NASHVILLE, Tennessee — Prioritizing profits over revenues and using technology to drive more opportunities outside of rooms is the next phase of revenue management in hospitality.
During the "Turning Courageous Revenue Management into Profits" panel at the 2024 Hotel Data Conference, Priya Chandnani, senior vice president of sales, revenue and distribution strategy at Sage Hospitality Group, said being courageous in this discipline means looking outside of room revenue management and taking advantage of additional on-property channels.
"Hotels are not just rooms," she said. "There's food and beverage. There's spa. There's cabanas. There's tents. There's all of this opportunity out there that we can continue to leverage, and it really is coming out of our comfort zone and trying new things."
Chandnani said the technology available today can help build out forecast models around departments such as food and beverage, and it gives revenue managers the chance to try different strategies out.
"When we think of what we have available to us today, to allow us to test, to allow us to fail and try again, to pivot quickly — to me, that's the opportunity," she said.
Merely using technology to improve upon the hotel industry's past isn't enough, though. It needs to be on par with companies outside of hotels, said Jeff Borman, vice president of revenue optimization at Ashford Inc.
"There's been a lot of mention of tech, but most of it still tends to end up in our industry, our vertical, comparing what we do to what we used to do. That's the wrong benchmark," he said. "Courageous is going to be selling like they sell outside of our industry. If we don't start to sell like Amazon, we will be sold on Amazon."
The hope is that by using the technology available, more time will be available to connect operations with commercial teams to optimize the business, said Niki Johnson, chief product officer at Otelier. This will allow for a greater focus on the revenue choices made by ancillary revenue drivers such as food and beverage.
Alex Cisneros, chief commercial officer at Mint House, said it's important to step out of what has traditionally been defined as revenue management and use data to help with guest relations and experiences, marketing and operations.
"The thing for me is, how do you really expand what we do? I think we're doing a good job with pricing. There's really good pricing engines. But how do you go above and beyond?" he said.
Roadblocks To Progress
To make the necessary strides to push hotel revenue management further, the existing problems standing in the way of progress have to be acknowledged.
Borman said the hardest-working people are in hospitality, but there's a culture issue that leads to everyone doing the same stuff repeatedly.
"Everybody ends up in their [own] swim lane. That's a real problem," he said. "We don't encourage ... the people to be disruptive."
Cisneros agreed that most organizations are structured in a way that "forces you to stay in your lane." He said it's on hotel leaders to encourage their teams to step out of those lanes and cross collaborate with others. Leaders must also allow their teams to feel free to challenge them when there's a differing opinion.
"The biggest mistake that people make is that you think that your boss knows more than you," he said. "But if you create an environment that they can come and tell you that you're wrong and let's explore these other alternatives, I think that goes a long way."
When it comes to adopting new strategies, there needs to be shared risks throughout the entire operation, Johnson said.
"Innovation thrives from taking risks, failing fast, and I think that we need that shared risk and that partnership on not only the management companies and the owner and the hoteliers, but also on the vendors," she said. "We need to take that journey together."
Another road block to progress is there hasn't been a consistent metric of success in revenue management outside of revenue per available room, Chandnani said. Her team has shifted to prioritizing total revenue per occupied room as a key metric to give them a competitive edge.
With all the data and technology available today, deciding which key performance indicators to prioritize has proven challenging, Cisneros said. From forecasting data at the market level to guest reviews on social media, it comes down to which KPIs matter to each company.
"There are a lot of opportunities. There's too much data, but I think with [business intelligence] and other alternatives, more advanced analytics, you can dissect that data in a more efficient way, but are you really looking at the right thing?" he said.
There's a tendency to fall back on legacy KPIs like RevPAR, but in some markets and for some property owners, that's not the metric that will lead to the most profits, Cisneros said.
At the end of the day, that profit aspect is what hotel owners care about. Borman said it's on the revenue-management team to ask specific questions about how space in the hotel is being utilized.
"If we're not asking a question, then it's probably not being brought to us, which is an opportunity for our hotel team, but I think they quickly learned, at least with us, that's how to approach us and you'll get investment," he said. "If you've got a great idea that's going to drive profit, the owner is essentially a checkbook."