Revenue Management-The Rate and Occupancy BalanceDecember 20, 2018
A common misconception when we speak to clients about our revenue management services is that revenue management always means we increase their rate. This is NOT at all what revenue management means-and why a “Set It and Forget It” mentality is never a good one.
Case Study-This Week in SW Florida
We looked at trends and knew that snowbirds would not be traveling up and down the highways between the 15th and 25th of December. They would start traveling on the 26th.
We adjust our rates DOWNWARD in order to increase occupancy. We then compared our pickup and occupancy against our Comp Set-and you guessed it-we are about triple the occupancy of the competitors who do not manage rate. Their rates went up in October and have not moved. Thus, our properties are picking up what few snowbirds we have and our revenue is greater due to the increase in occupancy.
Remember-Revenue Management is about the bottom line at the end of the month-not about how high rate can get or how high occupancy can be-it is about REVENUE! This can be a hard concept when owners are screaming, “Why did you lower my rates,” or GM’s are screaming, “I have empty sites,” but at AOS, our goal is greater revenue and this often means manipulating rate down for occupancy or up for higher ADR-but fewer site nights.
It is a complicated dance, but we do it well!