The old conceptual equation of Quality = Price/Value relates directly to a guest’s conceptual definition of quality as calculated by the price paid and value perceived. The bombshell that was COVID forever changed the landscape of revenue management. In Post-COVID 2021 we will need to re-align our priorities and stay on top of the latest trends to remain viable in this new, lower-rated, over-saturated, and hyper-competitive hotel world.
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Revenue management specifically, refers to the strategic distribution and pricing tactics you use to sell your property’s perishable inventory to the right guests at the right time and to boost revenue growth. Other products such as your amenities and food and beverage offerings will also come into the picture.
Your Lodging Concept
An exercise to start this process is to conceptualize the optimal scenario for your hotel property. If you could build a hotel with everything you want to include and offer what would it be. These factors can include site, size, service level and style of hotel, decor, facilities, amenities, furniture, fixtures and equipment, location, and potential brand affiliation. Guests might have preconceived opinions concerning brand types.
For example, Marriott International (Marriott.com, 2021) offers a broad selection of brands (30) and hotel types ranging from Luxury-Ritz Carlton, Premium-Westin, Select-Fairfield to Longer Stay-Townplace Suites. Wyndham Hotels (WyndhamHotels.com, 2021) offers twenty brands which include the Registry Collection Hotels in the luxury area to LaQuinta, Travelodge, Super 8, Days Inn, Baymont, Howard Johnson, and Ramada.
The strategies of these two hotel companies are obviously different. Marriott targets multiple services levels with select brands offering upper-tier brands but not offering economy choices. Wyndham Hotels, alternatively, offers limited choices at the higher end of service and multiple known brand economy-oriented hotels. These company brand offerings are lodging business choices by their organization’s decision-makers to attract different target markets and provide value differentials within service levels. A solid revenue management strategy can drive a hotel’s operating plan.
Similarly, when assembling a hotel’s competitive set, what criteria are utilized to select competitors? Factors such as site, amenities, facilities, service level, etc. can all be used to assess who should be part of your competitive set and ultimately data for your Star Reports via STR Global. Revenue management revolves around the measurement of what customers from different segments are willing to pay, and this can only be done by measuring and monitoring the supply and demand of your hotel rooms.
The primary consideration in the planning process is to define your hotel and your target markets. Traditional target market examples have often included business, leisure, group, etc. The drill-down questions for these segments can be what do business or commercial travelers mean? Are these travelers, salespeople, executives, managers training employees, or others, that all will have a different level of perceived value for the lodging product they seek. Leisure could include traditional tourists, sports, tourists, etc. Groups, alternatively, could mean corporate business meetings or association meeting/ conference members.
