Property-Specific Revenue Management Strategies Lead to Maximum Hotel Profits
Hotel revenue managers have learned throughout 2022 that there isn’t a one-size-fits-all strategy to tapping the most profitable demand segments.
Instead, revenue management strategy must be specific to each hotel.
Throughout the year, revenue-management experts shared tips for navigating the uneven COVID-19 pandemic recovery.
“There’s not a one-size-fits-all [solution], and what might work for one asset, one location, one type of hotel might not work for another,” said Cesar Wurm, vice president of commercial and revenue management at IHG Hotels & Resorts, during a panel at the 2022 Lodging Conference. “But it’s really important that at each hotel you have your optimal mix, and you have to know that with whatever data is available to you.”
Kimberly Furlong, chief commercial officer for Alpharetta, Georgia-based hotel and asset management company Atrium Hospitality, advised that hoteliers need to evolve how they think about distribution strategies.
“From my perspective, [online travel agencies] have a much better relationship with the brands because the brands finally gave in to the OTAs to allow for things like travel ads and accelerator and all the ways you can get the OTAs more money and brands more scale on the commission,” she said at the conference.
HEI Hotels & Resorts Senior Vice President of Revenue Management Jeremy See said the antidote to pressures from rising inflation is being a confident revenue manager.
“I think my role as a leader is I’ve got to instill that confidence in our team to say, ‘Look, here’s what inflation is; you’ve got to push it by 8%, 9% to start,'” See said during a video interview at the 2022 Hotel Data Conference. “I think one thing we learned in COVID is that if you don’t try, you don’t know. A lot of the resorts got good rates, but that’s because someone asked for it.”
Erica Lipscomb, senior vice president of commercial strategy for Crescent Hotels & Resorts, said during a video interview at the 2022 Hotel Data Conference that hoteliers must pay closer attention to their leading indicators as demand shifts.
“And so there’s not just one,” she said. “It’s how are you pacing on the books — not versus last year, not versus 2019. Again, it’s about that ramp, so how are you looking at pace? We always want to have share; we always want to win. So how are you indexing in your competitive set?”
PM Hotel Group Vice President of Revenue Management Tina Meredith said during a video interview at the 2022 Hotel Data Conference that one of her team’s best practices is looking closer at the 30-, 60- and 90-day booking window.
“From a pace perspective, we’re focusing on how the pace looks compared to same time last month for the same number of days out, because we don’t have good comparisons even year over year still,” she said. “I would say that’s definitely one thing we’re doing to stay ahead, along with taking more of just a holistic commercial strategy approach.”
When strategizing for certain hotel types, such as airport hotels, Alex Cisneros, senior vice president of revenue generation at Red Roof, said hoteliers must pay attention to market dynamics.
“It stands to reason that larger airports, such as Dallas and Atlanta, experience more delays, leading to more competition for hotel guestrooms,” he said in a September interview.
And the most up-to-date data is crucial.
“Airport hotels need to have a last-minute strategy that leverages data, segment and channels effectively. Access to real-time information is critical and enables us to be more creative in analyzing traffic flow, track specific airport market data and assimilate all of that information into one place quickly,” Cisneros added.
As hotels began working against increased prices for goods and labor, hotel revenue managers adjusted strategies to balance costs, demand and profitability.
Those strategies include taking risks on hotel rates, according to McKibbon Hospitality Vice President of Revenue Management Jihad Lotfi.
“None of us can decide what the customer will pay. It’s kind of like the car industry right now. You’re seeing cars being marked up $10,000 to $15,000 and people are still buying them,” he said during a panel at the 2022 Hotel Data Conference. “You don’t know what the ceiling is. I tell my team, ‘If it’s not broken, don’t fix it.’ Don’t be afraid to take a risk.”
For example, Lotfi’s team had a 10-year-old TownePlace Suites in a market that had never sold a room for more than $600. A new revenue manager came in and priced rooms at $1,500 before a college football game, and the hotel ended up selling a handful of rooms at that price.
“Again, you never know until you try,” he said.
Hotel companies that are learning to “do more with less,” are finding success through integrating sales, marketing and revenue departments.
Chris Hardy, vice president of sales and revenue strategy for Parks Hospitality Group, said during the “How to Unsilo the Sales Process” at HSMAI’s 2022 Revenue Optimization Conference Americas that his company is broadening its training.
“We started to train [our sales teams] on revenue-management principals and strategy … and I think that has really benefited our team so we have a broader understanding of how the two disciplines need to work together,” he said.
Michael Klein, vice president of global revenue management for Hyatt Hotels Corp., said during the “Post-Pandemic Evolution to Revenue Strategy” panel at HSMAI’s 2022 Revenue Optimization Conference Americas, that while “breaking down the silos” has become a buzzword in the industry, “the regionalization of the recovery really opened our eyes to how we have to work through the pandemic and really made a great model for the future.”
Not only have revenue strategists learned to price rooms competitively during an unpredictable demand environment, they’re also finding ways to get the most profits from food and beverage, spas, pools and golf courses.
For example, Prism Hotels & Resorts’ properties have added, at a premium, resort credits at dining venues. At its corporate travel hotels, the company rolled out its Business Boost package, which includes breakfast for one and premium high-speed internet for those arriving Sunday to Thursday.
“By having competitive offerings and encouraging prior-to-arrival commitment, we’ve seen paid-breakfast capture rates increase,” Samir Bhatnagar, corporate regional director of revenue optimization at Prism, said in May. “Hotels have great opportunities within the [food-and-beverage] space, and a little bit of effort can go a long way.”
