Revenue management in difficult times

Revenue Management in schweren Zeiten

The coronavirus is a major challenge for all of us. Much is still uncertain, but definitely worse than we had hoped a few weeks ago. Revenue management, or rather, accurate forecasting for the coming weeks and months, is a challenge at this time.

Everyone knows the main goal of revenue management. The goal is to sell the right product, at the right time, to the right guest, at the right price, through the right channel. Doing this successfully is not as easy as it looks – and as experienced revenue managers will tell you, it is not at all. This simple principle helps the hotelier to focus on new opportunities.

The right product

It is necessary to reflect what YOUR guest wants. You should focus on products and services that are not easy to imitate. It is crucial to highlight the hotel’s unique selling points to differentiate it from the competition. Develop service packages and products that add value for the guest and do not cost the hotel too much. In doing so, you should consider all revenue streams of the hotel. New concepts and formats for MICE (online & presence) are required. Special booking conditions help to protect your flexible rates.

In this context, also review the content of your website. Customer benefits and service advantages for the guest must be communicated clearly and unambiguously on your website in order to create competitive advantages.

The right price

Currently, the price sensitivity of the guest is different than normal. Guests will not travel if they think there is a risk, even if the price is very attractive.  – The demand is simply not there. In this context, avoid lowering prices or offering unconditional discounts. Also review your competitive price positioning.

The goal of the short-term pricing strategy is to avoid price dumping through discounts or further restrictions on cancellations.

In addition, revenue managers should focus on the competitor set and market trends to make appropriate adjustments to pricing strategy if necessary and then monitor competitor response. Competitors who drive prices down or exhibit out-of-control pricing behaviour should be excluded from your competitor set and for pricing decisions.

Guests are often not aware that a hotel has reduced prices, because they do not observe the hotel’s room rates like stock prices on the stock exchange. Therefore, it is important that price reductions or promotions are displayed to the guest on their own website. Regular prices must be crossed out and promotions highlighted. Companies like Amazon or Booking know how to display the benefits and discounts advantageously. Many IBEs (Internet Booking Engine) or channel management systems are able to implement these requirements and highlight prices on the hotel website accordingly.

The right time, the right guest, the right channel

As difficult as it may be at the moment, be patient. Develop different pricing and distribution strategies for the different booking horizons – short-term, medium-term and long-term – and review them regularly.

OTAs are outdoing each other in terms of campaigns and promotion. Consider carefully whether the campaign offered fits your pricing strategy. Or do you create unnecessary costs by participating and cannibalise the business. Check your content here as well and make sure that sufficient pictures, information etc. are presented, because content influences your ranking in the booking portals.

Use and communicate the advantages of direct bookings, e.g. better cancellation or rebooking conditions as part of your price offer.  Highlight your services such as 24/7 availability and your advisory competence for direct bookings. The OTA’s have lost trust especially in this point, as they are not or only difficult to reach for unsure customers.


Forecasting is the heart of revenue management. However, forecasting is currently like driving on sight. Current conditions correspond to the forecast. Revenue managers cannot currently use historical trends and booking patterns as a reference for future forecasts. They have to isolate this period in the data after the fact.

It is more important than ever to monitor daily pickup for each individual day and each individual market and price segment for the next 120 days and beyond, even if pickup is currently very low. Make demand forecasts for shorter time frames and review them more frequently. Monitor the pickup and your pricing strategy for 2021 just as regularly, as many group bookings and events continue to be postponed. High performance revenue management systems, with their scientific background and extensive algorithms, particularly support revenue managers in these times.

Experts are convinced that the recovery will take longer compared to other crises like SARS or the global financial crisis. They even expect a recession. Nevertheless, travel will continue to play a role in motivating people – especially in times of isolation.

One thing is certain: guest behaviour has changed in the last 4 weeks and will have an impact on future travel.  The lead time of bookings in the near future will be shorter. Guests will continue to be cautious and want flexibility. Therefore, protect their flexible BAR rates and clearly differentiate them from other restrictive pricing offers.

The segments of individual travellers and domestic travel will be the first to recover. Travel in (large) groups is difficult. Group segments will be slower to recover. Revenue managers should also closely monitor bookings and allotments to rescheduled events and functions as well as pick up on these dates. 

Companies such as Fairmas and STR provide a great service to support hotels and revenue managers. They monitor the performance data of hotels worldwide. STR offers hotels insights into market data and a performance update in free webinars. 

Recording Webinar 01. April 2020: Using Conten & Revenue Management Principles in challenging times

Birgit Haake - Expertin Revenue Management

Author: Birgit Haake

Birgit Haake has more than 25 years of practical experience in the hospitality industry and healthcare. With her company Haake Revenue4U, she supports individual hotels and hotel chains in Germany and Europe as an expert in revenue management. Her core competencies are booking management, (MICE) revenue management, pricing and online distribution. Birgit Haake holds a degree in business administration and has completed her training as a hotel manager. She is a certified trainer and has been a university lecturer in international hotel management and tourism management for many years.

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