Successful hotel revenue strategy requires an all-hands-on-deck approach, so revenue managers have to figure out how to help every department understand and work toward the same goals.
NASHVILLE, Tennessee—Key to successfully implementing revenue strategy on-property and at the corporate level is getting buy-in from all players, which can be difficult for anyone not well-versed in revenue management.
Everyone at a hotel is a stakeholder in revenue strategy and needs to be educated “so they understand the decisions they make and what they do impacts (everything),” said Garrett Henke, director of revenue management at the Turnberry-managed Hilton Nashville Downtown.
It’s important for managers and supervisors to identify all of the key metrics so everyone is working toward the same goals, said Ashley Manco, director of room revenue, business planning and analysis at 21c Museum Hotels. This means there won’t be a group sales manager focused solely on the number of group rooms while the revenue manager is incentivized on transient or total hotel revenue.
“Getting the teams focused and working toward those same goals … naturally creates better collaboration, which then allows you to develop those strategies and put them to work,” she said.
In her experience, front-office teams are encouraged to understand revenue management and how their decisions affect the property, Manco said.
“There’s been a lot of internal development there, too,” she said. “I think our leadership has recognized that we see better success when the teams are working toward the same goals.”
Manco said she encourages employees outside of revenue management to think 10 steps ahead.
“If I make this decision right now, how does that affect not only my department, but other departments later?” she said.
Helga Buszta, VP of revenue management and e-commerce at Filament Hospitality, said her company doesn’t have directors of sales at some of its properties, which average about 50 rooms. As such, it’s necessary to make sure all hotel employees—including housekeepers and front-desk staff—understand sentiment analysis and everything that can affect how the property is perceived by guests and how that influences the price/value perception.
“In our case, and many of our markets, we don’t necessarily have direct comparable competitors,” she said. “So oftentimes for independents, we’re competing against the branded products.”
Her company also has a number of “mom and pops” who don’t report, so they aren’t included in the company’s tools, she said.
“Ultimately there have been times where we have really had to take an even deeper dive into our own internal performance … looking at the sentiment analysis, looking at all of our digital marketing efforts as well, and really understanding how that (is) continuing to either build us up or is perhaps eroding on our performance because people don’t feel quite as proud as we do about our product,” she said.
Working with owners
It can be difficult to explain what’s actually going on to owners who are directly involved in the weekly revenue discussions, Buszta said. Owners have a different lens they look through to see where their products should stand against competitors, and might think revenue managers are just pushing buttons, she said. But it is more than that.
“We have to look at what the consumer thinks that product is, how they are receiving the price point, how they are receiving the product and the service level, and how that’s all contributing to the overall performance,” she said.
Revenue managers need to conduct a reorientation every now and then, said Johnathan Capps, VP of revenue at Charlestowne Hotels. For those involved owners, it might mean having them take a step back and then walking them through what the STAR report means and what the comp set is, he said. (The STAR report is a product of STR, parent company of Hotel News Now.)
“We try to do that often where it’s like, ‘Let’s take this report and let’s sit down with it and let’s talk about it … because it’s just as important that you get this as it is for me to tell you that pace is here, performance is here,’” he said.
Buszta said her hotels’ owners want to see a continued lift in average daily rate, definitely translating down to the bottom line. Meanwhile, her company has such a focus on ADR lift, particularly because many of the hotels have been under renovations the last few years, that in some cases, the ADR lift has far exceeded the comp set, she said.
“Our consumers are not necessarily supporting what we want to see in that lift,” she said. “Then, yes, we have to bring everybody back to say, ‘OK, so how are we performing in our overall RevPAR performance? How are we performing especially as independents against some of these branded properties, and in some cases, higher-tiered product than what we have? And overall, how is our (revenue per available room) improving?’”
At the end of the day, owners want to see the net operating income, said Jay Hubbs, SVP of e-commerce at Remington Hotels. They want to see the bottom line and whether the asset is throwing off cash, for example, to reinvest in hotels or something else, he said.
The easiest way to do that is raise rate, he said. That’s assuming hoteliers keep their occupancy flat, potentially through remixing or pushing retail rate, which will flow to the bottom line easier than adding 100 spaces to fill rooms, he said.
“So from an ownership standpoint … focused on market share that is sort of a joint metric that we look at,” Hubbs said. “We’re always looking at STAR reports; we’re always looking at comparing that together. But holistically, their focus is that bottom-line profit number.”
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