eliminating errors such as missed room postings and giving guests quicker service with just one bill on checkout makes this a must-have for independent hotels’ booking and bills management.”

One enthusiastic Welcome Anywhere supporter is the Knockomie Hotel near Inverness, with 15 bedrooms and a formal restaurant that serves traditional Scottish cuisine of the highest quality.

Knockomie Front of House Manager, Carol Duffus, comments:

“We’ve been using Welcome Anywhere since February this year after deciding to replace our previous booking system and the cost and customer service advantages have been tremendous.

“Welcome Anywhere is commission-free and highly affordable. I can now update key information myself, client booking confirmations are fully automated and the system is completely mobile, so I can keep up-to-date using a tablet or smartphone even when I’m out of the office.

“Welcome Anywhere is also integrated with the online travel agencies (OTAs), cutting out any risk of double bookings and giving me real peace of mind. The new rate manager includes some very interesting features and we’re now looking forward to a busy summer season.”

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