Hotel revenue managers have their work cut out for them now during the COVID-19 environment and once travel demand resumes.
Veteran revenue managers have experienced downturns before and know the challenges that accompany them, but this time around, they will have artificial intelligence and machine-learning software to assist them in setting pricing strategies. Still, lower travel demand due to the coronavirus and historic hotel performance declines are a testing ground for this technology.
Sources said the lessons learned in past downturns will apply to revenue strategy in the current environment.
Tina Meredith, VP of revenue management at PM Hotel Group, said in an email interview that she worked in the hotel industry through the past two recessions and worked in revenue management during the Great Recession years.
“What strikes my memory the most about both instances, but more so in ’08 to ’09, was how quickly rate strategies changed, how quickly downsizing measures were put in place and how we, as hoteliers, lost the bargaining power with our clients,” Meredith said. “The leverage swung to the side of our customers and clients almost as quickly as a pendulum swings.”
Priya Chandnani, VP of revenue management at Benchmark, said in an email interview that she has “never seen demand trends as low as they are” today, but in past downturns hotel revenue managers endured and developed creative pricing strategies.
“In the last decade, we have developed a stronger focus on net profitability, driving revenue through direct channels and higher reliance on technology making the work process more efficient,” she said.
Vikram Pradhan, group VP of global revenue management for Wyndham Hotels & Resorts, lived through the demand declines of the Great Recession and even the SARS epidemic of the early 2000s. He added he’s not worried about the long-term health of the hotel industry.
“While SARS was localized in its impact on cities like Hong Kong and Toronto, it wiped out demand for hotels in those cities, similarly to what much of the industry experienced here in the U.S. during mid-March this year,” Pradhan said in an email interview. “The first time I experienced a downturn in demand, I remember worrying how the industry would ever recover. But time and again we have seen this industry persevere. I have confidence it will recover this time as well as we see different travel demand start to resume.”
Revenue managing during COVID-19
Meredith said AI and machine-learning systems have certainly benefited the revenue-management discipline.