GLOBAL REPORT—Identifying the right strategies to drive revenue at hotels is a priority and a challenge, and revenue experts across STR-defined chain scales tackle these hurdles differently.
(STR is the parent company of Hotel News Now.)
HNN asked revenue experts via email, “what’s the biggest revenue management challenge in your segment and how are you addressing it?”
Luxury
Chinmai Sharma, EVP and Chief Revenue Officer, The Indian Hotels Company Limited
“Revenue management is the science to maximize revenues based on data. In the age where there is data available across various platforms, the ability to gather, process and making the data actionable is the key challenge. This is coupled with the right resources to do the job. Hospitality companies have had a challenge of putting the two together. At The Indian Hotels Company Limited, we have invested in systems, human resources and operational processes to ensure we manage our data, which is clean and actionable. Furthermore, actionable insights are used for pricing, sales, marketing and revenue management to target the right customer segment to optimize demand and revenues.”
Upper upscale
Nadia Karmali, VP of Revenue Management, Denihan Hospitality Group
“The increase in supply and specifically lifestyle boutique hotels has added pressure to average daily rate growth over the past few years in NYC. While demand continues to grow and we near our peak (revenue per available room) years, the focus on profitability is critical to our success. The role of the director of revenue management is constantly evolving. No longer is it simply setting your retail rate and opening/closing discounts. Understanding your distribution, booking lead time, cost per channel are all critical to our hotels’ successes. The world of digital marketing is no longer simply owned by the marketing team, it needs to be owned by revenue management as well. In the last three years in NYC, upper-priced hotels have lost rate annually, and simultaneously operating costs continue to grow. As we begin to climb back to our peak RevPAR, we need to creatively find more and new ways to drive rate and in turn profitability.”
Kathryn Barrett, VP of revenue management, Dream Hotel Group
“Our biggest challenge is controlling the rising costs of customer acquisition. Traditionally hoteliers have focused on RevPAR increases through occupancy and (average daily rate); however, rising costs of acquisition are eating into hotel profits. We recently rolled out new (customer relationship management) software across our portfolio and are leveraging this technology to strategically deploy marketing initiatives that drive direct business. We are also examining our sales and marketing spend more closely, as we’ve seen an increase in costs for luxury travel programs that are benchmarks for visibility. While some major brands cut group commissions, we increased ours to 12% in 2018 and have seen a significant response, which is great because growth in group business allows us to decrease other higher costs segments. As for (online travel agency) commissions, we continue to evaluate partners that make sense for our target guest. We’re open to working with new partners with flexible commission models. We are not looking to drive volume through third-party partners at hefty costs.”
Upscale
Kirk Pederson, president, Kokua Hospitality
“Cancelling and rebooking reservations has become a significant challenge in the industry, particularly within the upscale segment. With travelers having greater access than ever before to real-time booking technology and information, potential guests are practicing their own revenue-management methods in today’s cutthroat environment. As upscale hotels compete to deliver the overall best perceived value, the property with the most flexible cancellation policy may actually win the conversion over ADR. The growing rate of cancellation activity continues to skew pick-up totals, reservation regret statistics, conversion detail and therefore demand forecasts.”
Upper midscale
Inger Oliver, director of revenue management, McKibbon Hospitality
“In many markets, new room supply is the biggest challenge since there are various definitions of what is considered to be in the upper midscale segment. Furthermore, brands in the upscale segment are dropping rates to compete with this segment as they attempt to maintain occupancy levels and compete with the higher-end brands within the upper midscale segment. Since price is driven by demand, not brand, there is a lot of gray area. Pricing has also become very fluid, and changes are constant. Unfortunately, fluctuations in local market pricing can have a negative effect as the dreaded ‘rate war’ begins. Even when brands lower rates, they can still struggle to fill rooms and also risk cheapening their brand image. Revenue managers are using ever-improving technology and analytics to make strategic pricing decisions based on specific booking windows. At the same time, we are targeting various customer segments as well as the growing number of booking channels to drive occupancy and maintain rates.”
Kristen Richter, VP of revenue optimization, Americas, Radisson Hotel Group
“In today’s world of so very many brands, upper midscale brands are especially challenged in maintaining brand identity while implementing pricing strategies that drive revenue. Consumers’ price expectations are a bit more clear and finite when it comes to economy hotels and upscale/luxury hotels. But in the midscale and upper midscale space, consumers’ expectations aren’t as clear. Properties have to price with the right balance of driving revenue and maintaining brand integrity. Add in the ever-growing complexity of channel availability, channel cost and loyalty programs—optimized pricing becomes a tricky matrix.”
Midscale
Monte Gardiner, managing director, revenue management, Best Western Hotels & Resorts
“From my perspective, the biggest challenge for revenue management within the midscale segment is hotel-level engagement. We have made significant investments in applications and tools to enhance decision-making at the unit level. Adoption of these tools is not always immediate—midscale hotel staff in particular are often juggling many responsibilities and resist technology if it places too many demands on their time. To counter this, we try to build tools that are intuitive and accessible. We incorporate visualizations whenever possible, and place an emphasis on aesthetics and usability. We also spend a significant amount of time with midscale hotels highlighting the benefits of using the brand’s tools.”
Economy
Calvin Anderson, SVP, chief of revenue optimization, RLH Corporation
“The biggest revenue-management challenge in the economy segment is delivering a cost-effective, time-efficient, market-relevant pricing, yielding and channel optimization solution. The economy hotelier is resource-constrained with endless operational needs clamoring for their attention, which often leaves the fundamentals of revenue management deprioritized. At (RLHC), we see this challenge as our biggest opportunity and anticipate delivering an industry-first solution this fall. We will uniquely addresses short-term tertiary market demand powered by an automated solution that will partner with a human strategist who will oversee pricing/yielding as well as execute demand generation strategies within the core booking channels.”