Revenue management and marketing: A powerhouse duo
 
Revenue management and marketing: A powerhouse duo
25 APRIL 2018 7:32 AM

To be a top performer in today’s competitive hospitality landscape, revenue management and marketing must play a leading role in your hotel strategy.

In the current competitive climate of our industry, the presence of revenue management and marketing in any thoughtful hotel strategy has become absolutely critical.

One of the greatest challenges faced by hoteliers today is the congestion that continues to build within their markets. New hotel supply pours into cities more quickly than demand can rise to meet it, and our assets now have to fight harder than ever to capture a fraction of the business.

It’s not enough just to be the newest, trendiest hotel on the block anymore. Today’s consumers expect an exceptional level of service and thoughtful amenities at the bare minimum. So, how do you stand out from the crowd and continue to excel in overcrowded marketplaces? The rate and demand strategy brought to the table by revenue management, in tandem with the creative edge offered by marketing, can lend the competitive advantage that makes all the difference between success and failure.

Though the whole is greater than the sum of its parts, before anyone can fully grasp the weight of marrying these two powerhouses together, it’s important to understand the impact of each separately. Over the last several years, revenue management has risen to become one of the most valuable instruments in our toolbox. How do successful hoteliers navigate competitive markets when local supply is double or even triple what it was just 10 years ago, with new developments seeming to spring up every day? Even the most talented and determined salespeople can’t create demand out of thin air. When working harder stops yielding results, it’s time to start working smarter. And that’s where the genius of revenue management comes into play.

How are we performing against the market? How are we performing against the brands? How do we get better? What levers can we pull to make an impact? What are our most profitable channels? How can we drive value while remaining competitive in rate? These questions—and so many more—are constantly filtering through the minds of our in-house experts developing cohesive strategies to ensure the ongoing success of our on-property teams. A strong high-demand strategy can result in the few additional dollars in ADR that make the difference between meeting and beating budget. A targeted effort to shift your channel contribution by driving bookings away from the OTAs and toward brand.com might not create new bookings, but would you rather pay 10% commission or 0% commission? It’s an easy question to answer.

When I first started at First Hospitality Group more than 15 years ago, we had a small corporate team of just three people—not a revenue manager among us. Today, our revenue management team is the largest department under my oversight, hosting six exceptionally talented individuals each worth their weight in gold. Developing this department from its fledgling stages into the superhero team that it is today will always be one of my greatest accomplishments.

Marketing now is like revenue management was 20 years ago; in a fledgling stage of its own. Some people stubbornly choose to discount the impact of this discipline, but I’ve found that those who underestimate marketing don’t truly understand it. You might think that marketing is just getting in consumers’ faces with “pretty” materials and messaging that’s been curated to appeal to them—and to a degree, that may be true—but even some marketers themselves fail to make the most important connection at the end of the day: What return am I seeing on the investment of my time? Marketing can tell a brilliant story and beautifully represent the brand, but do we go back and measure the impact of all that’s been said and done?

In 2017, it was reported that over 50% of hotel bookings were made on mobile devices. As is often the case in marketing, there are a wide variety of tactics that can be engaged that have the potential to impact your share of those bookings. Whether it is because there aren’t enough hours in the day or dollars in the budget, you can’t afford to focus on every possible tactic. And yet, you know that you need to do what it takes to be sure you’re capturing your fair share—or greater.

So, how do you narrow in on the things that can make the most impact? The answer may not always be immediately clear. Trial and error are the bricks that pave the pathway to success. But the power to work through the fog and have confidence in your marketing strategy is in your hands—if you make a conscious effort to circle back and catalogue the effort vs. the impact.

If revenue management comes to the table to answer, “What segments can we influence?” marketing immediately follows up with “How can we influence those segments?” Together, they provide an invaluable dynamic that allows our hotels, even those in hugely competitive, oversaturated markets, to combat industry trends and create sustainable success.

Wendy Stevens serves as the executive vice president at First Hospitality Group, a leading hotel management, acquisition and development company, where she is responsible for developing and executing company strategy, pinpointing business opportunities, and building a strong workforce.

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1 Comment

  • Max Starkov, Founder & Director, HEBS Digital April 25, 2018 10:25 AM Reply

    Great and timely topic! The overall growth in occupancy and RevPAR many hoteliers have been enjoying for some time now cannot possibly compensate for “the loss of wealth” in the form of steadily increasing distribution costs via the OTA. Obviously, hoteliers need to increase direct bookings, which come at a much lower cost, and improve the overall direct vs OTA distribution ratio.

    One of the main reasons for the troubling trend of decreased revenue capture and profitability in spite of stellar economic performance is the lack of integration, coordination and singular focus and purpose among the core revenue generation teams at the property or hotel management company: The Revenue Management (RM), Sales & Marketing (S&M) and Customer Relationship Management (CRM) teams. Quite often these teams function in a rather disjointed fashion, leading to missed revenue opportunities, over dependency on the OTAs, alienated loyalty members worsened profitability and reliance on, and unsatisfactory performance indicators.

    The Solution: An Integrated Revenue Generation Team

    There should be a single-minded team at the property: Revenue Generation Team led by Director of Revenue generation, consisting of all the RM, S&M and CRM specialists, working together to acquire, engage and retain guests, optimize performance and increase revenue, especially direct bookings.

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