Revenue managers look beyond industry for inspiration
 
Revenue managers look beyond industry for inspiration
15 AUGUST 2018 7:25 AM

Hotel revenue managers share what other industries and disruptors they observe and how they take what they’ve learned and apply it to their own practices.

REPORT FROM THE U.S.—Hotel revenue management is an evolving discipline, and as part of that evolution, revenue managers are looking beyond the hotel industry to see how others are doing it and figuring out whether those approaches would work at their hotels.

It’s pretty natural to look at other industries, said Cassie Bond, regional VP of revenue management at Chesapeake Hospitality.

“You have to look outside the hotel box,” she said. “It helps us grow, and it gives us a competitive edge.”

Airlines, cruise and e-commerce influences
The most obvious comparison is the airline industry, Bond said, which has so many similarities to the hotel business. Chesapeake looks at where the airline industry peaks in travel, rises and drops in prices and changes in market demand, she said. The company also looks at how airlines sell tickets, such as through á la carte offerings, packages and upgrades.

“You have to follow it closely,” she said. “You have to be in the know of what airline trends are happening.”

Watching cruises is also helpful, she said, as that industry is known for pushing last-minute, three-day cruises and selling off the charts.

“We’re always looking at how to make good tactical moves that don’t screw up the long-term plan,” she said.

Online retail and e-commerce has come into play in recent years, said Mary Hilly, regional director of revenue management for HHM Hospitality. The success of e-commerce, particularly Amazon, has shown the hotel industry it needs to do a better job in making the booking experience quicker, more attractive and available on all channels and devices, she said.

“We didn’t make it so easy,” she said of the hotel industry’s history in generating online bookings. “The booking widget was not the primary focus on the page. The call to action wasn’t there. We’ve learned those lessons over the years. The industry has changed its approach to the e-commerce space.”

HHM looked at its websites to see what performed well and what didn’t, she said. They found some of their room descriptions were too wordy—nobody cared about whether there was an ironing board in the room—so they made changes to the descriptions and improved the pictures, she said.

Revenue-management principles are everywhere, said Doug Elftmann, VP of revenue strategy at Interstate Hotels & Resorts. It’s not just airlines, hotels and car rentals, he said, but also spas, golf courses, theaters, professional sporting events, nightclubs, financial services and even hospitals.

“It’s just really if it’s an industry that’s got something perishable, you can find revenue-management philosophies being deployed in the daily ritual,” he said.

It’s about analyzing what they’re doing and watching for innovation, he said. Anytime a company innovates in revenue management, it’s important to see how they attack the customer experience by making it easier, quicker and more personable for the customer.

“When you’re looking at how to do that, it’s just not revenue management but the overall hotel relationship with the customer,” he said.

Adapting and adopting
When looking at retail, Chesapeake analyzes who the companies consider target customers, Bond said, and it looks at what feeder cities those customers come from, which helps Chesapeake position and price its hotels to optimize its mix of business.

“(Retailers) understand consumers and customer buying power more than anyone,” she said.

If the summer is looking slower, the team will call a meeting and bring in the sales and e-commerce teams to figure out how to let guests know this season is the best time to stay at their hotels, she said.

Bond added the company uses the email ads it receives from retailers as inspiration and also looks to see what competitors Delta, Norwegian Cruise Lines and Amazon offer as well.

“It gives us ideas to connect better,” Bond said.

Revenue managers have to be open and accepting to change, Bond added.

“If we’re going to look for ideas to grow, then I have to have a team willing to be open to what I bring back to the table. … We’re getting together in our revenue-management meetings and teams. We’re talking about what we’re seeing going on.”

It’s one thing to collaborate and discuss ideas, she said, but her team creates action items and sets target dates and assigns roles. They follow up and track progress to see if an idea is working. An idea might work at one hotel but not another, so it’s about testing strategies and different approaches.

“There has been no resistance to adopting new ideas or plans,” Bond said. “We all have the same philosophy. We want to improve for our owners. We want to optimize our processes.”

Every time Denihan Hospitality Group knows of a disruptor that will affect its hotels, the revenue-management team thinks about what it should do differently, said Garine Ferejian-Mayo, SVP of sales, marketing and revenue management at Denihan. For apps like Hotel Tonight, the company tends to price moderately further out into the booking window to build its base business, she said. As arrival dates near and there is compression in the market, it tries to optimize occupancy and rate.

“With Hotel Tonight, we have shifted that strategy to build a lot more base on the books further out, so with the last-minute lower rates on Hotel Tonight we don’t have to lower our rates because we’re confident in our occupancy levels,” she said.

The app has been on the market for over a year and has grown significantly, Ferejian-Mayo said, and because it’s a mobile app and not something guests can book through a website, guests could easily be around the corner from the hotel and cancel their reservations to go to another hotel.

“It’s important to have the revenue-management strategies in place,” she said.

Interstate takes the approach that learning from other industries means more than adapting their exact strategies, Elftmann said, it’s more about adapting the process. Revenue management is all about change, he said. When watching disruptors and other industries, it’s about being quick and nimble and taking bold steps without being afraid to fail.

“Gone are the days of ‘set it and forget it,’” Elftmann said. “Every day, we have to try new strategies and tweak them.”

Different customers have different priorities, so what’s important to one is not necessarily important to another, he said, so it’s about tailoring strategies specifically to those needs. The team then needs to monitor the changes and critique the results.

“You have to be OK with saying this strategy works, this one failed,” Elftmann said. “For me, it’s about speed, agility and nimbleness.”

What to watch for
Amazon has a significant data base, Ferejian-Mayo said, and she would like to be able to work with the company as it will be the “mega travel channel.”

In the meantime, she said she would challenge her team to make sure it has updated all of its collateral, updated its websites and is doing everything it can on its end.

“We want to make sure we have the best product out there because we have loyal customers,” she said. “We also want to know what Amazon will bring to the market.”

Machine learning, chatbots and voice bookings are going to be game-changers in the space, Elftmann said.

“I can see it not being very long before my (voice) assistant is having a discussion with the hotel’s assistant, talking about what I want for dinner,” he said.

Bond said she feels she’s always on a webinar or watching a demo for a new revenue-management system coming out or for updates to current systems that offer new functionalities.

“We want to know what’s the newest thing coming out,” she said. “We want something that could give us an edge over our competitors.”

Bond said she accepts every demo that reaches out, and she goes through training sessions and webinars to determine if a new system makes sense for Chesapeake hotels.* There have been a lot of enhancements with revenue-management technology, she said, but it’s still necessary for revenue managers to be there making changes as needed.

*Correction 15 August 2018: This story has been updated to correct the name of a company. 

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