Who Needs AI?
My recent trip to HSMAI’s annual Revenue Optimization Conference resulted in (no surprises) all talk about AI this and AI that. At a subsequent meeting with my peers, which further underlined this all consuming topic from session to session, a colleague turned to me and said “… are we tired of AI yet?” I had to nod in the affirmative.
Now, I am not insinuating that we neglect AI and return to our trusted notepads and voice recorders; AI has so much to offer the world of revenue management, which is a highly detailed discipline in need of more efficiency - particularly given today’s labor shortages. I’m enthusiastic to see how AI evolves in this space.
However, as I look across the current distribution and revenue management landscape, I see lots of missed opportunities for our member hotels that can be set right today. I’ll share a few.
Identify performing channels and ditch the rest. Channels need to be managed. The desire for stronger visibility should be balanced with the ability to accurately handle the content, rates, and availability because often a promising channel can result in disappointment. Hold such channels accountable and cut your losses if they don’t perform. This will result in better results and greater rate parity.
Stop wholesaler redistribution. As leisure demand starts to wane, competition will increase. Every wholesaler contract you sign has the potential to be sold on to another wholesaler. Even longstanding suppliers may not be able to fully control their distribution. Wherever possible, stop wholesalers from buying keywords, hold them accountable for reselling to others, and request that rate parity is maintained, even after hours. Diversify the sales accounts you have to ensure that you are receiving the best value and services available.
Don’t forget ancillary revenues. It is surprising to see that up to 30% of member hotels are not offering dynamic packages. Even the basics, such as early arrival, can pad revenues at little cost. A recent stay at a remote desert motel was impressive – they offered early check-in and late checkout for only $25, a personalized email in advance of arrival, a text message offering additional services, and a $25 pet fee. Luxury properties can do this and more.
Pets, Seniors, Military and others. Pets are members of the family too. For some, leaving their dog behind while on vacation is like leaving a child at home. Guests bringing pets will happily pay a supplement and are quick to write off hotels that don’t accept them. Seniors often look for offers that bolster their stay. Military personnel are often cost conscious, so offering government discounts is a great way to get them into your property. There are likely other niche customers in your backyard that you can appeal to – take a look.
Bleisure is here to stay. Attract customers wanting to mix leisure and business; these days, the virtual world allows people to travel to other locations and work remotely full-time (I’ve now had two such requests in as many years with one of our team working from Romania as I speak). Think about how your facilities can attract these guests; offer long stay options, ensure rooms are conducive to work, and promote multiple room stay options for families.
Optimize loyalty – compete with One Key. Expedia is pushing additional discounts to drive customers to their sites. Why pay even more for this business? Optimize your loyalty program by making member rates the lead offer, highlight program benefits on your website, use loyalty points as customer service recovery (typically cheaper than amenities), and target OTA customers with a points bonus for return stays when booking direct. Expedia and other OTAs are here to stay, so you should work to ensure you are getting your fair share.
Don’t upgrade – price room types to sell. Premium rooms are often given away to upper tier loyalty customers or frequent travelers when, instead, reducing that add-in price could actually result in extra revenue. I like to look at the ADR per room type instead of the occupancy rate for the same room type. If the ADR difference between the entry level room and the premium doesn’t match the premium surcharge, but occupancy is high, you are missing an opportunity to charge on a scale. Closely look at these additional prices and reduce them to get extra lift.
The days of discounting are over. Value add. Customers are willing to pay more for luxury if we deliver on the promise. The pandemic proved our ability as an industry to maintain rate. Consider what your hotel offers and market accordingly as these specialisms typically broaden on-property purchasing. At Preferred Hotels & Resorts, our new signature campaign, Unforgettable Moments, is already wildly successful by focusing on breakfast, an upgrade, and a loyalty bonus. Given the leisure demand and the summer travel season, this is a great way to maintain parity and ADR while creating a market differentiator.
GDS advertising – are you visible? The GDS is back! Travel agents are using their core platform to book the return corporate traveler as well as the leisure traveler looking for a distinct experience. Agents consistently book higher rate business, so reach out to them consistently. GDS advertising today is showing strong ROI in many global markets, so it is beneficial to work with a specific GDS, or more broadly Amadeus/TravelClick, and invest in a targeted campaign. An important note: while the GDS is under ever more pressure to extend the best rate and content, the sheer volume means it is not disappearing any time soon. Visibility to the travel trade is critical for long-term success.
Granted, none of these tactics outdo AI, but it is still evolving, and while few of those solutions today capitalize on the above, the power of the human brain should remind us to set aside technology for what we can control today. Keep the above in mind and, as you peruse Chat GPT or Bard, practice it to get returns now.
