Hotel Group Business: Where the RM and DoS Butt Heads Unnecessarily

Welcome to another Expert Insights discussion.

Today we are joined by:

🔹 Connor Vanderholm
Co-Founder and CEO at Topline, one of our Expert Partners

In this discussion we look at one simple area where a hotel property DoS and a Revenue Manager can butt heads where it really isn’t necessary.

Connor outlines a few factors that can create some of this tension and also a simple approach to resolving the potential tension and getting both parties on the same page

Hope you enjoy it 🤞👍

NB: There is a transcript below from parts of the discussion. Please note our transcripts are generated using speech recognition software and human editing and may contain errors

🎞 VIDEO CHAPTERS:

• Guest Welcome and Topic Introduction (1:09)
• Factors that can influence priorities of DoS (02:19)
• What Revenue Managers do that might cause friction (07:40)
• What pricing strategies could be employed (09:18)
• Where does the General Manager fit in (12:50)
• Value of Remote Sales Support (16:26)

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Transcipt

Trevor Grant
So today, we’re going to talk about a topic that’s often discussed about revenue and sales and marketing working in silos. But we’re going to be a little bit more specific here, because you wanted to talk about how sometimes RMs and DoS can seem to butt heads, but they don’t actually need to be butting heads. And there are a number of factors around that, that we can look at exploring. Maybe you could start off by telling us what you’ve seen working with and supporting properties that have a DoS. And also when we talk about hotel sales, what do you think the day focus for the DoS is? What is the business they are selling to bring into the into the property?

Connor Vanderholm
I would say we’ve worked with a lot of DoS over the years, whether on property or working remote with them. And so I’ve seen quite a few, quite a few different types of personalities and different ways that they interact with the hotel, a lot of them take on a pseudo GM role, like they really take full responsibility for the hotel, and they’re working the desk, and they’re flipping rooms and all that stuff. And I just love a good partnership with the DoS. But sometimes you do to your point, you butt heads a little bit as revenue managers, there’s a couple reasons for that. One of those that’s not really talked about too much is depending on which company in the US may be working for – there could be incentives based around just booking group business. And where that can come into into play as far as butting heads with a revenue manager is if a DoS is incentivized just to get group business on the books regardless of what it does to the top line revenue number. That can be an issue because the revenue manager’s job is to say, okay, that’s awesome business, but we don’t actually want it at that rate, because we’re going to displace some higher rated business and it’s gonna actually hurt the hotel. And you can see like, if I have a sales budget or a sales goal, and I’m trying to fulfil my role, I’m gonna be aggressive, I’m going to be getting as much business as possible. And that just may not be in the best interest of the hotel.

Trevor Grant
Yeah, that makes sense. And so the focus here, as you see is that it’s the the group. The group business is the core business for building on top of, from your perspective? I’m sure other people might have slightly different views. You see the group business as almost the the foundation of the hotel, did I understand that correctly.

Connor Vanderholm
Yeah, it’s all interconnected. But exactly to your point, I do see negotiated business, and whether that’s group is a one time group is coming in, or it’s negotiated business like corporate negotiated large accounts, if you’re with a branded hotel, or your local negotiated business, that’s really the foundation. Typically, that’s not going to be your huge ADR drivers, either. The transient piece is where we’re able to see a lot of incremental increase in ADR. So every hotel is a little bit different and where it gets really interesting is kind of like a rubber band, you need to understand where your transient rates are likely going to be where they’re at, currently, if you’re going to be pricing that negotiated business, because the last thing you want to do is price that business too high, and then you can’t sell the remainder of your rooms because you have the prices higher than the markets willing to pay for them. So you really got to even that out so that DoS and Revenue Manager relationship has to be tight.

Trevor Grant
And that comes back to your point about how something as simple as incentivizing and how different individuals different departments are incentivized. Sales, they have a target, go out and sell it, they’re not thinking about what your revenue management strategy will be. They’ve got a a client, they’re in front of them, they’re ready to book and they’re going to sell. So are there other factors, you know, apart from incentivizing? I mean, surely that’s that’s not the only area that causes these these conflicts? What else have you seen?

Connor Vanderholm
Yeah, especially within the brand space, that I’ve noticed that revenue managers are often remote for limited service or extended stay hotels and the DoS is generally going to be on property. There is some outsourcing of DoS positions, which are very important for the right hotel, we do the same thing we dabble in that we definitely have a service offering that’s centred around that as well, but it can also cause some friction when a DoS has been on property for years, and a revenue manager comes into the scene and they live 14 states away. The DDoS is saying, hey, I know how this hotel runs, you’re trying to set a revenue strategy, and you don’t understand our property – so that’s always been a source of conflict. From our company standpoint, the way that we try to alleviate that is we actually visit the properties. We spend time sitting down with the DoS, having a tour of their hotel, and they’re comp set. So that helps us get a better understanding of what they’re really dealing with and what kind of property we’re really working with.

Trevor Grant
Yeah, I remember when we did a previous video with you, and we had Latoya on and I think that was a key factor. You’re actually there on property meeting the team, so you can see that interaction, what’s needed, and how the DoS operates. Now, we’ve spoken from a DoS perspective, it may be how they’re incentivized by the company they’re working for, it could be the structure of the remote setup with the DoS on property and the RM being remote and maybe not having that interaction. Is there anything that the revenue side does, that maybe creates a bit of tension? Otherwise, it feels like it’s always about the DoS in the wrong? Is there something on the RM side?

Connor Vanderholm
Yes, there’s plenty a revenue managers can do that kind of instigates too, right. Often times, actually a lot more lately now that a lot of more leisure business has been picking up in the US in some regards, the conversation that’s come up quite a few times is is should a revenue manager come to a group displacement conversation by giving a targeted rate? Or should they come up with just a minimum acceptable rate? Or should they leave the rate up to the DoS? What a revenue manager can do, that does cause friction, is if they come to the discussion trying to price that group for the DoS. We (the RM) says no, what I really want is $129 out of this group – that can cause some friction, because the DoS has been having conversations, they understand the budget, they understand, what’s going to be needed to close this business or not. So if we (the RM) just says, Hey, I’m just looking at the numbers, and I’m just gonna throw it out there, I want this rate or we’re going to walk on the business, that causes problems.

Trevor Grant
That makes sense, and you you said there about different ways that the RM could come to the table with a pricing? Do you have a preferred way of doing it? I’m assuming it’s situational. But what’s your take on it?

Connor Vanderholm
It is situational. But there’s some basics that you can go through and what we teach our revenue managers here, and also our DoS is – so let me kind of walk you through just maybe a simple displacement conversation that might happen. Okay, so DoS reaches out to the revenue manager, you know, copies the general manager, honestly, everybody’s in the loop. They say, hey, I’ve got this group, there’s 20 rooms for three nights, right? So and So dates? You know, could you help me figure out the price on this? So maybe it’s over a special event weekend, we get on the phone together? Okay, so we talk DoS, Revenue Manager, and GM if they’re available, and we say okay, what we expect from the DoS is to bring to the table an understanding of the client, we expect them to understand the available inventory. So they need to have looked and seen, do we already have business on the books, what do we have left to sell, maybe those are doubles, they need to come with a proposed rate in mind. Okay, because they are the ones that have this relationship with the client, back to your point, they’re already having those conversations, it’s their job, and they need to propose that rate. So, because it can be hard for a revenue manager to jump into something with no context, and that can cause friction as well, so what I want to do is to propose a rate. The revenue manager then needs to look at if there’s any hot dates going on, if there’s any reasons to protect those specific dates, what you currently have on the books, and what the minimum acceptable rate is, so I always recommend having a Revenue Managers come up with a minimum acceptable rate (MAR) and give that to a DoS. In a lot of cases that MAR is going to be well below what we’re going to charge this rate, but it’s it’s the minimum that I need to make sure we break even on this, and then let the DoS do their thing. Go let them work and get the best rate possible for the hotel.

Trevor Grant
That makes sense. I can now see how that lends itself into the group business being the foundation. An RM is saying, here’s a MAR that we can live with, that will work, now the DoS can go out and work with that rate. If they can charge a bit more, great, but that almost becomes like a bit of a hard deck. Then at least the RM knows that’s going to sit comfortably within the hotels broader revenue management strategy, is that right?

Connor Vanderholm
Absolutely. Yes. The revenue manager needs to understand that, again, this group business is likely not your ADR driver, and have these groups firmly in mind and have them written down and make sure that wherever, whatever you use, that you’re constantly looking at these groups, and knowing where the rates are because you get a price or transient strategy that’s going to be acceptable. In a lot of cases, this ADR for these groups is going to be a lot lower. And we need to still close the gap on that ADR, what we expect to what we need for the hotel.

Trevor Grant
Makes sense. One person that you’ve just mentioned a moment ago, but we haven’t focused on, as it’s not really the purpose of this conversation, this is really about the DoS and the RM but a lot of what goes on is led by the GM. So again, you must have experienced some different scenarios. Maybe, two aspects to this question, I guess is what kind of GM have you seen? And then in an ideal world, how would you see those three parties working together?

Connor Vanderholm
Yeah, there are so many different types of general managers, there’s as many of those as there are just human beings, right. Their experience level, their level of engagement completely varies. But again, if we’re just talking about the core fundamentals here, ultimately, it’s my belief that the general manager is responsible for the revenue strategy at the hotel. Okay, we advise revenue managers advise the DoS, but the GM can veto and trump those decisions as needed because they are on the hook, ultimately, for the performance of the hotel, and if their skins mostly in the game, then they need to be the one that has the veto power. So I I expect that all decisions whether the DoS and RM are having a conversation, offline or, just those two alone, that the general manager is fully apprised to everything happening at these hotels.

Trevor Grant
That makes sense. Again, it’s often discussed, and it depends who you ask, as to who should be responsible for what? And yes, okay, a role responsibility and accountability for your pricing and revenue management strategy sits with your RM, but ultimately, the GM is running the property that GM has the final veto, so they need to be engaged in some way, shape or form.

Connor Vanderholm
You know, my aspect of it, from a revenue manager, and from a company standpoint, if we are showing our expertise in the field, we’re showing that we’re fully engaged in the success of the hotels is paramount to us, and we’re giving recommendations that are in line with the goals of the hotel property team, then that issue of who’s in charge goes away. Because the general manager will accept, because of the trusted advisor ship of the revenue manager, will trust that they’re making the correct decisions – that takes a huge weight off of the general manager, because they don’t need to be a master of revenue management. They really don’t, they hire someone else who’s specifically focused on it, they need to be able to trust that. So I’d say the trust is the most important part.

Trevor Grant
That makes sense. I know that you guys have, within the last months, moved into having a sales solution that you offer now. Can you tell us a little bit more about what you’ve seen as you’ve moved into that space and, and maybe what you are trying to do differently.

Connor Vanderholm
So we, when we first kickstarted our company two years ago, it was part of our our entire platform that we’re going to have remote sales support, because we know how important that is to these hotels and the demographic of properties that we’re looking to service. It’s oftentimes an ownership group that wants to have as much control as possible. And they don’t want to hire it out to a management group, because they, they want to be involved in it. Sometimes the owners are GMs, right. But they still need somebody who has the time and experience to be able to do the sales side of it. As we’re growing our business, it kind of got pushed over to the wayside as we focused on what we were the best at initially – revenue management. Now, coming full circle, we’ve been asked by several of our ownership groups, our clients to offer a remote sales support solution that will help them and become, if you will, a mini management company. Someone who they can outsource these critical aspects to without giving up complete control of their hotel.

Trevor Grant
And that’s where that understanding of where the two things together is obviously advantageous – that you know about it and can then support it as well.

Connor Vanderholm
Exactly. So, we launched the pilot in early spring of this year, and it’s been wildly successful. So we’ve gotten a lot of requests for it, and we’ve just scaled it and we’ve been continuing to scale that along with our revenue support. We found it extremely complimentary to our revenue management service, because we’re already in close proximity to our sales support agents. And we already have personal relationships with them. We’ve known them for years, and we know how good they are. We selected them because we’ve worked with them in the past, and have known their work ethic and what they’re going to bring to the table. So we’re fortunate enough to bring some of these folks on. And it’s a very seamless service, which I think limited service hotels love.

Trevor Grant
Excellent. Have we touched on all the points that you wanted to convey and how working together can be so much more advantageous for both?

Connor Vanderholm
Yeah, I think we’ve covered kind of the reasons why, I would just encourage everybody to take a hard look at it if you’re having issues, because we have had quite a few property teams that have been burned by revenue managers, or vice versa. I would say if you’re getting a new revenue manager, give them a fresh start on it. They’re really eager to work well, with you and revenue managers. On the flip side of that coin, I would say, your most important job is to have a good relationship with your property teams. It just really is.