A cultural shift at Accor, which is taking focused, cross-functional approach to revenue management at the individual property level, is a lesson for all.
Who wants sub-optimal revenue management? Certainly not us revenue managers! Increasingly, we aspire to total revenue management. It is easy to see why. As ancillary revenue approaches 50% of total revenue, we understand that the traditional RM system, built around the base rate or fare only, clearly is suboptimal. However, most travel companies today don’t properly manage ‘total revenue’.
The good news is that some practitioners are seeking a new algorithm, a new analytical model that will account for ancillary revenue. Adam Hayashi, VP of Revenue Management & Analytics at AccorHotels, who spoke at a recent EyeforTravel event, who sees ‘total revenue management’ in a different light, is one of those. For Hayashi, the concept of TRM is an innovative way of thinking and a cultural shift, rather than just a new mathematical goal. He encourages RM – and virtually every other function at his hotels – to think in terms of meeting customer needs on a broad scale and maximising the use of every square foot at his properties.
Of course, in the airline industry, ultra low cost carriers theoretically have a culture of total revenue. Much of their focus, however, has been on unbundling services to permit lower ‘bare bones’ fares. But customers often view this negatively, seeing it as service degradation, or extreme nickel and diming, rather than an attempt to better meet their needs. At Accor, Hayashi is approaching ancillary in a far more entrepreneurial way by considering what new value-added services can improve the customer experience and drive new revenue streams.
At the recent conference in Las Vegas, where Hayashi was speaking, he provided multiple examples of how the group has grown ancillary revenue. Here are four he cited:
1. Wedded bliss: At one upscale property, the large back lawn became a popular new wedding venue in the city. The property was well known as an elegant setting in town; converting the space to a wedding venue became a significant new revenue driver, utilising an asset that had previously generated no incremental revenue.