How will 2020 shape up for you – my Top Ten predictions

How Will 2020 Shape Up For Hotels – My Top Ten Predictions

They say that all good Revenue Managers always carry two things: a calculator to crunch the numbers and a crystal ball to predict the future.

NB: This is an article from Right Revenue

So here is my attempt as a fortune teller and my own personal thoughts on how the industry will change in 2020.

#1: A move to focus on TrevPar – We are all used to managing our business on ADR or RevPar but is this really enough?  Absolutely not.  As our challenges with distribution increase, along with our Cost of Customer Acquisition (COCA); with the need for increased digital spend; PPC, re-marketing and meta spend increases expected, understanding your true costs will be business-critical.  It never ceases to amaze me that so many hoteliers don’t work out their true costs and have given their teams little clear direction on ‘walk it rates’, but crunching those numbers and understanding perimeters for Last Room Value (LRV) must be the starting point for measuring TrevPar.  Once you have a true handle on costs, then measuring incremental spend per segment is your next challenge.  Imagine the power you would have if you understood exactly what each segment was costing to acquire and how much incremental spend you could expect?  Now that is the power of revenue.

#2: Increased reliance on technology – We all know that ‘every pound is a prisoner’ and that it is all of our jobs to increase the bottom line.  If this is truly the case, then take your revenue manager out of spreadsheet hell and allow them to become a strategist!  And to do that, for goodness sake invest in technology. Whether that is a revenue management system, a CRM, channel manager or effective PMS, please redress the balance and spend a little more on systems that will actually benefit your whole business strategy. I promise your hotel will benefit immediately.

#3: Distribution Landscape – The one to watch in 2020 is Google. They may not position themselves as an OTA but they certainly behave like one. Google recently announced that all travel related sites will be pushed further down the rankings so that they can dominate search, and we saw the effect immediately with an instant and serious loss of profits for Expedia. Add this to the fact that they know more about our customers than anyone else – their travel behaviour and their spending potential and we have a global power-house right on our doorstep – literally! They are changing our distribution landscape and this change will, I believe, lead to more innovation by the OTA’s. My advice is to watch this space…

#4: Rate parity is disappearing – Not only do we have to cope with inflated commission levels and the ever-increasing number of under-hand practices unveiled daily by OTA’s, we now have them very openly under-cutting our rates.  Mix this with confidential rates being leaked into the public domain, and I believe 2020 will be consumed with price wars. My advice is to be very careful who you ‘jump into bed with’. Go through every contract with a fine-tooth-comb and be very aware of what you are signing up to. Ensure your hotel team is bought into your revenue strategy and that they can quickly spot rate under-cutting, as every price that is undercut is affecting your valuable profit.

#5: Guest expectations – A quote I use frequently – ‘the future belongs to those who hear it coming’, the question for 2020 will be, do you hear it? Some industry leaders are suggesting that our guests are actively seeking a ‘hotel/AirBnb’ hybrid; a wonderful and unique experience but with comfort, security and style.  Providing a bedroom is simply no longer enough, are you ready for that shift in buying behaviour? It is right around the corner

#6: Ethical buying – We have a huge amount to thank David Attenborough for… His series ‘Blue Planet’ brought it home to most of us, just how wasteful we all are and that we are in fact not ‘entitled’ to do what we want with this earth but that we actually purely custodians… This shift in ethics has and will continue to have an impact on your customer’s buying decisions. Removing plastic straws is no longer enough. Do you have an open and honest environmental policy? Are you already ahead of even your customer’s desire for more ethical food choices? I hope so…

#7: Events Revenue Management – Often neglected when we talk about Revenue Management but understanding your profitability in this very lucrative sector should be at the forefront of your strategic planning in 2020. As an example, I often hear ‘we are 10 weddings down compared to last year’ but in real terms, what exactly does this mean? The questions you should be asking are: 1) what value did your weddings have last year 2) how many ‘eaters’ compared to ‘sleepers’ 3) what was the overall value last year 4) what is the overall value this year 5) what potential business have you lost this year in total revenue terms, NOT just total number of weddings. In essence, you need to stop evaluating your business at a high level and start digging deep into the figures. The future of Total Revenue Management lies in having a great handle on ALL of your hotel business.

#8: Retaining Talent – Hospitality is hard work… Those of us who love this industry are used to working long hours and often in very stressful circumstances but the truth is that for many of us, it is our ‘normal’ and we wouldn’t change a thing. However, as we learn to cope with Brexit, Generation Z, and cope with more competition in our area, the staffing issue will, I believe, become more of an issue in 2020 than ever before. As an industry we need to learn to invest in our teams, reward in new ways – which often isn’t monetary but could take the shape of training, more flexible working, removing zero-hour contracts – all of which will benefit the hotel industry as a whole. We are nothing without the people around us, so 2020 is the time to show that.

#9: Personalisation – This is a buzz word that has been around for a while and whether we like it or not, it is here to stay, but what exactly does it mean and how do you tread that thin line of personalising a stay and not seeming to be intrusive? This journey often starts with your website and your booking experience and there are some great providers who specialise in this space. But over and above that, what are you doing as a hotelier to recognise your guest’s needs? My advice is to stop thinking like a hotelier, and start thinking as an experience provider. As I said above, we need to stop believing we are providing a room for the night (gone are the days), our hotel guests want more than that, and 2020 will bring a year when we need to be pro-active rather than re-active

#10: An end to silo-working – is this too optimistic? I hope not. I still see so many hotel departments that are all consumed by their own targets, focusing on their own GOP and that rarely focus on the big picture of Total Revenue Management. Make 2020 the year that you give overall targets. Make 2020 the year that you improve communication between your teams. Make 2020 the year of great teamwork.

The truth is that we all have the privilege of working in the most dynamic and exciting industry in the world (in my humble opinion).  Change happens almost daily and often we told that we don’t react quick enough.  2020 will bring, I believe, one of the most exciting and challenging years we have ever faced… Let’s hope we are ready for it!

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