Indie revenue management needs creativity, cooperation
Indie revenue management needs creativity, cooperation
25 JULY 2018 12:40 PM

Experts say the task of revenue-managing an independent hotel requires more direct collaboration with other departments, such as marketing, and it forces revenue managers to find solutions they likely wouldn’t consider at branded hotels.

REPORT FROM THE U.S.—Revenue management is never an easy job, but the job is considerably tougher for independent hotels, according to sources.

Without the marketing power of brands or the ever-more sophisticated revenue-management tools provided by the larger companies in the hotel industry, revenue managers at independent hotels are tasked to not just set rates but find creative ways to drive demand and track performance.

Kim Snow, VP of revenue strategy at Interstate Hotels & Resorts, said revenue leaders for independent properties have to showcase a diverse set of skills in order to be successful.

“Revenue leaders must be excellent communicators, have firsthand knowledge of the transient and group sales processes and collaborate with their marketing, finance, (food and beverage) and operations partners,” she said via an email interview.

Snow noted that independent hoteliers have to be realistic about where they stand in the larger travel ecosystem and do their best to make the best of it.

“In the independent space, a hotel's voice can't be heard above brand and online travel agencies’ million-dollar marketing efforts, which means we must leverage the experts on our team and be adept at navigating marketing and digital initiatives, as well,” she said.

Collaboration with marketing
Linda Gulrajani, VP of revenue strategy and distribution at Marcus Hotels & Resorts, said one of the key skills for a revenue manager at an independent hotel is the ability to work closely with the marketing team on property, particularly because the hotel won’t have the corporate-level marketing muscle of a brand to lean on.

“Ultimately, revenue management is reliant on somebody to generate demand,” she said.

Gilbert Arredondo, divisional VP of revenue for the independent and luxury division at Remington Hotels & Resorts, said that can be a matter of finding the right niches to market to for an individual property. He said finding those opportunities requires constant collaboration, which is a stark difference from branded properties.

“In the brand world, (revenue managers) can be more siloed,” he said. “Revenue management can do what revenue management does, and they can let sales do what they do.”

But Jen Volk, who leads revenue strategy and ecommerce for Riley Hotel Group, said the ability to individually market a hotel more heavily instead of relying on more brand-wide messaging allows hoteliers to sell a more unique experience, which is what many guests want.

“That’s been a lot easier when you can have a niche in a destination,” she said. “We’ve seen that be helpful with creating (guest loyalty).”

Snow stressed revenue management at independent hotels requires a greater degree of creativity.

“Independent hotels must be creative with pricing and promotions, participate in OTA marketing opportunities, and take risks to test rate strategies based on data and trends,” she said. “Contribution often comes primarily from OTAs for independent hotels, and usually requires more effort and creative pricing strategies to optimize. Having an OTA acquisition strategy to engage that customer once they are sleeping in our hotels is the secret to converting them to book directly.”

And that conversion from OTA guest to direct repeat guest is key for keeping down customer acquisition costs, multiple sources said.

Both Snow and Gulrajani noted their independent hotels have more ability to manage rates and profitability in spaces outside of just rooms, with Gulrajani saying Marcus is putting added focus on managing banquets spaces and Snow noting there are opportunities with “unique food-and-beverage outlets, resort fees, unusual meeting spaces, or health and wellness programs.”

The challenges of technology
One of the biggest obstacles revenue managers face in independent hotels is technology, since independent properties don’t have the benefit of brand-provided revenue-management tools.

Gulrajani said the landscape of vendors offering third-party revenue-management technologies can be difficult to navigate, in large part because different tools and systems like property-management systems and customer relationship management software don’t share information in the way a hotelier would hope.

She said the first criteria for any revenue-management tool must be how it interacts with the hotel’s existing PMS.

“We’ve found that most revenue-management systems don’t work well with (property-management systems),” she said. “It’s kind of a shame, but that’s a driving force (in what tools get used).”

She said this is a bigger problem for smaller independents or those not affiliated with larger management companies that would have the capital and resources to invest in technology.

Arredondo agreed that tech “is probably the biggest struggle” for independent hotels, noting there are only a handful of vendors for things like central reservation systems, and none of them also offer property management system solutions that integrate well. That makes it all the more challenging to find a revenue management system that works well in a cobbled-together tech ecosystem.

“The problem is even when they talk together relatively well, when things are working the right way, you know one of them is going to break down,” he said.

Gulrajani said because of the cost and complexity of these systems, many independents simply go without any form of revenue management automation, which means more of a revenue manager’s time is eaten up by mundane tasks and time is left to deal with making strategic decisions or collaborating with other departments on property.

Despite these challenges, engaging with technology is ever more important in the revenue discipline, with Snow noting that things such as artificial intelligence are becoming more relevant.

“The platforms are smarter than we are now, so we need to stay trained on the latest enhancements and upgrades in order to increase results,” Snow said.

Volk noted staying on top of training opportunities is key for how Riley approaches technology at its independents.

Finding people with the right skill set
Because of all the challenges unique to independents and the higher level of cross-discipline collaboration, sources said they look for revenue managers with a more varied skill set for independent properties.

“On the independent side, we want someone who thinks less in black and white and is more likely to think outside the box,” Gulrajani said. “They have to have that flexibility. … At an independent hotel, hands down the revenue person has to be stronger in many ways (than at a branded hotel) because they have to work so much harder. But there’s also so much more they can do, and it allows them to use their brain a little more.”

Arredondo agreed.

“They have to have really good communication skills, which goes along with working with marketing,” he said. “They probably have to be higher quality (candidates) than at branded hotels, because at a branded property, it’s ok to work in a silo.”

Snow said those skills are something young revenue managers should strive for if they hope to climb the ladder in the revenue discipline.

They should “strive to be more than a revenue manager by gaining knowledge in all aspects of operations, sales, F&B, etc.,” she said. “Find a mentor and remain curious about your hotel's business. Remember, it takes a team to be successful, and the revenue strategy leader must have a diverse background in today's fast-moving industry, with a skill set that includes being good listeners, analytical thinkers and strategic implementers. They must understand all aspects of the business, including what's important to the owner, brand and management company.”

1 Comment

  • Taran July 30, 2018 10:57 AM Reply

    why just independent hotels, the rules of engagement and collaboration work equally and effectively for branded hotel companies as well. RM can not work in silo any more !!

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