‘Moin Moin’* with Revenue Management!

Simply take a break in Rendsburg! The ONNO Hotel has been recognized by travelers from all over the world, receiving the Special Award from HolidayCheck in 2022 and earning its reputation as one of the finest establishments in Schleswig-Holstein and Germany.

The Frisian name ONNO, as refreshing as the breeze between the North and Baltic Seas, embodies the hotel's commitment to providing a truly exceptional experience for its guests.

In a conversation with GRANT, hotel manager Claas Normann Mäder discusses the importance of dynamic pricing and revenue management. Despite the prevailing belief among many boutique hotel owners that revenue management can be effectively handled with an Excel spreadsheet, Mäder emphasizes the need to adapt to changing market dynamics. He explains the considerations involved in implementing revenue management strategies and highlights the minimal effort required to do so.

GRANT: What’s your take on revenue management from a boutique hotel’s point of view?

Revenue management, in simple terms, is all about maximizing your revenue. It's about offering the right product, at the right time, and at the right price. Gone are the days of static or seasonal prices. The pandemic has revolutionized the way guests behave and book their accommodations - they now compare and make online bookings quickly and spontaneously. Loyalty towards a particular hotel or travel provider has significantly declined. As a hotelier, I embrace these changes because there is no other option. For a small hotel like ours, with 68 rooms and apartments, it is essential to stay well-informed about the market and anticipate future trends based on experience and solid data.

“Revenue Management ist Liebe und Zuwendung zum Produkt”, findet ONNO Hotelchef Claas Normann Mäder.

How did you end up in revenue management?

CNM: It all started with a stroke of luck. I found myself working in the sales team of FARRIS BAD, a spa resort in Norway. Back in 2009, the concept of e-commerce was just beginning to gain traction, and my general manager asked if I could handle it. With little knowledge of what lay ahead, I took on the challenge and quickly immersed myself in the world of e-commerce. This led me down the path of becoming a revenue manager, taking on the role of Total Revenue & E-Commerce Manager.

No longer was it solely about room rates; we began offering all outlets in the spa resort through packages and products on various online channels. Our focus was on maximizing our own sales channels. For me, revenue management is more than just numbers and figures; it's about having a deep love and dedication to the product. Understanding that the customer is king, I strive to make this philosophy evident through intelligent pricing strategies. It becomes clear that a direct booking holds greater value than bookings made through other distribution channels.

“No two markets are alike.”

Reviews are one of the most critical tools for me when determining prices and product placement. A revenue manager can’t adequately represent and consider this using only Excel. HQ revenue has this deeply integrated into their system, which is one of the reasons I chose to use their tool.

GRANT: How were you able to transfer your international experience in revenue management to your boutique hotel?

CNM: I designed international pricing strategies for the luxury hotel THE THIEF in Oslo and applied those in the sales team. No market is the same as another. One country has its sum- mer vacation in June, another in September. It’s essential for hotels of all sizes to understand that different markets think and operate differently than the market right outside their door. Campaigns and prices can be tailored to each market individually. For instance, a price offer in the Danish market increases the F&B revenue in the hotel, while the German market might accept such an offer but it won’t increase the hotel’s total revenue.

GRANT: The ONNO Hotel is a wonderful event venue. What program awaits your guests?

CNM: In the summer, we host five concerts in our courtyard garden. During the pandemic, there was a cultural silence, and everything came to a standstill. We wanted to create a place where life could flourish again, and normality could return. That’s how the concert series “Music for Friends” was born. Moreover, in August 2022, we opened a new restaurant named DREI to create another hotspot for people.

GRANT: What has been your experience with the restaurant in the hotel?

CNM: I always vowed never to open a restaurant in the same ho- tel! I’ve stuck to that. Because with hotel restaurants, there’s always a battle between room rates and F&B revenue. The F&B outlet and our restaurant are 200 meters apart, giving our guests a reason for a short walk before going to bed.

GRANT: We’ve already landed on the topic of Total Revenue Management. Isn’t TRM just for large establishments and hotel chains?

CNM: Total Revenue Management is super interesting and vital for establishments of all sizes. It’s complex, which is why not many delve into it. At its core, it’s about creating content that excites. That’s what revenue management should aim for, but it’s often overlooked. Anyone can offer “cheap,” but you’re leaving money on the table. In the most successful campaign I’ve led in the FIT market, we even significantly increased package prices! Provide more content; that’s the key. Don’t get stuck in Excel; instead, focus on the product. What do customers desire? That’s exactly what they should get.

"Anyone can offer 'cheap'  – but you're leaving money on the table."

GRANT: What has been your experience with dynamic pricing?

CNM: I introduced dynamic pricing from day one when I took over the hotel in 2017. Sadly, my competitors haven’t grasped or implemented its basic principle to this day. They’re losing money, and so am I. It sometimes frustrates me that the price can’t be increased flexibly enough during peak times. My surrounding market would benefit from delving deeper into revenue topics. The market should get the prices they’re will- ing to pay. Of course, you shouldn’t overlook reviews con- cerning price/performance, but you shouldn’t be intimidated if this score is slightly lower than the hotel’s overall score.

GRANT: What is the guest response to dynamic pricing?

CNM: Of course, when guests are asked if the hotel should be cheaper, the answer is almost always yes. Complaints tend to arise during both the off-season and peak season. After all, who wouldn't want the best product at the lowest price? However, it's important to be cautious with lowering prices too much, as this can attract the wrong type of customers who often nitpick and leave negative reviews.

"I take immense pride in the substantial number of direct bookings we receive."

GRANT: What’s the effort required to start revenue management in-house?

CNM: Honestly? Feels like zero dollars! I’ll just leave it at that.

GRANT: The ONNO Hotel proudly showcases its direct prices on its website, allowing guests to easily compare them to booking platforms. By booking directly, guests often receive a much better deal. In this regard, Revenue Management plays a crucial role in driving more direct bookings.

CNM: Direct bookings are of paramount importance for every hotel. HRS, Booking.com, and many others entice us with the allure of quick sales. As a hotelier, I’m supposed to offer the lowest price, provide numerous discounts, and pay the highest commission for that quick turnover. All well and good, but if I give a 15% discount and pay a 15% commission, then 30% of the gross price is immediately gone. If I’m getting into this game, I’d rather pass that discount to my guests who call us directly and appreciate it. We offer a price match, and our guests always find the best deal directly with us. All OTA rates are 12% to 15% higher than directly on our website.

We have a high proportion of direct bookings. I’m particularly proud of that. I can afford to be represented on the OTAs to increase visibility and ultimately fill up the entire hotel.