Hotel revenue and sales executives shared lessons learned in the 10 years since the economic meltdown of 2008, and how they think the hotel industry can withstand the next downturn, whenever it occurs.
NASHVILLE, Tennessee—In the 10 years since the 2008 recession, the hotel industry has adopted a lot of beneficial technology, but it’s the industry’s people who will get it over the next downturn, whenever it comes, according to a panel of hotel revenue and sales executives.
The technology that exists in the industry today, and didn’t 10 years ago, enables hoteliers to collect and use more and better data about guests and performance trends, panelists said during a session titled “10 years after the meltdown: What are the lasting lessons?” at the recent Hotel Data Conference.
The data those systems collect can identify patterns and blind spots, which can help inform decisions by hotel revenue managers and sales teams.
“When we look at what we have available to us today versus 10 years ago, there are such a wide variety of tools … (that enable us) to put customer segments under the microscope and put demand patterns into focus that we couldn’t 10 years ago. … Those systems being so much more sophisticated today really gives us a better lens to look through,” said Karen McWilliams, VP of revenue strategy at Concord Hospitality Enterprises.
“We have to face the facts: There are a lot of tech components today that will always be smarter than the human mind,” she added.
But it still takes the right people in the right roles to take that data and technology and put it to the best use for the best result, panelists agreed.
“You can’t be fully automated and feel that’s going to deliver your optimal results,” said Brian Tkac, SVP of marketing, sales and revenue management at Hostmark Hospitality Group. “It has to be a mix. Machines give us a lot of good, usable data that maybe we’d never thought of or seen before. But at the same time, you still have to have someone who is great at strategy, following strategy on the longer term to make sure we’re staying the course.”
Difficult to predict
For one thing, all data has limitations in what it can do, said Nolan Wrentmore, VP of revenue management and e-commerce at Aimbridge Hospitality.
“All the data that’s been shared over the conference here says (a downturn) is coming at some point, if we use historical data. But to predict it is going to be very difficult,” he said. “It’s going to take some event. All the dips that have ever occurred have been due to some catastrophic event, whether it be the financial markets or a terrorism act. Unfortunately, that’s what’s going to cause the next downturn, when one of those types of events happen.
“I don’t want to get into the habit of predicting those,” he added.
Tkac agreed the data doesn’t necessarily make those types of predictions easier.
“When we’re doing forecasts and our budgets on a yearly basis, it’s a snapshot of the time,” he said. “Going beyond that … the natural disaster part of it or a downturn usually don’t fill into it.”
To recognize the warning signs for such black-swan events, hotel companies will have to lean on their associates who have been through them before, Tkac said.
“A lot of our team has gone through these cycles,” he said. “We learn from our mistakes. We definitely saw what hotels or hotel chains or specific hotels in our markets—how they fared better … and what they may have done differently from a strategy standpoint. You have to be able to trust that experience.”
Barb Ward, VP of sales and marketing at CSM Corporation, said at her company, it’s everyone’s responsibility to stay up on trends and news that might affect operations and strategy.
“It’s important that we follow trends, and we do in the corporate office, and we have to message that out to our hotels to keep them immersed in what’s happening in the industry,” Ward said. “They’re kind of day-to-day—our sales teams are selling, (others are) involved in operations of the hotel—so we have to be able to provide them daily, weekly insights on what we see.”
Be bold, take risks
McWilliams said hotel teams need to feel empowered to be bold and take risks when measuring trends and patterns in the data.
“We have to be proactive and react,” she said. “It’s about looking at it together and understanding and taking that risk.”
It can be difficult to sell that philosophy to a sales team, Ward said. But she sees signs that hotel companies are taking risks to shore up against a possible downturn.
“There is some underlying prep happening already, with acquisitions and brands coming together,” she said. “Whether consciously or not, that’s a piece of weathering the storm.”
Tkac said one of the lessons he hopes the industry learned from the last recession is to be bold when it comes to rate recovery.
“Historically what happens through these downturns is (the industry) is slower to recover from rate loss,” he said. “But demand can return. As an industry, the first thing we do is to drop our pants and lower the rates. Having gone through three or four of these already, I’d think we would learn as an industry to recover faster. And it doesn’t happen.”
While the industry’s upswing continues, it should be “pedal to the metal,” Wrentmore said.
“No downturn is mentioned in the conversations we’re having,” he said. “You can prepare for downturns, but it’s more of a folder hidden away in the back of a cabinet. As far as future strategy, it’s all ‘go forward.’”