With so little demand in so many markets, what good is demand-based, data-driven revenue technology?
NB: This is an article from IDeaS
It’s common in times of uncertainty to question that which has traditionally worked in more stable times. To not do so is to assume what worked yesterday will always work in the future. New problems often require new or more inventive solutions, and 2020 will leave us with many problems still yet to be solved.
The pandemic has taught people, and the technology they use, quite a bit. We have the privilege of supporting, interacting and learning alongside thousands of hotels around the world and this year was no exception. Each property has been impacted uniquely by the pandemic, and every hotel has faced unanticipated challenges.
Taking a closer look at data trends and patterns over the past year, some best practices our clients have used to navigate the disruption have emerged. Here are three areas of revenue management strategy, and the science behind it, that keep us and our clients agile and adaptable in an ever-changing world:
What’s Past Is Prologue
Demand has changed forever because even as occupancy rebounds, the mix of your business will be different moving forward. And not just demand—there are significant changes in supply in many markets, implications due to local public health orders and competition to keep an eye on now more than ever. People and technology can account for these factors but if circumstances have changed, so should how you view and interpret the data for decision-making.
Assumptions like typical seasonality, day-of-week pattern and segment behavior have all been jolted by the pandemic, but this shake-up allows for technology to find new indicators into the changing business. Historical occupancy, ADR or RevPAR will always provide valuable insight, but in today’s market, to adapt means to understand cancelations, new bookings, forecast trends in any direction, shifts in competitor pricing, optimal pricing restricted by manual controls and how these change over the most relevant intervals of time for your business. It’s difficult to do this with everything else needed to run a business today, but if you’re looking at revenue figures and making decisions to change pricing, you are already doing it.
The people doing it best are letting technology do the heavy-lifting by taking their historical and future data (now including a full year of pandemic data) to measure and monitor the changes over time across days, weeks, and months to tell them about the returning demand for the future.
Sharpen Your Profit-Hunting Tools
A recovery in most markets will mean a focus on growing the business in certain segments to offset losses in others, and one area of opportunity is certainly leisure demand. Leisure, particularly yieldable, transient demand, can often be a steady drip of business. Less like a block of group rooms or contracted allotment because this business can come from many different places. Cost of acquisition for leisure bookings are often difficult to measure or disjointed if the transaction passes through multiple channels.
Profit hunting will be a permanent fixture in the modern revenue manager’s activity and thus should be a permanent fixture in the technology they use to deploy their strategies. Determining the best business based on profit allows hotels to achieve the analytically optimal strategies they desire.
Profit becomes the great equalizer of all potential business. Two guests paying the same rate, both spending $100 in ancillary revenue—one in the spa and one in the bar—on paper appear to be equivalent in revenue. But as you track revenues in all areas, and the costs associated with each of them, simple math will tell you profit can paint a much more nuanced picture than revenue alone. This applies to casinos, resorts, all-inclusives, extended-stay, hotels with ancillary revenue and any hotel putting more focus into strengthening leisure business for 2021.
As more informed decisions can be made about all revenue-generating areas of the business the rooms revenue manager can take a more strategic role in commercially managing all the intersections of revenue opportunities. Direct channels are prime to succeed in a post-pandemic world because the business owner has greater control over what to feature that may be most relevant to their target leisure traveler in today’s environment. Tailored shopping experiences allow customers to shop based on their attributes or needs and open unlimited possibilities to present the most compelling offer to a guest with the goal of taking the most profit to the bank.
Anticipating Uncertainty = Agility
The pandemic has only made more evident the challenges our industry faces when there is a lack of reliable and well-integrated technology in place to support people and their processes. Think of how much more difficult creating budgets were for this next year than in years past. And nobody would claim their budget season is a low stress time of year under the best of circumstances. Now is the time to change the status quo, break down a process and rebuild it right. Chances are it needs to be rebuilt, reimagined or reconfigured to support you best through these uncertain times.
If you have the people, then empower them to build the mechanisms, collect the data and create the insights you need to make the most optimal decisions for your business. And if you have less people right now, then rely on automated revenue science technology where you can. A self-learning forecast for each segment of your business, for 365 days into the future, updating multiple times each day, using snapshots of your own data and competitor pricing to influence revenue management decisions is possible today, tomorrow and in our post-pandemic world.
Through this pandemic, we have worked tirelessly to ensure our industry-tested analytics react quickly to changes in business mix and overall demand. Our solutions continue to be refined and recalibrated to deliver revenue-enhancing decisions, and we’ve boosted our client support to help hotels quickly identify opportunities and meet changing market demands.
As with any business or revenue plan for a company, successful agility is not determined by knowing what specific outcome will occur, but by understanding all possible outcomes that can occur and then assembling an adaptive strategy to achieve optimal performance each step of the way.
