Sales and revenue management are two departments that seemingly should be a match made in heaven but often find themselves at odds with differing goals for success.
NB: This is an article from IDeaS
While a hotel’s sales team is often incentivized to grow occupancy above all else, revenue managers understand the need to look beyond guestrooms to ancillary services in their quest to maximize revenue. However, if a hotel’s general manager is appropriately engaged with growing revenue efficiently, they will need to find a way to align these departments.
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The longstanding silo separating revenue management and sales is one of the most important for hotels to dismantle as operators adapt to the changing economics of revenue optimization. The solution to this issue is a commercial strategy approach that prioritizes data-driven decision-making. By leveraging data, revenue leaders can increase their confidence when making pricing decisions and providing data or rationale for targeted sales efforts.
Sales managers have taken on as many new responsibilities as revenue managers today, so alignment is necessary to optimize their potential. Cooperation with sales is integral to optimizing ancillary revenue for each hotel, and ancillary revenue is becoming an increasingly important avenue for revenue growth. Owners are aware of this and the need for unity between sales and revenue management. Still, it’s become necessary for technology to bridge the gap between these departments—both in ethos and in practice.
Knowing the Rules
The best way for sales and revenue management to find common ground is through access to a combined offer engine capable of swapping information between departments. Hotels already possess a great deal of guest information, from their marital status to travel habits. However, in practice, revenue management may not have access to this information when they most need it. Operators must construct a digital bridge between customer relationship management (CRM) and revenue management technology.
As effective as revenue managers are today, they can be even more impactful when possessing real-time sales data. For example, hotels already know which guests are planning annual trips and can meet them in advance with promotions for food and beverage, amenities, and more. If a hotel knows the same guest visits the area each January, there is no limit to the options they can present them through promotions, options during booking, and minor improvements to the arrival process. With the right data, the challenge is more about the timing of these promotions, not determining who will respond well to them.
Not all revenue-improving efforts require hotels to offer guests complimentary or discounted amenities, either. If operators know their frequent or most valuable guests prefer late checkout, extending an offer for extended checkout times is a straightforward way to improve guest satisfaction scores and the likelihood of future bookings. This is influential on individual travelers or families, and a similar strategy can be leveraged to improve the group booking experience. For example, operators could offer wedding group blocks early check-in if they also booked a significant amount of on-site event space. Hotels can execute these strategies if they are willing to unite departments behind the scenes.
Putting Into Practice
If marketing to guests instantly is so easy, why isn’t everyone doing it? First, hotels must improve their ability to understand gaps in demand at the property level. Historically, this level of awareness was only available to operators in highly consistent markets, often destinations or major cities. Over time, technology’s ability to forecast demand and understand gaps is improving and allows operators to improve the timing of their offerings in a way that speaks to guests personally.
By combining the best elements of sales data and revenue management practices, hotels can optimize revenue and guest satisfaction in a mutually beneficial way. Sales and revenue management’s goals must be clearly stated, mutually aligned with hotel revenue and profitability metrics, and agreed upon by the hotel’s general manager. From there, the organization can collaboratively develop the strategies and tactics for reaching these goals. This will require more collaboration between these departments but will raise the potential profitability of the hotel exponentially.
Ultimately, hotels must increase the speed at which information is shared between all departments to continue improving and exceeding guests’ expectations. This process will likely require rethinking the operational structure of these departments and realigning their goals at a foundational level. More transparency is good for data analytics, and the incentives exist to embrace it.
