While there are ample revenue management strategies to increase your return on investment, it’s essential to focus on the timing to ensure you make the most of your efforts.

With some simple steps in mind, hotel and resort owners can ensure better returns on long and mid-term contracts planning, allowing better management of forecasts and different revenue channels.

1. Identify property attributes

It’s important to know the type of property you manage and the lead time of bookings. Different hotel segments have different lead times. Hence, knowing the booking patterns of the guests is key in defining the correct time frame. It can be daily, yearly, monthly or quarterly in advance.

You can also review the entire year or plan even further out depending on the patterns identified. Usually, resort hotels need to be prepared 1-1.5 years in advance, while for city hotels, it’s enough to cover 3 to 6 months in advance. The approach taken depends on seasonality and special events.

2. Set volume targets

In order to achieve specific goals, you need to know the targets you are working towards. Knowing what to anticipate can help you organize and decide what you can achieve via different contracts and how early you need to lock them in to meet targets.

While negotiating, it’s good to take into consideration the seasonality and offer percentage off BAR as opposed to fixed rate in peak periods.

Having a clear target will help you better understand what you need to have in your hotel in each period.

Bullseye
Defining and setting up clear targets is key to proper planning

3. Break it down by Market Segments

Having contracted business is good, and once you have identified the need and peak periods and estimated the contracts, take into consideration the business mix. Leisure guests are willing to pay more without discounts.

However, flooding your hotel with cheaper rated groups might not be the most revenue-driven approach.

Try and come up with an ideal mixture of businesses by seasons and various length of stay patterns to identify opportunities. Once all factors are taken into consideration, only then you can make sound decisions.

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4. Review Forecast Regularly

Once most contracts are in place, you can play around with the forecast to set realistic expectations and identify gaps between targets and forecasted numbers.

It is key to utilize forecasts alongside targets to be able to monitor the performance continuously. This is even more important in the case of longer lead times.

5. Review Supplements

Even if rates are fixed, you can always play around with supplements and increase them.

For example, you may be locked into a contract, but the guest may want to add breakfast on top of it. Feel free to charge a bit more to make up for the lost revenue coming from the rate.

Room type supplements, food and beverage supplements, and person supplements are ideal ways to knock the contracted price up by a few Euros and make sure you get the best possible deal.

Long and Mid-Term Contracts Planning

Overall, timing is important, but that’s not the only thing. You need to have a good base knowledge to make the most of the negotiation in order to avoid being locked into a contract that is only going to harm your business.

Review and apply all the points above before contracting starts and keep an open mind while negotiating, especially if it’s for a year or more out. You never know what might happen!

Hence, you need to make sure your forecast is as accurate as possible to support you in the decision-making process.