As revenue management evolves with the industry and the world around it, revenue managers need to stay on top of their game by playing close attention to new trends as they arise.
Some common themes of recent revenue-management trends center on changing consumer preferences and technology acting as both an obstacle and enabler.
Dan Skodol, VP of revenue analytics for The Rainmaker Group, broke down five of the most recent revenue-management trends and what hoteliers should do about them.
#1: Loyalty based pricing
In an effort to shift direct bookings away from third parties, hotel brands started to offer loyalty members discounts if they book direct.
“What’s interesting is the word loyalty in use in conjunction with discount. Truly loyal customers tend to be willing to pay more for your product,” Skodol said. “You need to think of the potential dilutive effect of this.”
Skodol said revenue managers need to understand their total channel and marketing costs in order to avoid guests booking with high-commission online travel agencies.
“You have to still compare your own direct booking costs, brand fees and marketing fees from brands. Customers that may have paid full price are now getting a discount, and the brands are benefitting from loyalty effect,” he said, adding that it’s important to understand there are other channel options. For example, negotiated corporate rates might be a better way to go.
“It’s about optimizing your overall channel mix,” he said.
#2: Impact of alternative accommodations
It’s no secret that alternative accommodations, such as Airbnb, are putting pressure on hotels. Skodol cited research that shows that U.S. hotel inventory grows 10 percent when accounting for Airbnb’s active listings. Airbnb booking revenues are projected to grow from $7 billion in 2014 to $83 billion in 2020, he added. Meanwhile, he said the estimated annual loss to the New York City hotel industry is $450 million due to Airbnb, and that figure could grow to $805 million in 2018.
