There is one constant in the hospitality industry – change. What was once considered leading practice
in terms of customer service, like express check-outs to avoid morning queues or offering free Wi-Fi to
guests, is now expected by many travellers as base level service. Just as service offerings to guests
have evolved through the years, so have the operational technologies hoteliers themselves use to
ensure that their properties are running as efficiently and profitably as possible.
Revenue management has been used in the hospitality industry for well over a decade. The practice
was first used to simply fill rooms, with no real view to the long term effects of these pricing decisions.
Using revenue management in this way provided hoteliers in the short term with more customers and
spikes of increased revenue, however, this approach also led to longer term negative effects and
hoteliers who simply slashed their rates to fill rooms usually took time to recover financially from short
term pricing decisions. Over the years, revenue management has evolved to become more reliant on advanced technologies
which promote a strategic, longer term approach to pricing and sales. However, even using revenue
management to strategically price hotel rooms and ancillary services is no longer enough in today's
dynamic operating environment where the way guests choose the hotel they want to stay in and what
price they are willing to pay is constantly changing. It is time that hoteliers stop thinking about revenue
management as it has been known, and start thinking about the next generation of revenue
management strategies that are adapted for today's digital environment and take additional revenue
streams into account. Today's Hotel Guest is Empowered, in Charge and Online All hoteliers need to realize that their guests have never had more power. While many hotel managers
will argue that the guest has always been their core focus and offerings, services and the way rooms
are packaged and sold has been tailored towards them, it is not the same guest from the past. Today's
hotel guests have increased expectations and are in control of every part of their experience. Both business and leisure travelers have changed the way in which they book hotels over recent years
– in the past they may have been more reliant on travel agents or travel brochures to actually inform
them of the best places to stay and relied more heavily on a traditional star rating process and
descriptions of the hotel generated by the hotel themselves. These days, when a traveler goes to book
a room in a location that they may not be familiar with; their selection process is much different. In
many cases potential guests search for information on the hotels in the area online and specifically look
to third party review sites for impartial past guest reviews to "aid" in the selection process. When searching online for a hotel, travelers may look for a hotel that has both a good reputation rating
as well as a good price. For a hotel in these situations looking to attract new guest in a digital
environment, it is always a balancing act between price and reputation. Research has shown that
guests will pay more if a hotel's reviews are better compared to the alternative - which is why it is
critical that hoteliers understand what is being said about their property online and why social media
reputation is critical in practicing total revenue management. Most hotels have both a social media presence and have undertaken some form of monitoring as to
what is being said about their property or brand online. On a basic level hotels primarily focus on the
servicing aspects of their properties in relation to social media. For example, if the prevailing comment
in social media about a hotel is that the check-in process was tedious, the operations team at the hotel
will likely pursue how to rectify this and create a better experience for users. In the same way, if a
hotel is highly rated with the majority of comments related to the tastefully decorated rooms and comfy
beds, the marketing department will build on these positive reviews. Through a hotel knowing what social media sentiment exists for their property they are better placed to
understand the likelihood of demand – if a property is consistently being talked about online as offering
a poor guest experience relative to the price being paid to stay there, it is advisable that the property
look at their pricing structure or the customer service levels they are offering. Conversely, if a
property is consistently being talked about in positive terms online it may be in a position to look at
pricing itself more aggressively in the future. While this new and constantly evolving operating landscape may be concerning to some hoteliers who
feel they don't have the scale or the operational systems in place to adapt to a new world where
revenue management needs to be applied across multiple revenue streams and the customer has
more power than ever, it is important to understand that the actual basis of revenue management
hasn't changed. Hoteliers can and should still base their decisions on data and supply and demand and
it is still critical for hoteliers to understand who their most valuable guest is and do everything in their
power to attract and retain them. Conferences and Events – Driving Better Revenue Hoteliers looking to bolster property revenues should be looking towards conferences and events as
their next big revenue driving opportunity. Group business represents up to 40 to 60 percent of
revenue potential for many hotels these days, which means that hoteliers need to take a more holistic
look at their sales and catering revenues as decisions they make for their function spaces can have a
major impact on the bottom line. To ensure that a hotel is optimizing revenues from their function
space, hoteliers must establish and review KPIs for their conference spaces. They must ensure that
they have the right data collection and analysis tools in place and are able to define market
segmentation, forecast accurately and identify their most valuable groups. Importantly hoteliers must
also align their forecasting and function space management with a dynamic pricing approach to ensure
that revenues from conferences and events are being optimized. To achieve optimal levels of revenue from conferences and events, hoteliers also need to incentivize
their sales team on achieving quality of business, rather than quantity. Having the right forecasting,
data and metrics in place may not result in optimal business without the sales team delivering the right
piece of business with highest revenue impact to the hotel. Sales teams therefore need to be
incentivized appropriately on the right measurements, to channel their focus on quality of business,
rather than on single dimensional metrics such as sale volume or space occupancy. By putting revenue management practices in place across all key revenue generating departments of a
hotel, hoteliers will be able to build a holistic view of a customer, helping increase their ability to
identify and target these valuable revenue generators. Working Closer Together for Better Revenue Generating Outcomes Today's revenue managers must be guest-aware. Decisions as to who their most valuable guests are
should be formed by integrating a complete customer revenue profile along with data from guest
promotions and the marketing department. Just as marketers can gain benefit from the data generated by revenue managers, marketers can also
help revenue managers better understand their most profitable guests and adjust packages to best suit
their needs. Marketers are constantly putting packages together that increase opportunities to generate
revenue. Because marketers understand where guests live and what their interests are (e.g.
adventurous families like to hike, bike and kayak), they can help revenue managers price hotel
packages that will appeal to guests' interests and motivate them to visit the hotel. Marketers are experts at creating demand by inspiring people to commit to hotel products and
services. By knowing when marketing places offers into the marketplace, revenue managers can
create better, more accurate forecasts in relation to demand, which can in turn lead to better revenue
optimization. A Brave New World Needs Brave Hoteliers Today's hospitality environment seems to be undergoing constant evolution. What was best practice
two years ago, is expected as standard now and how guests assess and book their hotel rooms has
changed in such a way that they have more choice and power than ever before. It is no longer enough
for hoteliers to simply utilize revenue management for their hotel rooms and keep employing the same
customer promotions as they were in the past. Hoteliers have to ensure that revenue management
strategies apply across all revenue generating streams of their properties and adapt to the digital
world. They must understand where they fit in this new online landscape and what is being said about
them. Hoteliers also have to ensure that all of their departments are working together in a cohesive
way. As job descriptions blur and standalone hotel departments become more closely aligned, it is the
hotels that embrace, not fight against, the next generation strategies that will be in a better place to
practically manage their revenue and ensure long term profitability. IDeaS, a SAS company, is the world's leading revenue management software and services provider. Combining industry knowledge with innovative data analytics technology, IDeaS creates sophisticated yet simple ways to empower revenue leaders with precise, automated recommendations they can trust. With 35 years of expertise serving hospitality, including hotel, event, and parking clients, IDeaS delivers revenue science to more than 30,000 properties in 164 countries around the world. Results delivered. Revenue transformed. Discover greater profitability at IDeaS.com.Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com
 Changing With the Times: The Need for Hotel Marketing and Revenue Management to Converge | By Fabian BartnickFriday 25 April 2014 |
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