Is NOI the only thing that matters?
In this episode of the Hotel Moment podcast, Karen Stephens, Revinate CMO, and Joe Pettigrew, Chief Commercial Officer at EOS Hospitality, reveal an industry truth that a hotel’s NOI should be the number one priority for revenue maximization. Pettigrew shares an honest perspective on commercial strategy — explaining that loyalty percentages, direct booking percentages, social media followers, email open rates, all mean nothing without property-specific plans to drive NOI.
Listen in for alternative ways to ensure you’re connecting with guests on a variety of platforms, identifying repeat customers, and wrapping your arms around your data to make NOI an easy target.
Meet your host
As Chief Marketing Officer at Revinate, Karen Stephens is focused on driving long-term growth by building Revinate’s brand equity, product marketing, and customer acquisition strategies. Her deep connections with hospitality industry leaders play a key role in crafting strategic partnerships.
Karen is also the host of The Hotel Moment Podcast, where she interviews top players in the hospitality industry. Karen has been with Revinate for over 11 years, leading Revinate’s global GTM teams. Her most recent transition was from Chief Revenue Officer, where she led the team in their highest booking quarter to date in Q4 2023.
Karen has more than 25 years of expertise in global hospitality technology and online distribution — including managing global accounts in travel and hospitality organizations such as Travelocity and lastminute.com
Transcript
Intro- 00:00:04: Welcome to the Hotel Moment podcast presented by Revinate. The podcast where we discuss how hotel technology shapes every moment of the hotelier’s experience. This podcast is hosted by Karen Stevens, Chief Marketing Officer of Revinate, and she is joined by leaders in the hospitality industry. Tune in as we explore the cutting-edge technology transforming the hospitality industry and hear from experts and visionaries shaping the future of guest experiences. Whether you’re a hotelier or a tech enthusiast, you’re in the right place. Let’s dive in and discover how we can elevate the art of hospitality together.
Karen Stephens – 00:00:46: Hello, and welcome to the Hotel Moment podcast. I am your host, Karen Stephens, the Chief Marketing Officer of Revinate. On today’s episode, we are thrilled to have Joe Pettigrew, a seasoned commercial leader in the hospitality industry, currently serving as the Chief Commercial Officer at EOS Hospitality. With over 15 years of experience, Joe has held key roles at prominent organizations, including Starwood Capital, ShoreRock Group, and Principal Hotels. His expertise spans brand management, asset management, and revenue maximization, where he has pioneered strategies to drive operational excellence and profitability across diverse hotel portfolios. Joe is recognized for his innovative approaches to enhancing revenue streams, and he’s here today to share his valuable insights. Welcome to the show, Joe.
Joe Pettigrew- 00:01:30: Thank you very much, Karen. Thank you for having me.
Karen Stephens – 00:01:33: It is a pleasure. So I wanted to start off. Let’s talk a little bit about EOS Hospitality. I know you just came over to EOS from Starwood Capital Group, but can you give us kind of the 10,000 foot view of what is EOS? What does the portfolio look like?
Joe Pettigrew- 00:01:47:EOS is actually probably one of the fastest growing, if not the fastest growing hotel investment company in the US today, in the last four or five years for sure. And because it has a fully integrated management platform called EOS Hospitality, And so it’s on a really great trajectory for supercharged growth. Most of the hotels that we manage today are unique and individual hotels with great character and amazing locations. So they all tend to be independent properties, the vast majority of them, which is really kind of what attracted me to join the company as I am actually very, very new here myself.
Karen Stephens – 00:02:39: That’s excellent. So you said something there. I mean, I think everybody knows what a management company is, obviously, but you said an integrated technology management platform. Can you talk a little bit about that? So are you saying that there’s a tech stack that kind of goes throughout the hotels or what did you mean by that one?
Joe Pettigrew- 00:02:55: I meant to say integrated management platform, meaning just a management company that manages every hotel that EOS owns.
Karen Stephens – 00:03:04: Got it. So the asset company and the management company are the same entity.
Joe Pettigrew- 00:03:08: Technically two entities, but really the same company. Yeah, led by the same founder.
Karen Stephens – 00:03:13: Awesome. Okay, that’s great. Yeah, I’ll say EOS is one of our customers, and we’ve worked with you for a while and we absolutely love the portfolio. I think what is interesting is that when you have that diversity and independence, it’s like you can have a common management framework, but all of the brands are a bit different. So that’s exciting, I’m sure.
Joe Pettigrew- 00:03:32: Definitely. And really the most exciting part about it is, I mean, as you know, the hotel industry is so fragmented between ownership, brand, and management. And a lot of the inefficiencies and difficulties that we all associate with working in the hospitality industry, a lot of that sort of go away because there’s a full alignment between the ownership, brand, and management, especially when you run a lot of independent hotels — we don’t really have brands to deal with. So that is the real bonus when you have that fully integrated structure.
Karen Stephens – 00:04:04: That is very exciting. So I wanted to talk about commercial strategy here for a moment because I feel like commercial strategy has been around for a while. I just had a guest on the podcast, Jennifer Hill from Kalibri Labs, who said it is an “evolution, not a revolution.” So a lot of people have been doing commercial strategy for a while, but it seems to be getting more and more focus. We just had HSMAI that happened this week, where the focus is really on commercial strategy. But it’s something that you’ve been doing, I know, for a long time. Your approach — I’ve seen a lot of talks. Can you just give the highest level view of what commercial strategy is and how it impacts hospitality?
Joe Pettigrew- 00:04:45: Yeah, and I think the way it happened, I’m sure everybody has their own definition and version of what they think of when they say commercial strategy. For me, it was born out of just a pure necessity that I was working in a Starwood Capital Group as one of the biggest hotel ownership groups in the world, but not managing any of the hotels ourselves. That, we had to add value through by working with third-party management companies for most of the hotels that we own, that I needed to come up with what I would call a commercial strategy to essentially move the folks that are managing our properties into one direction. And that one direction being the most important, sort of the North Star, if you will, to truly move the needle at the hotel there. And a simple one-liner explains that in order for this hotel to truly outperform our current expected performance, the hotel needs to do X. And that X is broad enough where it touches operations, revenue management, sales, and marketing. But then if everyone understands the goal is this one sentence, clear objective, simple to understand vision, then it forces everyone to realign what they’re doing and how they’re thinking about their own pricing strategies or even guest service strategies and out-of-order maintenance, everything to be aligned with that North Star. And because it does not have the luxury of managing individual commercial leaders on a day-to-day basis, sitting on the asset management side, that I had to sort of develop the simplest way to deliver. Here is the opportunity. Our vision has to be executing on these things. Now this becomes the vision. Everybody, we need to create our own sub-strategies and tactics in order to deliver on that. And so that became the commercial strategy only because it had to be something that every department had to participate in, not just revenue.
Karen Stephens – 00:06:52: And I think that that’s what I like about it so much, because I think traditionally, as you mentioned, your sales team has certain goals, your revenue manager has certain goals, and f everybody gets in line, whether it’s moving the needle on net operating income or making sure you get the right channel mix when you’re talking about how you’re approaching guest…And I’ve seen you do some talks on that as well. So that is really interesting. And I think for our listeners — a lot of our listeners are marketers within a hotel, they’re revenue managers. I think you bring such a unique perspective as the asset management company, as the ownership company. What you’re interested in is making sure that the asset itself increases in value. And if people can start to understand what moves the needle there, it makes it a lot easier to get things done at the hotel. What I mean by that is, if budget season’s coming around, if I can talk to an owner with that lens, I’m going to be more successful.
Joe Pettigrew- 00:07:48: 100%. And for most of us who are working in the hotel, so that is basically anyone besides the folks who work on the brand side. But if you’re working in the hotel or as part of the management company, or you’re working as part of the ownership group, really the only thing that ever matters in measuring the success of the hotel that you’re working in is the NOI. Nothing else matters. Loyalty percentage doesn’t matter. Direct booking percentage doesn’t matter. How many followers you have on Instagram doesn’t matter. How many emails — open rate, but none of that stuff actually matters. The only thing that matters is the NOI. Now, in order to improve that NOI, all of those KPIs that I just kind of whittled on, all will have some impact in driving that NOI. But the magnitude of what each one of those things make the biggest impact will be different for every hotel in different locations, depending on which brand you have and what kind of facilities you have. And so you can’t approach any one of these with a very simple mindset of like, I mean, Direct booking percentage, you’re only like 20%, I’m 40%.
That comparison is not fair when the only thing that really matters is we need to just maximize on the NOI. I always joke that I can make all the OTAs go away. Like I can make a 100% direct booking percentage by just turning off all my OTAs and everything, but your NOI will go down. And so that’s an easy thing for me to achieve. So if you focus a team on direct booking percentage, people will do some strange things to deliver on like KPI at the sacrifice of what the final number looks like.
Karen Stephens – 00:09:25: So if you’re dumping your rate, so you turn off everything, you dump your rate to the floor so that you can get all the business directly, that might not be the best strategy.
Joe Pettigrew- 00:09:33: 100%. And/or just turn off all of the OTAs. The only channel you can ever book on your hotel is your own website, then I have the best direct booking percentage in the world, but that’s no —- that may not be the right thing or the best thing for the hotel’s overall profit.
Karen Stephens – 00:09:47: Right. Well, let’s talk a little bit about OTAs because I saw that you spent some time at Expedia. I spent some time at Travelocity. I’ll say for our listeners, both of those times were pretty limited and early in our careers. But remember, I was there, actually moved around a lot. But anyway, bottom line, when you think about OTAs and the place that they have within a hotel book of business, how do you think about the OTA? When is it good? When is it bad? And how do you shift the share? Because we definitely want to drive directly. We’re not saying that. But what do you think about it?
Joe Pettigrew- 00:10:16: So I definitely think that they are a useful partner in just about every scenario. And the biggest reason why I think that they are a good partner in most cases is because if you really do a deep dive study of the overlap of customers between who books directly on their website versus the customers that are booking on the OTAs. That overlap isn’t that strong. Like there’s not a great overlap there. And so the customers that are booking on the OTAs for you are more than likely not going to be diluting the bookings that you’re going to get directly on your website or on your voice. And so you have to treat that as another pool of a source of demand that you know exists that you know how to utilize best depending on what you’re needed. And so, for example, I’m generalizing here, but one of the great things about working at Starwood in my last role was that I got to work with so many different brands and so many different management companies — lots of different asset classes. But generally speaking, the OTAs always had a very short booking window, almost across the board. So if you know that that is true and you know what your profitability margin is for a short-term booking versus a long-term booking, then you can really leverage the OTAs to drive your NOI. And what I mean by that is if I were to sell a room at a hundred dollars and I have a hundred-room hotel, the very first guest that I book at a hundred dollars has a negative NOI because I have a fixed cost of the front desk staff and all the admin in general and sales and marketing. I have all the fixed cost bases that are built in to service the first guest that books. The last guest that books the 100th booking that I get for a hundred dollars, that one has almost 60% flow through because all my fixed fees have already been paid for by the first 50 bookings that I book. And so if the OTAs is the one that is delivering me that very last booking at $100, then actually the profit margin on that is much greater than the direct booking that I got for the very first booking that I booked in. And so if you know how you’re utilizing the OTAs to come in at what booking window and what lead time and so on, you can make it incredibly profitable. And it doesn’t have to be the expensive channel that everybody is so worried about all the time. Controversial statement, I recognize.
Karen Stephens – 00:12:45: It is. And I want to make sure that we put it in context because I think every channel has its purpose and place. What you’re saying is, Hey, if you need to top off your hotel to fill those last few rooms, okay. But the first few rooms, you want to make sure that you’re not paying a massive commission on that.
And of course, we know that there’s booking windows all over the place. But I think the way that we think about it is Revinate is that if you understand who your best, most profitable guests are and when they book, and what they like, and how you service them, then hopefully you can fill a lot of those rooms with repeat guests because you know their trends or you can share data across portfolios and remarket. So if Joe went and stayed in this hotel and likes to golf and eat sushi, that I’m going to market a second hotel in the portfolio that can target Joe based on that information. And that’s a direct booking that’s intelligent. So I think if I understand what you’re saying, OTAs should be a compliment. They should be incremental guests that you wouldn’t otherwise get. And then that makes sense. Is that a fair statement? I want words in your mouth.
Joe Pettigrew- 00:13:48: That is exactly right. Because like I said, the first bookings that you get, the cost of service — then is a lot more expensive. And so that’s where you want to focus on making sure you get those guests at the cheapest cost as possible. And then the closer you get to your hotel getting full, that last few rooms to top up, those are your cheapest ones. And so you could be more liberal about where you are getting that booking from because the profit margin on that is so much higher.
Karen Stephens – 00:14:15: It’s so much higher. So I think it’s really understanding, what are your segments? What are your booking windows? How are you marketing to those guests to make sure you get the repeat guests in? And do you have strategies at your hotel when you do have OTA guests that come in to make sure that you get the email or what are your strategies or what are your advice for people on property? To convert that OTA guests, once they get there.
Joe Pettigrew- 00:14:38: I’m sure you’ve heard of every tactic in the world. You get a card at checkout or come back for 20-30% off or some of these other things. The one thing that I have found pretty effective and one of my favorite tactics on that is actually finding out who the repeat customers are that book on the OTAs and find out who they are. And then you can approach those people proactively, whether that is on arrival, in-stay, or maybe even pre-arrival, that you try to get some of those because they’re clearly loyal to your hotel. They love the product. They love the service. They love your staff. But somehow, OTA is their preferred booking platform. And so I think that is the area where I’ve seen a lot of success in just making them feel that extra special and actually making them understand that, Hey, if you like us, when you book through some of these OTAs, it does cost us a little more money. It would actually help us out if you did book directly. And in return, we get a lot more information about you. And we can service you even better when you come stay with us at this other hotel, which you haven’t stayed with us yet. But when you go there, you’ll get the same level of service that you’re getting. And I think just explaining those benefits and targeting the ones who are already in love with your hotel by booking on OTAs, have been very effective.
Karen Stephens – 00:16:00: Yeah, we can’t assume that our guests are in the hotel industry and understand the difference between booking direct and booking on an OTA. So that is critically important. We obviously are connected into a lot of PMS systems with our platform. And what we see is about 17% of a guest database on average has guest profiles with multiple OTA bookings. So we see that often. We have a benchmark report, where it looks at all of those hotels, and you can see that data. And what we recommend is following up with what we call a “win-back campaign.” So when that guest checks out, it’s like, Hey, next time book direct, we’ll give you a free drink.
You can offer this. There’s a lot of things you can do there. But that’s absolutely where the sneakiness gets in of where the OTA may be. You don’t want them coming back on an OTA channel.
Joe Pettigrew- 00:16:47: Yeah. And quite often they’re there to do some kind of business. So having like a sales coordinator or somebody reaching out to them to make them feel a lot more special. And you find out he’s like a window cleaner in the area or something, you know, and then you can give them a negotiated break. Make them feel a lot more special. There’s just lots of things you could do.
Karen Stephens – 00:17:03: You just got to get your arms around the data, which is really important. And I’d love to shift gears a little bit. Speaking about data, you’ve spoken a lot about the importance of individual pricing and hyper-personalization that impact total RevPAR. So that’s another new fun thing that we’re talking about. Not only the room spend, but the ancillary spend around that. So how do you think about that for hotels, and how are you capturing that data to make sure you understand the true value of the guest? What’s the importance there?
Joe Pettigrew- 00:17:30: I have to admit that I haven’t really cracked this yet. And I wonder if there’s something that you guys offer or anybody else offers that I’m not aware of yet. Essentially, we have great technology to attribute every single touch point the guest has ever had before that person makes a booking, right? And I think the technology that has evolved so much, and there’s lots of great resources out there that can help you understand what touch points are driving what interaction and what’s great for awareness version and so on and so forth. But that sort of attribution kind of stops the moment the guest makes a booking. And then it doesn’t actually follow that guest through until checkout and then for the entire life cycle of that guest. So depending on what has been kind of shown to the guest, how we marketed, how that guest booked, then what happens at the spa with the F&B, with the golf and just sort of everything else that you could do at your hotel. And that is the one that I would love to figure out at some point, is how do we actually do that better just as an industry in general? But certainly for our hotels.
Karen Stephens – 00:18:41: So, Joe, in your career spanning various leadership roles, you’ve navigated through economic downturns and market shifts. What lessons have you learned about resilience in revenue management? And can you talk about how these lessons can guide hoteliers? So we came out of COVID, which was pretty crazy period. Now we’re all feeling good again. But what kind of lessons were the lessons learned in navigating through that? How do you help hoteliers kind of protect themselves? Is there a way to think about it or do you just carry on?
Joe Pettigrew- 00:19:09: Personally, for me, I think the biggest lesson was we need to do a less of looking in the past to guide our future rather than we need to start just looking at some more indicators that will basically help us look into the future without like looking into the past. So if you are a revenue manager or just a hotelier in general, what we do really well is when we forecast out into the future as we go. What did we do? What was our pickup in the last seven days? Or what did we pick up in the month for the month? What was our pickup like last year at this time? And we keep looking in our back mirror to try and predict the future. But what happened in the COVID is that things were moving so quickly that if you were looking in the back mirror to guide your future, it was going to be totally wrong because things were going like this, and then things are going like this again. And so for about two, three years, if you’re looking in the back-mirror, you were wrong the whole two or three years, or you just don’t know when things are going up. You think things are going down. And when things are starting to come down again, you think things are going up because you’re looking at three, four months ago when the trends are now kind of curving over. So I think that’s really the biggest thing. And I do also, whenever I speak with technology vendors, I ask them all the time, particularly with the revenue management companies or forecasting or finance-related companies, that. There must be some leading indicators that we can look at to see how the demand is shaping out into the future?
I mean, the retail or other industries do a much better job of looking at mobile data, movement, flight, number of searches going on, events that are happening, people, what the vacancy rate is in the offices, to how many cars are passing by poles. I don’t know, there’s just so many of these types of data out there that we don’t really tend to look at as much. And I can see now some companies are starting to develop some of these technologies, and the hotels are starting to use them more. But I would say that that is the biggest lesson that I’ve learned, and that, interestingly, in COVID-19, I actually saw this in real time where when the country started to shut down, I saw this in real-time moving from east to west. It started from China, then like Singapore, everything shut down. And then it came out to Italy and Europe. The hotels were shutting down and like the demand was falling apart. And as all of these things are happening, I’m telling our hotels in the U.S., Look, this is coming. Like it is slowly but surely moving. And everyone over here is in denial. But it hasn’t hit us yet. So I don’t want to do anything about it until it actually hits us.
And then it did hit us — every single one. And then after a while, it went the other direction. The U.S. started to open up everything, and I could see the demand just like starting to come back from west to east. And then no one in Europe wanted to do anything about it after seeing what’s going on in the U.S. You know, all these huge booms in domestic travel and beachy drive-to resort destination vacations. I mean, they were all really booming, and no one was preparing for that in Europe until you were kind of hit with it. So just being able to prepare for looking at the leading indicators and looking into the future and actually preparing ahead of time so that you can better take advantage of that when it does finally arrive.
Karen Stephens – 00:22:40: Yeah, I think that’s a great piece of advice. And when you were talking there, I was thinking it’s true that up until COVID, hospitality had been, you know, we’re always a little slower than everybody else. We’re very set in our ways. We have our technology stacks. We look at our numbers. We do everything. You know, I look at my star reports. I do all my things. And that really kind of disrupted everything. And now as we’re moving into this era, it’s like, Yeah, look around. What are other industries doing? What are the other ways that you can watch the trends?
And who would have thought that after the biggest crash and everything closed, then goes to the highest ADRs we’ve ever seen — occupancy levels through the roof, depending on where your hotel was. So all bets are off. So I have one more question for you to close out that’s kind of along those lines. So as you survey the hospitality landscape right now, where do you think hotels are having their moment or spark of innovation, especially when it comes to technology? You mentioned that you’re looking at different vendors, but are you seeing anything kind of that’s coming out there that’s really cool and interesting at this point?
Joe Pettigrew- 00:23:43: I don’t think this is technology-related, although I think it’s technology-enabled. I do see a lot of companies now really focusing on guest experience as marketing. Where pre-COVID, whenever we talk about marketing, it’s about awareness. It’s about consideration. There’s a whole typical classic marketing funnel. And it’s about what we put in front of the guests and how we get converted better and talking about all these different theories for improving conversion and copywriting and all of this stuff. Whereas now, I think a lot of companies are really looking at customer experience being the main differentiator and actually creating guest advocacy rather than just buying their loyalty from points. I think these things are where a lot of focus is. And certainly, that’s where our focus is at EOS right now is, really just focusing on customer experience — offering something unique and different full of character and amazing locations that prompts advocacy from the guests that have stayed with us. And I think there’s nothing more powerful than word of mouth. And now that is amplified through social media channels. And at the same time, all of these traditional outbound marketing tactics are sort of becoming less and less effective. And they’re certainly more difficult to deploy as well, right? With all the changes happening and cookies and regulations, trying to enhance privacy. So I think that is one piece of innovation that I see, which is really enhancing customer experience to be totally unique, memorable, that will prompt people to sort of advocate on your behalf and spread the word of mouth.
Karen Stephens – 00:25:29: Absolutely. Lots of personalization, lots of focus on the guest experience. I love that. Well, thank you, Joe. We’ll leave it there. My guest has been Joe Pettigrew from EOS Hospitality. Thank you so much for your time today.
Joe Pettigrew- 00:25:40: Thank you, Karen.
Outro – 00:25:46: Thank you for joining us on this episode of Hotel Moment by Revinate. Our community of hoteliers is growing every week, and each guest we speak to is tackling industry challenges with the innovation and flexibility that our industry demands. If you enjoyed today’s episode, don’t forget to subscribe, rate, and leave a review. And if you’re listening on YouTube, please like the video and subscribe for more content. For more information, head to revinate.com/hotelmomentpodcast. Until next time, keep innovating.
About Revinate
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Our Guest Data Platform and communication solutions unlock revenue for hoteliers and put them in control of the full guest experience — initial research, booking, check-in, throughout the stay, and even after check out — all via the communication channels that guests prefer, whether it's voice, text, email, or web.
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