It’s easy to say that all hotel disciplines have changed tremendously in the past 18 months.
NB: This is an article from Duetto
The industry has been pushed to new limits and has responded with courage and creativity. Changes have been seen in revenue management and technology adoption too, with many brands accelerating their tech adoption in preparation for a return to more normal trading conditions.
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A new age in revenue management
An important part of the revenue discipline is focused on price. Revenue management is ‘selling the right product, to the right guest at the right price at the right time’. In the current climate are we focusing too much on the right price and not enough on the product, guest, and time?
Historically, hotels have battled with limited access to data, which fuels an inability to truly evaluate demand. Revenue teams have been tied to rigid pricing models and an over-reliance on the constrained forecast. Revenue managers had pretty much only pricing to test the water and measure reaction to pricing as a demand signal. Therefore, in situations of suppressed demand, price wars could easily unfold.
There has been a huge tech debt in the industry. This systematic under-investment has had a detrimental impact on the industry and particularly revenue management in particular.
But access to better data is allowing us to evaluate hotel demand, embrace Revenue Strategy, adopt a multi-channel approach fuelled by Open Pricing, providing the revenue manager with more flexibility to adapt to different levels of demand coming from different segments.
Over the last 18 months, even in markets that have been badly impacted by COVID, we have seen winners and losers. The spectrum of performance amongst hotels in destinations has widened. There are, of course, many reasons for this:
- Business Mix
- Country Mix
2021 has been an inflection point where we have caught up in techniques and technology but also customers have become more digitally savvy. We need to think beyond pricing and think of the value proposition of our properties.
For 2022 and beyond, revenue teams need to adopt a multi-channel, total revenue management approach focused on profitability.
Hotels have been forced to think beyond pricing and rethink their value proposition to make sure customers felt comfortable to travel, wanted to pay, and felt value for the money they were spending.
Commercial teams have refocused on the basics of selling and marketing where the price is important but it’s just one of the elements of the formula. Here, the collaboration between Sales & Marketing and Revenue Management has been more important than ever before. We see that the disciplines of digital marketing and revenue management are finally converging – the future has arrived, and this is very exciting.
Digitalization has accelerated due to COVID, by both hotels and their guests. Hospitality has been commoditized, but we need to constantly be thinking about the customer journey too.
As a team, we need to work on creating perception and real value for clients. This is going to give us a competitive advantage. Consider:
- Brand differentiation
- Clarity of your value proposition
- Type of experience clients will be having at your property
And from there consider new revenue-generating activities to push a truly multi-channel strategy. Consider:
- Direct business vs OTA
- Corporate programs
- Dynamic pricing for corporate programs
- Pay as you stay corporate programs
- Mobile booking experience
- Other revenue streams
Re-evaluation of loyalty
Today it is 15-20 times more expensive to acquire a new customer than retain past customers. Building brand loyalty has never been more important to hotels and guests. Trust is a key differentiator in the purchasing cycle. Guests that feel comfortable with your brand and your product will continue to book time and time again. And hopefully, they are booking direct because that direct relationship makes them feel secure.
This is a relationship you are building. It is not just about price. Hotel commercial teams can and should be considering all revenue avenues: spa, restaurants, early check-in, late check-out. It’s about really merchandising the total hotel experience. It’s about delivering a good, old-fashioned personal experience. And those who continue to do so will have a competitive advantage.