Revenue-management, sales-and-marketing execs talk ROI
 
Revenue-management, sales-and-marketing execs talk ROI
05 OCTOBER 2018 7:47 AM

Sales-and-marketing and revenue-management executives provided asset managers at the recent HAMA conference with insights on how to work best with their teams.

DENVER—Working with sales-and-marketing and revenue-management teams—and understanding their mindset and motives—is the best way for asset managers to get the most out of the hotels they oversee, according to speakers at last month’s Hospitality Asset Managers Association annual conference.

“It all comes from a place of open communication and trust,” said Allison Handy, SVP of sales and marketing for Prism Hotels & Resorts, during the “Can’t we all just get along” session. “We have to be able to trust each other that our interests are aligned.”

If both sides know where the other side’s insecurities and fears are, it helps foster an invaluable open communication line, Handy said.

“It’s about asking questions for interest’s sake, not a perception of asking questions for a ‘gotcha’ sake,” Handy said.

Jeff Senior, VP of marketing for KSL Resorts, said each side knowing priorities and specific plans goes a long way in creating harmony and success.

“Regardless of your circumstances, where the win happens is where there are clear outcomes and the owner asset manager can accurately convey the desired outcome, and the operator has to work toward how to provide that outcome,” Senior said. “By doing just that simple exercise, you make great progress (in avoiding angst).”

Senior’s advice to asset managers is clear: “You agree on the outcome, agree on the resources necessary and those kinds of things. But how it gets done—that’s the operator’s role. Let them be entrepreneurs there, if you will, to advance that agenda.”

Hunter Webster, SVP of revenue strategy at Interstate Hotels & Resorts, said it’s important to remember each team is working to achieve the same thing.

“As a hotelier, … we should be telling you guys what’s going on, how we’re doing, how we’re making money for your hotels, what are the issues, and how we’re addressing them,” Webster said. “At the end of the day, we all have the same goal. We all want the same thing from the hotel. We have to break down these walls.”

Being comfortable in admitting mistakes is an important part of the process, Handy said.

“I want my teams to tell me when I’m wrong—when I’ve given them a suggestion, I want them to present data to me and say bad idea, here’s why,” Handy said. “We want that same relationship with our owners and asset managers.”

Allison Handy of Prism Hotels & Resorts tells asset managers at the HAMA conference that maximizing return on investment is essential for sales-and-marketing departments. At left is Jeff Senior of KSL Resorts. (Photo: Jeff Higley)

Maximizing ROI is main objective
The sales-and-marketing executives sang a tune appreciated by the asset managers in attendance—a primary focus of the discussion led by moderator and CHMWarnick SVP Larry Trabulsi was about maximizing returns on investment.

“All of our hotels look at getting our arms around the cost of different marketing,” Webster said. “Probably the biggest expense has to do with digital, whether it’s the website or the brand, whether they’re doing something with paid media or global distribution. We’re always trying to make sure that whatever program a hotel engages with, we have some way of tracking spend.”

“ROI is the question in every area of our business,” Handy said.

Being able to track lead source and the actual promotion dollars spent on various platforms and programs is an essential part of the ROI process, according to Handy.

“I am maniacal when I look at our booking rewards that we are tracking lead source on every single booking so that we get roll-up on ROI on some of the programs,” Handy said. “Quite frankly, there’s a number of programs that we do (where) there is not the ability to measure direct ROI, and we have to be cognizant of that. We have to be realistic about that and look at that anecdotally.”

Senior said maximizing ROI begins with measuring success and failure.

“I have a phrase that everybody who works with me is sick of hearing, but a problem well-defined is half-solved,” Senior said. “It starts there. And if you understand what it is you’re trying to solve for, you can understand the underlying (key performance indicators) that will drive the results that you can measure.

“You have to measure everything—even if you can’t (measure it in traditional ways), have a KPI around it and see how you did against that,” he added. “Even if it’s only you’re measuring yourself against yourself. Think of a swimmer and their personal best. It’s that kind of notion.”

There are a number of measurements to take into consideration, according to Senior.

“You measure against yourself, you measure against the industry, you measure against previous high watermarks—your own success, you measure against your budgets and your forecasts,” Senior said. “If you’re disciplined and you do that, over time, it gives you something to be accountable to and aspire to accomplishing and ultimately delivering superior ROI.”

The cost of brand-initiated custom marketing programs is becoming more prominent, and that’s another area that a hotel must track to ensure it’s getting an acceptable ROI, according to Webster.

That information isn’t always available from brands—something the speakers lamented a couple of times during the panel discussion—but that can’t prevent a hotel staff from trying to find the ROI.

“You have to do the best with the data that you have,” Handy said. “The brands also have to turn over that data so that we can measure that. Something that I’m constantly fighting with certain brands more than others (about) is the ability to have tracking ROI on all the dollars that we are spending, with the brands and individually outside of the brands as well, but they blocked the ability to track that. We collectively need to continue that message with them in the need to measure that ROI and having the data to be able to measure.”

“They have the data—we have to push them,” Webster said.

The people part is important
People—individuals and teams as a whole—are an integral part of the ROI measurement process as well, the speakers said.

Handy said ensuring that the right people are doing the right job functions goes a long way in maximizing ROI on the people front. For example, a data-entry person should be entering lead responses into software programs instead of a highly paid sales person, Handy said.

“Replacing the salesperson with data entry seems to be working—it’s a trend that we will likely continue,” Handy said. “It doesn’t take away from the ability of the salesperson to connect with the client; they don’t need to be the person that’s sitting there filling out the RFP.”

A lot of the staffing equation’s parts depend on the business cycle, according to Senior.

“If you’re in a very strong business cycle, which is where we are today, the focus is on inside sales—you need people that can transact and convert leads as quickly and efficiently as possible,” Senior said. “In a down time, you need people that can go out, find business, engage, secure the business. It’s a different skill set, a different cost model.”

Senior said the current environment often dictates that high-powered outside aggressive salespeople tend to “be basically responding to digital third-party leads—not the most productive use of our sales-and-marketing dollars.”

However, keeping them on the payroll for when the inevitable downturn arrives is a major consideration, he added.

“You really have to drill out the underlying cost to understand how effective your revenue efforts are,” Webster said. “That’s something we’re taking a hard look at—we’re talking more about net ADR versus gross.”

Knowing net numbers isn’t always easy as the technology that integrates all essential data points isn’t quite available yet, speakers said.

Webster said it’s often a search-and-discover method that involves looking at different reports and profit-and-loss statements.

When it finally is found and reportable, it’s a matter of “figuring out what to do with the data and how to make it work for you,” Handy said.

The major requirement for such data is finding a way to make it actionable, Senior said.

“It’s that fine line between it’s interesting to know but if you don’t know what to do with it—I’m a big advocate of not overcomplicating it,” Senior said.

Working with revenue managers in the initial analysis is extremely beneficial, Senior said.

“They can, over the course of the 30-day period, come up with a pretty handy ‘Here’s what my Expedia margins are, here’s my various margins in GDS, etc.,’” Senior said. “Fill the model, and once a month just plug in your actual results. That’s actionable. Is it perfect? No. But it’s close enough that you can say, ‘Gee whiz, this cost me a lot on profitability, was this a good strategy, with the benefit of hindsight? And now going forward, do we need to think about doing this differently?’

“Being actionable and being able to do something trumps being able to be real-time,” he added. “That will be the Holy Grail, but today, all of us would benefit by just having that additional insight.”

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