An uneven recovery across the U.S. in 2022 has prompted hotel revenue strategists to take risks and tap into their ability to be resilient, resourceful and creative in order to make better business decisions.
Scott Neslage, director of lodging operations at Indigo Road Hospitality, which owns, manages and operates restaurants and boutique hotels, said while it wasn't much of a surprise to his team, a challenge in 2022 was that budgets came with more significant uncertainty than the historical average.
"Working with some really weird COVID demand patterns, trying to understand how the bounce back would shake out in terms of timeline, segmentation and channel mix, there was just a lot of uncertainty going into the year," he said. "I think we kind of expected to be surprised, and we certainly were."
Neslage said historical data no longer was a guide to understanding what could materialize in the future.
"Even going back to 2019 and 2018, our segmentation [in 2022] is just so different, combined with the bounce back from COVID, historical data has never been less relevant in our forecasting process," he added. "Which, in turn, means what has become increasingly relevant is our forward-looking segmentation data, forward-looking channel mix; that's what we're laser-focused on."
Neslage said looking at trends in channel mix, demographics and emerging feeder markets has helped to formulate better promotional and marketing strategies, "all with the end goal of increasing our [return on investment] from digital marketing efforts."
Isaac Rodriguez, senior vice president of revenue strategy and distribution at Twenty Four Seven Hotels, said when budgeting for 2022, there was uncertainty around which markets would cool off from 2021— a time when drive-to markets and leisure-heavy destinations were performing well — and how average daily rate would carry out.
The big surprise was that ADR continued to increase despite occupancy being diluted a bit. He said this is unlike past downturns, where if occupancy declined, ADR would, too.
Adjusting Strategies
Some new adjustments Indigo Road made this year included increasing the frequency of communication and collaboration between the property and home-office team members.
"The reason we wanted to do that is because we expected things to shift in the year, for the year [and really] in the month, for the month, as demand patterns, trends began to emerge," he said. "It wasn't just a monthly meeting or weekly meeting. We have different subsets of folks that are talking three, four, five times a week about what trends were emerging and action-planning on how we're going to capitalize on that."
The finance team, for example, began sitting in on all revenue calls. Neslage said this is different from a lot of organizations he's been a part of, and it's been a vital piece to Indigo Road Hospitality's collaboration efforts. This way, the finance team can understand with a better degree of clarity what's going on in the revenue-management department, he said.
"It's really led us to up our game, in terms of how closely we are watching things, how quickly we're reacting," he added.
Culinary teams have also been collaborating more with operations and revenue management teams to formulate ways to upsell and enhance the guest experience, he said.
"We found a lot of times with particular wedding groups, that people have a higher willingness to pay for a higher level of experience," he said. "When a sales manager, for example, goes to the executive chef and says, 'I've got this [client] prospect, here's what they're thinking on the culinary side, what ideas do you guys have that could help us upsell them? What tricks do you have up your sleeve that we might be able to pitch?'"
Having these conversations can also provide encouragement. For example, the culinary team might look forward to an event more if they get to be creative with the offerings, he said.
Kimber Lakes, hotel portfolio revenue manager at Indigo Road, said she likes to call this an internal sales strategy, "because you're selling your team on your event and then they get involved."
While group demand from social groups has returned, corporate has not bounced back, Neslage said. Rather than trying to find new segments of demand to fill those gaps, Neslage's team stayed on the path of upselling guests. One successful strategy has been curating innovative packages and experiences.
Cory Chambers, senior vice president and chief revenue officer at Hospitality Ventures Management Group, said the front-line associates have and always will be a crucial piece to the upselling strategy.
"Highly engaged front-desk associates are oftentimes our future [general managers], our future revenue leaders, future sales leaders, because they not only know how to address conflict, [they] offer solutions, negotiate and identify opportunities," he said. "Those are all key traits of a solid front-of-house associate. The front desk is and will continue to be a huge source of intel for how we make decisions and set strategy."
Chambers said the traits he looks for in a revenue strategist today are creativity, willingness to try new things and take risks, openness to outside ideas and leading with data.
"[They need to be able] to own a decision that didn't work and eliminate that, but now we know because we tried it and no one can say we didn't," he said. "We would far rather see a risk be taken and a negative outcome occur than no risk be taken and nothing changes."
Rodriguez said Twenty Four Seven Hotels began leveraging room type audits. His team found that there's opportunities to upsell rooms with better views, for example. This wasn't something his team necessarily considered in the past.
Finding ways to increase length of stay has also been top of mind, he said. Even at some of its non-extended-stay hotels, Twenty Four Seven Hotels continues to ensure there are opportunities to drive length of stay through promotions and having operations teams on board.
And with occupancy in most of Twenty Four Seven Hotels' markets not expected to "grow more than stabilized," Rodriguez said it's crucial that his teams improve mix of sales, standard base sales and are only discounting when needed.
Gilbert Arredondo, divisional vice president of revenue strategy at Dallas-based third party management company Remington Hotels, said his goal is to direct book as many guests as possible.
"Everything starts with having a really good forecast. And the further out you can forecast, the better you are," he said.
Arredondo encourages his revenue managers to discuss potential holes in business on the books further out, rather than two months out. This allows revenue teams to have more effective group strategies, for example.
"When you receive group leads for that week or time frame, you can say, 'Normally we charge x, y, z, but we really need something so let's charge a, b, c.' Or you can say, 'We need more marketing so what targeted marketing can we feed them?'" he said.
The more frequent teams do that, "then the less you have to get away from the fire drill of 'We're three weeks out, we don't have anything [on the books]. Because the knee-jerk reaction at that point is, let's drop rate,'" Arredondo added.
Collecting and sharing data with sales and digital marketing teams can help streamline the process of filling a demand hole, he said.
"You can also do things that don't necessarily lower your rate. You can be more aggressive in qualified discounts, advance purchase rates, direct booking rates; there's a lot of things you can do further and further out," Arredondo said.