Breaking the Boundaries Between Hotel Revenue, Marketing and Sales

At a time when powerful technology is changing the game, revenue management professionals need to reinvent themselves by stepping outside of their comfort zone by bringing revenue, marketing and sales together in a collaborative effort while tearing down the traditional departmental silos which keep these concentrations separated.

NB: This is an article from Wendy Stevens, Executive Vice President at First Hospitality Group

Historically, revenue managements in the hotel industry has been focused on some basic and straightforward questions, with core principles on pricing and yield. Some of these questions are: Am I priced correctly? What are consumers willing to buy? Have I managed demand properly?

All these questions remain as critical building blocks in the foundation of modern day revenue management. These pieces need to be in place to achieve financial success such as the right price, length of stay, correct mix of business, seasonality, etc.

A lot has changed in recent years, most notably the introduction and widespread adoption of revenue management systems and solutions based on exceptionally powerful artificial intelligence (AI). Leveraging the power of big data, analytics and algorithms. which can crunch the numbers with an astounding degree of granularity and sophistication, have systematically changed the revenue management game.

The systems that successful hotels work with today have evolved dramatically to provide revenue management professionals with specific recommendations, and to deliver pricing parameters based on historical demand-along with a range of other factors. These system-calculated recommendations are not always accurate which is why we still need experienced professionals in that revenue management role. But there is much more sophistication and precision, and the growing power of technology has brought about a profound paradigm shift in the industry.

It is against this tech-assisted backdrop, at a time of profound change and exciting possibilities for the industry, that revenue management professionals need to be doing some smart and strategic critical thinking about what is next and how they can evolve. How can they best spend their time, and what else they can be doing to efficiently deliver maximum possible value in this brave new world of revenue management?

Breaking Down Barriers

Today, a handful of industry innovators are recognizing that one of the best ways for revenue management professionals to push the boundaries of their specialty is to break down the traditional boundaries that have existed between revenue, marketing and sales. The goal is for revenue to become a more engaged and collaborative partner, and, in some cases, to function as a kind of central hub that can bring new levels of coordination and mutually beneficial cooperation across departments.

Market(ing) Forces

Some hotel owners and operators are starting to “cross train” their revenue teams to teach them how to review and evaluate marketing analytics. Marketing departments are still critically important and do enormously important work. But does your marketing team understand demand as well as the revenue team does? Who better to determine if the marketing dollars you are spending are incremental than revenue management professionals who live and breathe this stuff every single day?

Forward-thinking hotels are providing their revenue management team members with social media data, and encouraging them to factor customer sentiment into how aggressively they can price. There is growing recognition across the industry that is bringing meaningful value in this kind of inter-departmental cross-training. Today’s revenue teams need to understand that what guests are saying about their hotels can help a property be more confident in its pricing-and hotel owners and operators are getting better at not only making those connections, but doing so in a more systematic and sustainable way.

A similar dynamic exists with respect to global distribution systems (GDS). Marketing can build and monitor a campaign, but there is value to having someone in revenue management who is trained as a GDS expert to understand how customers see the hotel, when campaigns should be run, and how those campaigns should be monitored. Revenue should be helping to answer those questions and conduct those assessments. Marketing is no less important, but revenue management should be the hub.

The value of a more engaged and versatile revenue management team becomes evident across a range of different scenarios. When brands come to you with opportunities to spend money in top-off campaigns, revenue can help determine if that makes sense. A lot of this is math, really. Marketing is a creative force, but revenue is analytics-and it’s that analytical capacity that needs to drive (or at least be connected to) the evaluation process. Everyone in the business is trying to tighten their belts when it comes to third-party reservations. If there are opportunities to get rid of some of inventory, and the rate can come in at a great number, then it may make sense to proceed. But the reality is that by the time you account for commissions, that isn’t likely to be the most profitable piece of business you can book. Revenue can help make that call. It’s all about trying to connect the dots more seamlessly. And we’re not there yet (as an industry), but we are starting to lay the groundwork.

The marriage of marketing and revenue boils down to bringing new perspectives and insights to the table to answer fundamental questions. When you go back and look at a campaign and ask: Did I have the right offer? and Did I have the right price point?, it’s apparently clear that these are questions that revenue needs to be intimately involved with.

Sales Pitching

Sales is another area where revenue management can and should become more engaged and collaborative. Sales and revenue management have traditionally been at war-or at least in a state of tension. There is a constant push and pull between the two departments, with sales bringing opportunities to the table and revenue management is signing off on those opportunities (or not).

Today however, it’s increasingly clear that this is another opportunity where revenue can add value by evolving its role. To make this new sales-and-revenue dynamic work, it’s incumbent upon revenue management professionals to bring more to the table. Because it’s one thing for revenue to say “no, that’s not a good piece of business,” but the follow up to that needs to be So what can you bring to the table? Instead of just saying “no,” revenue needs to become part of the sales process, actually helping with prospecting. There is no reason why revenue management professionals can’t go online and use tools like Demand360 reports to learn more about what the competition is doing.

Evaluating each piece of potential business based on what the average total customer spend is at the hotel remains important. If the spend is here, will you be willing to give up a little bit more or be more flexible? This isn’t exactly revolutionary, but it’s still an important piece of the puzzle. If you’re considering a group piece of business, what’s the spend?

Revenue management and sales are starting to work closer together-and that’s a good thing! Ultimately, there isn’t a single piece of business in a high-demand hotel that shouldn’t be looked at and thoughtfully and critically evaluated. Important input and insight from revenue can help determine whether a piece of business fits your plan and your property, and perhaps it isn’t too surprising that more hotels are starting to make a push to ensure that revenue is included in the process of evaluating these accounts. While not every brand and property has made the same strides in this area, there is little doubt that it makes sense for revenue to be more involved going forward.

New Perspectives

The value of breaking down traditional departmental silos becomes arguably even clearer when considered in context of what is already taking place within the industry. Even during a period of sustained economic growth and positive performance, growing supply continues to drive all successful hoteliers to continue to work toward the most profitable pieces of business. We are all trying to shift share or shift our channel mix, and hotel companies are constantly looking for ways to cut expenses and to keep a lid on the escalating cost of customer acquisition.

For all that effort, however, we still haven’t truly been able to break out what the specific costs are per channel. If you ask some brands to break down the fee structure, you might get 20+ pages outlining all the various fees that can go into a reservation. While we have more information at our fingertips than ever before, things have also become incredibly complicated. In many cases, we’re still trying to piece together which triggers we can pull when we see the void in front of us. Travel ads, OTA promotions, adjusting the online group inventory-these are all things we can do, but it’s all too often an inexact science. The solution isn’t to pile more information and complexity on top of what we already have, it’s to consider doing things differently.

For example, hotel professionals will often complain about lost business because of these new hotels opening. But what do your low demand strategies actually look like, and how were they developed? What did you do in advance to prepare for a competitive up-tick in the marketplace, and did you bring together revenue, sales and marketing as a group to determine the best way to move forward?

New Challenges

While a shift in mindset is starting to take place, changing the way the industry has done things for decades won’t happen overnight. Bringing together different departments that have functionally been separate entities for a long time now isn’t easy. There are logistical, operational and even social obstacles that will arise, and hotel owners and operators need to be vigilant about addressing issues promptly (including removing employees who can’t play nice) before they become problematic.

Working together in a positive and productive manner requires setting aside inherent territorial instincts, reliance on different metrics and different evaluation channels, and, above all, a willingness to change. Different groups need to be considerate to avoid bruised egos and hurt feelings, and it’s up to leadership to cultivate a truly collaborative environment and to remind all parties that they are on the same team-working toward the same goals.

Successful teams today cannot be in silos. They need to be resourceful, prepared, confident and coordinated. That’s only possible if you work together, but it’s also true that things can become more complicated when there are more moving parts. In the end, however, there’s no real choice to be made: the way the industry is evolving, you will either need to move to a more collaborative, trust-based business model that introduces more revenue management analytics to different aspects of the business, or you’ll simply get left behind.

Reprinted from the Hotel Business Review with permission from