How to manage revenue in a pent-up demand era?
20 experts shared their view
Considering the unprecedented global travel disruption and performance declines we've endured; hoteliers finally have something to look forward to. The world has spent the last 18 months dreaming about travel, but not actually going anywhere. Increasing vaccination rates combined with relaxed travel restrictions are bringing travel back… with a vengeance. Most agree that the worst is behind us.
But so far, this pent-up demand or "revenge" travel is different. Driven almost entirely by domestic leisure demand, the patterns have changed. Some premium locations are already exceeding 2019 pre-COVID levels, while hotels just a few blocks away are still struggling. Hotels that targeted the corporate, international, or group segments are reinventing themselves, with mixed success.
Considering the unique nature of the recovery, what should hoteliers do to optimize and manage COVID's pent-up demand?
This World Panel Viewpoint is sponsored by Cendyn™
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As the demand for travel returns, hoteliers can get ahead with smart, careful planning. Of course, different parts of the world are recovering at different rates, so hoteliers need to monitor the health situation in their area, as well as in the places where their guests usually come from. Some segments will return before others, so mapping out these segments in the form of a journey and targeting them at the right time will help maximize marketing spend. Once a journey plan is created, then revenue, sales, and marketing teams can align their strategies to increase efficiency even further.
With this unprecedented demand in some regions, now is the time for hoteliers to introduce or reintroduce themselves to travelers. Not only should they reach out to former guests and loyalty members through reopening campaigns, but they will need to reestablish themselves as destinations for new guests – either leisure or business depending on the demand seen. The messaging around these campaigns should be tailored to the audience to ensure relevancy and with guests now placing a bigger emphasis on health and safety – this should also be taken into consideration.
Finally, hoteliers now can maximize the value of the guests that stay at the property. This means using the effective CRM tools to upsell ancillary offerings, such as dining and spa add-ons, as well as encouraging repeat stays through loyalty programs and post-stay messaging. At the very least, hoteliers need to make sure their guests have the best stay possible to help drive positive reviews and return visits. By following the core principles of hospitality — and adding some extra planning, flexibility, and diligence — hoteliers will have the best chance of successfully navigating the return of travel.
In the past, revenue management was referred to as "the art of turning away business". This definition became somewhat obsolete during times when there was no business to turn away.
Instead, revenue management became "the art of uncovering opportunity".
As such, hotels have to learn how to uncover opportunities.
We need to look much closer at where we can generate revenue throughout the entire guest journey. Oftentimes these will be micro opportunities.
Upselling and cross-selling are some of the most effective and fastest actions to implement and improve upon.
Instead of an exclusive focus on room revenue, we need to look at total (net) revenue. How can we optimize the entire existing space at the hotel? Where can we generate revenue in areas that we have not tapped into previously?
Technology will help us uncover opportunities by helping us better understand the data we already have. A business intelligence tool is a must in today's world.
We also need to re-evaluate our processes and improve efficiencies. We need to generate a competitive advantage by working smarter and offering a better guest experience than our competition.
These are obviously extremely tough times. But there is opportunity. We just have to uncover it.
Whether a market is nearing pre-Covid demand or not, every hotel should review their channel mix and booking patterns. Our revenue management teams need to be more diligent at making changes to pricing and inventory management on hourly basis to make sure we maximize demand. Many markets are seeing historically high contribution from OTAs and shorter-than-ever booking windows. Here are a few tips:
Focus on Recent Trends: historical patterns do not apply and revenue management systems cannot react fast enough to the new demand. Offering premium rooms on all channels can create an advantage, as guests looking to travel may have some extra money in their vacation budget to splurge on a suite or superior view. At the same time, many guests still want to find a discount--managing these discount options is more important than ever in revenue management. Hoteliers should embrace discounts and test varying price points, lengths of stays, and booking windows to maximize exposure. For some, just having a rate open will drive demand; for others, the amount of discount will determine success
Take risks and trust your instincts: we are certainly in uncharted territory. If you are making changes with your comp set, you will lose the game. In order to win we have to get first mover's advantage. If demand is strong enough, the bookings will follow, if not, we change course again. While we can't predict when the next event will happen that will impact us this greatly, we can be sure that we'll see peaks and valleys in between—having a new “bag of tricks” will help manage the future that much more easily.
Having clients all over the world, I can say I have direct experience with the issue. And it's no fun. As a consultant, it's frustrating to go on a call and celebrate the hotel's best year ever, hang up and speak to another client running at 1/10 of 2019 occupation rate... I have a few clients that haven't reopened their doors since 2020, and some of them will -unfortunately- never be able to open again.
Scott is right when he says that, currently, results are driven almost entirely by domestic leisure demand, and hotels with a strong dependency on non-domestic, non-leisure markets have a long road ahead, whatever they do to reinvent themselves. I've seen properties offering staycations, creating alternative spaces, coming up with coworking stations, etc. Results were mixed (meaning: close to zero), as best.
The legendary Eugene Schwartz once wrote that "the greatest mistake marketers make is trying to create demand." I agree. This may sound nihilistic, but most properties will simply have to bite the bullet and survive until the market becomes less domestic/leisure-centered. Let's hope this will happen sooner than later.
Reinvention is the “Mother of Success” in the post-COVID era. If you are a corporate hotel, these corporate groups and managed corporate travelers are not coming back anytime soon. According to Deloitte, U.S. business travel is expected to grow much slower than anticipated and will reach 65%-80% of 2019 levels only in Q4 2022. Similar is the situation in Europe and APAC.
In the same time, due to ongoing uncertainty and ever-changing government travel restrictions, long-haul and overseas travelers are not coming back at least until the summer of 2022.
So, what should hoteliers do?
Re-evaluate your property's market segments:
- Corporate groups and transient corporate travel are out, social groups, unmanaged business and leisure transient travel are in. A few years back, when visiting with a client - a big box conference hotel, I asked why the 100,000 square feet of meeting/event space were empty over the weekend and where were the weddings and other social events. “Too much work” was the answer. Well, if you want to stay in business, corporate group hotels should reinvent themselves and become social event hotels in the next 18 months or so.
- In the post-pandemic world, hoteliers must “own” their short-haul and drive-from feeder markets for both leisure and unmanaged business travelers, and “delegate” to the intermediaries only the long-haul and the few foreign feeder markets still in play. Effective practices include employing solid revenue management and RMS technology, enforcing strict rate parity, implementing CRM programs and technology to engage and retain repeat customers, and investing in digital marketing initiatives for those local markets.
Utilize to the fullest the property's spaces:
- Create co-working spaces: Similar to Roger Smith Hotel in New York City, create work-from-hotel spaces for out-of-towners, digital nomads and local entrepreneurs who do not want to be tied down by office leases. Create Room and Office daily, weekly and monthly packages and promotions, including WiFi, coffee, bottled water, snacks and catered lunch.
- Utilize unused conference/function space: With the corporate group and netting's markets ramping up with a slower pace than leisure travel, utilize unused fu cation space to offer yoga classes, wellness programs, cooking classes, new book readings and author signing events, neighborhood craft shows, etc.
Focus on generating ancillary revenues:
How many hotels can boast that 35% of their revenue comes from the sale of ancillary products like it is for a typical airline? A hotel has significantly greater ancillary revenue opportunities than the airlines, yet very few hotels take full advantage of these bottom line enhancing ancillary products. Increasing ancillary revenues requires a) the implementation of merchandizing strategy and culture at the property/hotel company, b) incentivizing and training your staff, and c) adopting technology solutions to automate as many of the internal processes as possible.
- Core Hotel Ancillary Products: Upselling, upgrading and cross-selling the property's core amenities: better rooms, suites, spa services, F&B, early check-ins, late check-outs, etc. Implement automated solutions like ROOMDEX and Oracle's Nor1 to increase ancillary revenues and reduce labor cost.
- Non-Core Hotel Ancillary Products: I see two great merchandizing opportunities: a) Sale of guest stay-enhancing ancillary products like champagne for special occasions, romantic stay decorations, chocolate covered strawberries, ice cream, bouquet of flowers, breakfast in bed, etc., and b) Sale - a la carte or as part of packages - of city passes and tickets to local museums, theme parks, sporting events, concerts and performances, art exhibitions and other attractions, as well as sightseeing tours to places of interest
Revenge travel presents an opportunity for hoteliers to offer new or different experiences and packages—not only with the intention of generating more revenues from existing clients but also to attract different customers who could eventually become loyal clients and shift your business mix.
People's values have changed in many ways since 2019. They are looking for different experiences, ways to share more with family and friends, or simply enjoy life to the fullest. But pandemic-driven fears and uncertainty still weigh heavily on all their travel choices.
As we got used to being locked down, we also got used to shopping online, food delivery, home exercise, short-distance traveling and many other behaviours hoteliers want to understand so they can offer more variety in their services. These offerings could include partnerships with local restaurants or venues to offer catering services for client events or ensuring they can offer different daily menu options for clients planning longer stays.
Come what may, this is the time to review and update your in-room dining options and prices or the SPA services menu and others that will help you build a unique, safe, and profitable experience for your clients.
The hoteliers who are able to make qualified commercial decisions around shifting demand, ahead of their competitors, will put themselves in the best position to capture pent up demand and capitalise on revenge travel in recovery. These decisions all hinge on having the best tech solutions in place that can deliver actionable insights based on the industry's most accurate and complete, real-time data.
Forward looking data
Traditionally, hoteliers relied on historical analysis such as identifying established demand drivers, year-over-year trends and on-the-books data to forecast and build a picture of incoming demand in their market. But with 2020's data, and a large portion of 2021's data rendered mostly irrelevant due to the impact of COVID-19, revenue managers have a problem on their hands when it comes to anticipating upticks in demand.
Speculatively forecasting demand based on the manual analysis of trends and the news is nothing more than guesswork (and highly time consuming for leaner teams). That isn't a sound enough strategy to effectively capture pent up demand in this recovery period. Instead, hoteliers should incorporate a predictive market intelligence solution into their tech stack, which utilises forward looking data points such as flight and hotel search to reveal the first signs of traveller intent for their market, and deliver location-specific, segmented demand insights.
Hoteliers can examine source market demand data to understand which guests are willing to travel to their destination, from which country or airport, and when. Armed with insights on the booking window and length-of-stay, hoteliers can make more informed pricing and promotional decisions, and deliver targeted marketing campaigns focused on particular source countries and more precise dates.
Agile decision making
The timeline to a full recovery across the globe is still clouded. With market restrictions changing in the blink of an eye, travel is recovering at different rates depending on the country. Although there is clearly pent-up demand, the market remains volatile - so hoteliers need to be more flexible than ever as they navigate recovery. Without the correct predictive intelligence solution, like OTA Insight's Market Insight, they won't be able to spot shifts in traveller demand from different source markets and take much needed revenue opportunities.
Similarly, a solution of this kind is also able to judge the strength of domestic demand, so hoteliers can make suitable pricing, marketing and budgeting decisions for this segment. A segment that is expected to be a key source of demand, and therefore revenue for the foreseeable future.
Integrated tech stack
Fine tuning a dynamic pricing and marketing strategy has never been more important, particularly as less price-sensitive market segments, such as business travel are currently negligible. Employing an integrated tech stack at your hotel, including a high quality rate shopper and business intelligence tool to complement a predictive intelligence solution will create a comprehensive price, market and business intelligence suite. This can give you a much needed edge when it comes to capitalising on pent-up demand. Identifying and acting on demand trends before the competition could be the difference in maximising revenue in recovery.
One fairly simple focus will be to implement a digital up-sell strategy. Exact figures are hard to find but it seems that 85% of the hotels globally do not have a digital up-sell strategy. Some don't even up-sell at all. This is basically leaving money on the table.
Gaining new guests is much harder and more expensive than finding a good and service oriented way to increase the wallet share of your already booked guests. Winning a new guest comes at the cost of a substantial commission often 15% or more, or it comes at the cost of marketing expenses and sales expenses done by the hotel directly.
The incremental revenue a hotel can gain from a nice up-sell such as $50 to the next level of room, an early arrival at $30 or a late departure of $50 comes at virtually no cost. Upselling if done well, can add anywhere from 0.75% to 1.5% revenue to the top line, all very high margin revenue!
So besides from implementing a good demand strategy for your revenue, make sure you add a good digital up-sell strategy to it!
New Demand, new approach!
First of all, A NEW APPROACH IS REQUIRED TO THE DATA:
Sadly but true, historical data is gone, the patterns and the demand have changed (forever?), so we cannot refer to them anymore as we did in the past
Nevertheless, this does not mean to ignore them. Data is always a treasure. Past data can in fact help us reveal the speed of our recovery, but in order to optimize the revenue we need to look at immediate historical data (like DOD, WOW or MOM) and above all at Future data!
It is a must to study the market in a deep way, to analyze the new trends and patterns. Every destination has a different booking window, business mix, Length of Stay and geographic demand in respect to the past and the first step is to know them. So, keep your focus on:
- your recent past data
- your future OTB and
- the demand (flight and hotel search, new consumer behavior and needs)
- the competition
The revenue manager post covid is a professional who looks at the market in a wider way, by analyzing the customer research on a destination and from specific geographic areas and examining other country political, flight and healthy restrictions, in order to understand where the demand could come from.
Moreover, the new demand is a very fast changing demand that requires monitoring inventory and pick up and making changes to rates on hourly basis. In some locations, the booking window is compressed to the last 7-4 days before arrival.
Another key point is to reconsider your property market segment and reinvent your spaces, in order to detect the existing demand. Target new geographic areas and personalize your offer to take every opportunity.
Do not ignore the contribution to the total revenue of cross selling and upselling!
The demand will continue to change. Be fast and be agile.
The leisure revenge travel is definitely there for some destinations, different in nature based on the specific location but with some common aspects: mostly domestic/proximity travel, long length of stays, short booking windows, low rate resistance.
People haven't been traveling for over a year and are impatient and eager to go back on the road! For the lucky Hotels with overwhelming last-minute pent-up demand right now, the opportunities are great but the risks as well: it is the time to remain focused on profits and make sure that the booking trends are carefully monitored to anticipate the demand.
Hotels need to be dynamic in their segment, inventory, and pricing management in an ever-changing scenario, keeping a close eye on the benchmark. Work towards a healthy distribution mix as OTAs are ramping up: don't fall in love with easy volumes and focus on the most profitable channels. This is crucial for the long-term, we surely need to get the most out of the current demand but be prepared for an uncertain future: autumn and 2022 are behind the corner so make sure you are on top of your data and optimize already for the next +365 days.
We cannot stop working on the transformation that the pandemic brought to our industry and we need to remain consistent: alternative space usage, total revenue strategy, flexibility, stop the silos working, embrace technology and creative revenue management are here to stay.
The demand will never be the same (at is now and as it was before, at least for a while).
We must keep on working on maintaining solid roots to be ready for any swinging times and deal with uncertainty.
Recovery is looking very different depending in the location and type of property. Revenue Managers at resorts and beach destinations are enjoying great demand, and in many cases, an ADR higher than in 2019 is being achieved.
Also, managers of small boutique properties are seeing how the demands is steadily strong, as many guests still try to avoid social contact and choose accommodations where they can maintain a certain bubble.
in the above-mentioned cases, all Revenue Managers must do is be smart with the pricing, as the pent up demand is there.
The challenge comes when we look into city properties, especially the ones that are mainly designed to cater to the MICE and Corporate segment. In these cases, recovery is going to take much longer, and is not certain that for these particular business, it will go back to pre-pandemic levels.
For these properties, there are different initiatives being launch in properties globally to entice guests to return, such as:
- Convert part of the inventory into "offices with an adjoining bedroom", which can be appealing for the longer staying business guest.
- Make a different use of certain spaces, adding value to otherwise "no-man-land" lobbies and currently unused meeting spaces. From new pop up outlets, to co-working areas. Ans inspiration can be the "Working from" concept from The Hoxton group.
- Improved used of tech: Technology allows guests now to open the room door with their phone, we all know that. But what about implementing apps that let guests book a table at the restaurant, a slot at the gym or a massage of their choice? Apps such as Hoteligy let you do that, thus increasing guest satisfaction and ancillary revenue.
All in all, due to the lack of demand in urban locations, these hotels are focusing more now on driving other sources of revenue, in what can be the road towards Total Revenue Management.
The surge in travel to leisure destinations when the travel restrictions were relaxed led to revenge travel as people were waiting to get out of their constrained spaces. Some leisure destinations were able to tide over even 2019 results due to the pent up demand. Pricing and optimising demand were again at the crux of it in delivering higher revenues.
Were these hotels able to maximise all avenues?
Were they able to combine the strength of distribution, dynamic pricing, ancillary revenue management to maximise the results?
Were they able to also provide a seamless customer stay experience?
The trend towards leisure is evident, and while everyone may not travel to far-out destinations, city-hotels and others still affected need to work on different elements to attract customers;
- Know your customer - The needs are different
- Curated experiences that cater to leisure needs
- Package optimally, partner sensibly
- Re-think your sales strategy. Local ain't Global
The new normal requires new approaches. Hoteliers that can adapt their business strategies will win the market share. The hotel demand is coming back, but what has changed, and how to maximize revenue in a post-pandemic world?
The booking window
The booking window became shorter, and hoteliers have less time to react to changes in demand. Some hotels encourage guests to book in advance by offering flexible rates. For many properties, the times of prepaid & non-refundable rates are gone. Other hotels adopted a semi-flexibility strategy when guests are paying deposits at the time of booking (cash flow is important) but have an option to change the date without losing a deposit. Revenue managers focus on forward-looking real-time demand data and have to adjust rates weekly and sometimes even daily. For many hotels, revenue management software became an essential tool as it monitors demand and adjusts rates in real-time.
Domestic demand
The domestic leisure market became the most important segment for many hotels. Revenue and marketing teams work together to create promotions and packages that target locals and drive markets. Many properties build new partnerships with local businesses that benefit hotel guests and serve as new creative revenue streams.
Increased competition
The lack of international travelers, leisure & corporate groups, and business travelers results in extremely high competition for domestic leisure guests. Hotels that win in this competition shift focus from price to value. They sell unique experiences rather than rooms. Experiences that incorporate health and wellbeing are especially in demand after the pandemic. Sustainable operation is another competitive advantage as more and more guests choose to support hotels that care about the environment.
Rates and staffing levels
Some hotels have already experienced "revenge" travel - especially the ones located near natural attractions. After a year of low business levels, the temptation is significant to make up for the loss by increasing the rates. After all, the high demand dictates high rates, right? A strategic approach requires two considerations - staffing levels and the actual value of a hotel product. The guests paying high rates will expect a certain level of service. Many hotels struggle to attract talent after the pandemic, and current low staffing levels negatively affect service. The hotels that charge more than their product should cost face a risk of losing guests to competitors. One or two weekends of high rates and low service quality probably will not have a severe negative impact. However, consistent negative reviews about service and overpriced hotel product may damage the hotel's reputation.
The recovery is almost here, and i some destinations is 100% here.
Driven by the domestic markets in Europe and USA market in Americas hotels are starting to recover some part of the previous figures in terms of % occupancy (price is nowadays far away in some destinations).
I personally think that we need to optimise our technological ecosystem ... today more than ever we need data, we need to know our guest preferences and behaviours and how our environment is changing, that's completely impossible without data and almost real time figures.
We need to adapt very fast to all changes we are facing, all countries are improving theirs vaccinating rates and are relaxing restrictions so probably we are waking up today with more demand than ever... so be very agile in all your decisions...
Summarising:
- Technology: Try to have the best technology possible in the market with one objective ... having the best data possible, internal (buyers behaviours, and external, demand, comp set, market information)
- Agility: Three days nowadays can be an entire year ... so take decisions in the first moment you see something is changing in your parameters ... Do it Now!!!!
1) The most important is to be realistic about what type of Demand there is out there. That means gathering data from any possible source. It can range from sophisticated areas such as forward-looking data Intelligence to simply speaking with corporate bookers. When segments and channels are identified they need to be surgically targetted with a clear value prop. Looking at profitability from the commercial point of view will be super important. What is my cost of acquisition, total customer spend, and profitability? Is it worth it? how much can I spend?
2) Secondly, I would say demand will be patchy. One day full, the other empty. So it will be important to have rock-solid predictions. This is important for 2 reasons. one to optimize revenue but secondly to manage staff levels and productivity. Welcome to the era of micro-optimization and connecting the dots across more disciplines: Commercial - Operations - Finance.
3) Third and last I would say is to be creative and assess which new demand can be generated. Again here it is important to be realistic. A run-of-the-mill hotel in an industrial area will not make a good co-working space. Digital nomads are budget conscious etc Also, it is important to be realistic when addressing different demand sources might require capital expenditure which can be difficult at this time.
Hoteliers need to be up to date with Macro and Micro trends, their lead times and watch their seasonality. It will be a game of "peek a boo" over the next 12-18 months as we are hearing "recovery" on some parts of the world yet on other parts we are going back into lockdowns. Destinations are now more important than ever.
I fundamentally disagree with the statement: The worst is not behind us...I believe the worst is still ahead of us! What will happen if governments stop supporting yet businesses have not enough demand? We hear in many places about zombie businesses - only alive because of subsidies.
For those who are standing and ready to overcome the next 18 months:
A) Seasonality - you will see more extremes - higher highs, lower lows. Harvest when you can, wind back when needed. and all of that destination driven!
B) Macro / Micro trends - governments will do what is best for THEIR citizens, not others. They will restrict, enhance, etc. at short notice.
C) Lead times - current ultra short will relax a little (to short short) and driven by point B and A
On top of that we will see a new generation of pricing and marketing emerge. The old blasting and email offers will be out. Advanced purchases will take on a new form and payment form might just become the newest way on how to price
The pandemic, and the corresponding time within our own four walls, has without question made us long for travel – heightening our desire to delve into foreign cultures, venture to bucket list destinations and make fresh memories beyond the local coffee shop. Hi, Marta :) (she's my barista).
For hoteliers, it's been a time of ongoing adjustment and change, of ups-killing and relearning. As travel returns, the hoteliers having the most success are those taking the time to deeply understand the travel market they now exist within, and the fresh needs and expectations of their target guests.
Our recent Changing Traveller Report series highlighted a number of things about this new wave of eager travellers. It showed that they increasingly demand flexibility in the booking process, with many viewing the ability to freely cancel or modify their stay as a top priority. Alongside this is their growing desire to have a more direct relationship with the venue they're booking with, and to tap into the deals and benefits that a reservation made via a property's website or social media channel can bring.
Travellers are being guided by friends, family and others they trust for tips on where to go, more than by advertisers. Globally, almost 1-in-3 plan to work from the road, meaning that being well set up for this group in property is now key.
Being equipped to deliver for the post-pandemic traveller, and building out the data necessary to ensure your marketing and distribution are targeted efforts to attract them, are two quite different undertakings. It's critical to use smart tools that allow you to see where your guests are coming from, to map their preferences, and to ensure you're appropriately priced compared to your competition. This shift can move your business from one that's hoping to secure Covid's pent-up demand, to one that knows it is doing everything possible to maximise the wave of inspired travellers now entering the market.
I know I'll be dreaming of far-flung destinations on my walk to the coffee shop until we are allowed to roam again!
Revenue managers should feel good about the rate increases we are seeing in many markets today. We've learned valuable lessons from past recessionary events, and most hotels knew that dropping rate during the COVID pandemic would not spur demand, it would only put them at a long-term disadvantage when recovery eventually occurred. With the current labor shortage wreaking havoc on our industry, many hoteliers are having to take rooms out of inventory, which would have even more detrimental effect on profitability if we weren't able to push rate. With many of our clients seeing an increase in cancellations due to impacts from the Delta variant, it is important to keep these lessons from earlier in the pandemic in mind and maintain rate integrity.
Continue to work more closely with your Marketing teams to coordinate efforts. While business and group travel remains depressed, shift your segmentation to target leisure travelers, particularly in your local market. Highlight the attractions around your hotel and position your hotel as part of the local destination. Think outside of the rooms by driving ancillary revenue through upsells and add-ons.
Monitor your comp set, but don't set prices solely off the market. Identify your hotel's unique demand drivers and use these as a way to differentiate from a marketing and price perspective. Hotels need to ensure they have systems in place to assist in detection of (and ideally automate response to) future changes in market and demand condition, as they will continue to be unpredictable and hotels following their comp set and focusing on actualized data will miss out.
There are a few items that we need to consider to avoid generalizing the term "pent-up demand":
1. Demand hasn't come back for everyone. Some regions, submarkets or specific locations (especially urban, business-oriented) are still struggling.
- That's why it's still very important to be able to accurately measure and forecast demand levels by utilizing forward-looking market data instead of only concentrating on the internal booking data (pace, OTB, etc.).
2. For those areas or properties that are seeing increased demand levels, they will also notice (if they're paying attention) that booking patterns have significantly changed. Booking window is still shorter than before. Channel mix is different. DOW patterns are no longer the same either. Mostly, this is driven by the fact that not all types of demand are coming back at the same pace. Leisure is. Corporate/biz and groups are not (yet).
- That's why it's important to dig into deeper layers of data analysis, past just future daily house-level OTB, so you can actually understand who is coming, from where, how they're booking, how far in advance, how long they stay and what they actually need from the services/amenities standpoint.
3. That also means that your sales/marketing strategies should be aligned with the above. If your marketing messages, packages and promotions are targeting the wrong audience - they need to be revised.
- That's why it's important that all departments (marketing, sales, operations, finance, etc.) are aligned with the revenue management analysis and strategy to ensure that all operate in sync and are pursuing common goals.
4. And the last but not least. It's not just about top line room revenue. It has never been but now, thanks to the pandemic, we clearly see how important it is to target the actual profit (for all departments).
- To get the right formula, add ancillary revenues to the equation, subtract distribution costs and operating costs - and optimize that (Google Adjusted RevPAR or #ARPAR for more details).
All the answers are in the data.
It's all about data and it's all about the right tools (technology).
Hotels that have a clear and effective revenue strategy for the post-Covid world will be in the strongest position to capitalize on any influx of leisure travelers once recovery takes hold in their country or region. There are several areas hotels must consider.
Have the right tech stack
Having the right information at the right time and in the right hands of your revenue, distribution, and marketing teams is critical. Having siloed or outdated tools can lose you critical time and lead to the wrong decisions being made.
Hotels must be able to track in real-time their distribution health in order to be able to optimize the most effective channels – driving direct sales wherever possible and protecting their rate parity. With the fluidity of feeder markets revenue managers must constantly ensure their room rates are competitive not only against the local comp set but within their key feeder markets too. A competitive intelligence tool should therefore be able to track Point of Sales across multiple regions. Upselling and attracting returning visitors will also be essential components so an e-commerce platform that tracks, segments, and drives e-commerce activity is central to effective revenue management.
Today, these central tools can all be part of a single hub in the cloud allowing teams to manage performance all from the same platform.
Build a smart partnership with OTAs
As we predicted last year, the larger online travel agencies (OTAs) are growing fast – both in size and influence. Hotels need to find the right balance between making the most of their reach and their tools to attract guests in regions where their brand presence is much weaker while also competing effectively on their home turf.
Ensuring hotels make the most of OTA tools, such as booking.com's visibility booster, is just part of the picture, they must also continually be protecting their rate parity to secure the best possible position on the organic search results.
It is difficult to overstate the importance of rate parity in the current market. Not only is it central to protecting visibility and the relationship with the OTA but with the universal free cancellation policy having created a culture where double booking has become the norm, inconsistencies with rate parity increase the likelihood of guests canceling their direct booking in favor of the rate on the OTA.
And, it's not just a question of going head-to-head with the OTAs in the drive-to markets, hotels need to be smarter about where they focus their efforts, ensuring they have got the most competitive rates on the days where demand is at its highest.
In addition to the OTA tools, Google has also upped its stakes in the hospitality sector releasing several new tools to support hotels to capture demand and optimize revenue such as its Pay Per Stay option which sees hotels only pay fees once the guest has checked in.
Add memorable experiences
Securing a room booking should be just the start of the journey to optimize revenue. Creating experiences based on the hotel's location and services. It is an opportunity to cross-sell. For example, some rural locations have enjoyed higher levels of occupancy than before the pandemic. With travelers keen to treat themselves there are opportunities to increase food and beverage sales and other services such as spa treatments, guided excursions with partners or other in-room services.
For city hotels, affordable packages combining competitive rooms rates and entry to top venues and theatres may entice regional visitors to return.
Up-to-date and accurate guest information is required to drive these marketing and revenue-building activities.
Update hotel listings
One of the easiest, if time-consuming, ways to drive revenue is by ensuring listings across all directories and channels are complete and consistent. In the rush to get away, potential guests are searching online in detail. Hotels must have all their information up to date including all amenities, services such as restaurants and gyms, health and cleaning policies, location, and photos. New hospitality specific solutions can now automate these updates on behalf of hotels.
The hospitality industry faces a rocky time ahead but it is clear that in those countries where travel restrictions are being eased there is a significant proportion of the population keen to travel. Hotels who combine data insights with targeted distribution and marketing activity will be in the strongest position to drive revenue performance.
This World Panel Viewpoint is sponsored by Cendyn™
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