How Personalisation Can Drive Bali Resort Revenues Today

Hotelier Indonesia

How Personalisation Can Drive Bali Resort Revenues Today

Written by: Tracy Dong, Lead Advisor, APAC, IDeaS Revenue Solutions

Resort owners in Bali operate complex businesses. They face challenges related to volatility in demand, having overwhelming amounts of data and complicated revenue streams. As a result, traditional dynamic pricing approaches simply aren’t ideal options for many resorts, which means there is greater risk of missing out on potential revenue gains.

While automated-pricing technology has enhanced how hotels practice revenue management today, not all systems are a good fit for the resort market. For instance, all-inclusive resort revenue managers must weigh the outcomes of per-person pricing versus unit-based pricing and deploy that pricing strategy across all products and channels.

A large opportunity for resort owners to improve their profit performance today centres on guest personalisation. Offers like a spa package, rose petals and champagne, or room-location choices like balcony, poolside, ocean-view or beachfront create opportunities for more tailored and unique guest options.

Resorts often have many room types and drive a longer length of stay compared with traditional hotels. They also tend to have very well-defined patterns by day of week and season. As a result, many resorts rely on occupancy-based pricing to drive revenues, and packages or amenity add-ons to enhance overall property profit performance. Given the multitude of potential revenue streams within a resort, there are a wide range of revenue maximisation opportunities to be captured through personalisation.

Let’s take for example a resort in Bali that consists of beachfront villas, traditional hotel rooms with meetings and events spaces, and is located 30 minutes from Denpasar Airport. In this case we have a resort that drives both strong leisure weekend business and strong mid-week group business. This resort has 15 room types, charges an additional rate for third- and fourth-person occupancy and historically captures a three-plus night length of stay from their guests. In terms of number of pricing decisions, the resort has to make over a typical year, this could result in 15 room types multiplied by 365 days in the year times three occupancy price points times seven length-of-stay price points, which works out to 114,975 pricing decisions in the year—and that’s just for calculating the Best Available Rate (BAR) alone. This is not even considering fluctuations in pricing as demand shifts or additional rate plans.

Given the multitude of pricing decisions needed, optimised pricing at the room-type level by length of stay results in very personalised price points. Think about the difference in price points if you had a family of four looking for a junior suite for a Thursday to Sunday stay pattern versus a single business traveller looking for an executive king for a Tuesday to Wednesday stay pattern. Even if these two guests were looking for the same room type, we’d see very personalised price points for each of them. Layer this level of pricing optimisation on top of the diverse set of products, rate plans and chargeable amenities a resort offers, and already you are offering accommodation packages and price points personalised to a guest’s needs, without ever having to ask for personally identifiable information.

Resorts also take a significant portion of business—sometimes upwards of 70 percent—from wholesale tour-and-travel contracts. This may lead some resort owners to view personalised approaches to pricing as a lesser priority compared to traditional hotels due to having rates set far in advance, rooms occupied and even total guest spend preconfigured, but this should not be the case. Yes, the agreed contracts help ensure the resort stays busy, but with less control over pricing and availability, how does a resort know if these arrangements truly create the best outcome for their bottom line? A savvy revenue manager will conduct a thorough analysis of their wholesale contracts, outlining areas where rate negotiation or availability can be optimised.

Cultivating asset value for resorts is all about capitalising on the unique revenue opportunities these businesses create. Compared with urban-based hotels, resorts are challenged by much more complicated business models and a diverse range of revenue streams. Resorts require a more tailored approach than the typical hotel. This approach should account for flexible guest rooms to accommodate families of all sizes, while pricing per person or by room, as well as managing an abundance of package offers and contracted wholesale rates.

Pricing will continue to evolve. Buyer expectations are on the rise because technology provides more transparency and immediacy to our consumers. The guest’s ability to tailor their experience will only continue to grow, and customer choice will be the next pricing opportunity. In today’s environment, hotels, especially resorts, are discovering ways to leverage the data they have now and cutting-edge technology to optimise and deploy those hundreds of thousands of pricing decisions every day. Each of those is becoming more hyper-personalised and delivering results that lead to greater revenue opportunity and profit potential.

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