While hotel demand came back in a big way, that doesn't mean the job of finding the right demand for the right hotel has gotten any easier.
Speaking during the online HEDNA@Home event's "Developing the Optimal Commercial Mix in 2022" session, NH Hotels Chief Commercial Officer Fernando Vives Soler said 2021 was the hardest year of his career for that reason.
"My main responsibility is to drive revenues through the organization through the right segments, the right channels, and of course, the right partnerships and accounts," he said. "It hasn't been easy."
When trying to drive the correct segmentation, Ben Thomas, chief of commerce for Penta Hotels, said the big strategic shift for his company was to "look more at the profitability of the segment, rather than just the top line."
"It became so important for us to really analyze the true profitability of each channel, what type of business each was bringing," he said.
Lennert De Jong, chief commercial officer for CitizenM Hotels, said the goals of hotel companies shifted significantly over the course of the pandemic.
"Over the last two years, the pressure has been off a little bit as an owner-operator because what can you do if there's no business to be brought in?" he said. "Then it's not about making your forecast plus or minus 1% anymore. It's about getting in what you can get in and not doing any damage to your long-term revenue capabilities."
2022 Expectations
De Jong said his company, like others, is still waiting for the return of business travel, and he's hopeful that his company will see 90% of overall demand from 2019 by the end of 2022.
Vives Soler said that leisure demand has determined which markets are seeing the quickest rebound, except in situations where they're heavily reliant on international travel.
"We're going to see those destinations that rely on the domestic traveler [recover] faster," he said.
Thomas agreed that domestic leisure travel will continue to be the dominant segment in 2022, similarly projecting 90% of 2019 overall levels by the end of the year.
He said projections for the future are getting harder and harder.
"I think forecasting accuracy kind of went out the window in 2020, and it's yet to return really," he said. "We strongly encourage within our companies to present a business plan, a two-year plan, as opposed to a budget or a forecast. We don't work in three-month increments only."
Tech Changes
Vives Soler said NH Hotels has gone all-in on automated revenue management over the past two years, but he recognizes the lack of strong forecasting makes it difficult to take those systems to the next level. He said NH Hotels has had to expand what data its revenue managers are looking at to make the best rate decisions.
"It's a combination of forward data, not only what's on our own books, but whatever information is available," he said. "We're thinking about air travel, and thinking about events that are happening in destinations, trade shows, performance and the information we're getting in from our comp set."
He said the complex nature of all of this means that relying solely on the technology to make revenue-management decisions without some human guidance would be a mistake.
"So we're trying to augment that with that human component," Vives Soler said.
He added NH Hotels has used this period to improve its booking technology to make it more streamlined for consumers, in particular moving group event bookings online.
Maintaining Rate and Profits
While hotels largely haven't pushed rates down significantly to induce demand during the pandemic, De Jong said there have been instances of that happening and it can be somewhat of a gamble for hoteliers to still hold rate.
He pointed to New York specifically as a market where some hotels have had a hard time maintaining rates, but those who have were rewarded around the end-of-year holidays.
"In the case of New York in the last few months" holding on rate really paid off, he said. "We were able to go back to normal occupancies at large hotels that had normal pricing in the last weeks of [December]. And that wouldn't have happened if we started selling at low pricing in September to generate some pickup. So it's a little bit of a risky game."
Thomas said part of the solution for maintaining profits has been moving from just looking at business segmentation and more toward looking at channels "and what the actual cost of that channel is," then prioritizing the most profitable channels.
"It's taken some time to get our heads around how to best manufacture that because we always have these predetermined segments that we use and hoteliers believe a customer should fit in," he said.