Hoteliers should avoid dropping rates, says expert

During the seventh edition of Hotelier’s Great GM Debate, which took place yesterday at Conrad Dubai, Kerzner International vice president revenue management global Thibault Paquet presented on the topic of updated revenue management for the hospitality industry.

Paquet began his presentation, stating that too many hotels are looking at revenue in terms of room revenue, rather than also focusing on other revenue streams within the hotel.

“It’s not enough anymore,” Paquet stated. “You need to look at other revenue channels.”

Revenue management he added, should acts as a “gatekeeper”, in order to keep the right balance between occupancy and rate.

Dropping room rate, he pointed out, can have a negative effect on average spend per room as well.

“Low room rate means clientele with a low spending power. Guests in high season have a higher spending power,” said Paquet.

“Dropping the rate, is like a the panic mode, when times are tough. Drop the rate, and in the short term you will see a difference,. But you have diluted the business that was supposed to come anyway,” he argued.

“If your sales, marketing, and revenue force are focusing on [dropping the rate] for next week, you will miss out on opportunities in the long term.”

Paquet also advised that hotels in the region should try to achieve a mix of business travellers, and travellers from different nationalities at their property, as this impacts on the average spend per room.

“Spend per room differs on nationality,” he stated, “and this knowledge should impact revenue strategies and decisions.”