Blurred lines between demand segments, more price-sensitive customers and a "triple Super Bowl" in concert tourism have kept things interesting in 2023 for hotel revenue strategists as they stayed focused on the bottom line.
Here's a look at revenue-management-focused headlines from 2023.
At the beginning of 2023, hoteliers were optimistic about a return of group business and an overall continued recovery of occupancy with limited new supply entering many markets across the U.S.
But some hoteliers began to notice leisure travel fatigue among some travelers.
In 2022, there didn't seem to be a price ceiling. But a few months into 2023, that demand began to slow down in some U.S. markets.
“We still saw a very strong start to the year, but people continue to be rate sensitive. We have been seeing year-over-year gains but not the [average daily rates] we anticipated for the year. A majority of our growth now is in occupancy,” Dan Paola, vice president of operations at management, development and investment company Raines, said in an article in April. “As a portfolio, we are almost flat in ADR year over year, but up over 5% in occupancy. April may be the first month that some of our hotels don’t see overall year-over-year increases. It’s hard to tell with some properties because there continues to be new supply entering the market. With so many brands, guests are looking to try something new.”
Hawaii-based hoteliers early in the year also realized that the high rates they were able to charge throughout much of the pandemic will be unsustainable as leisure demand declines due to inflation and travel fatigue.
Experts in Europe said factors such as geopolitical strife, inflation, higher energy costs and lingering health concerns from the COVID-19 pandemic led to guests tightening their wallets.
"Steady hotel demand has kept average daily rate high, but revenue managers are still feeling pressured to help high rates trickle down to significant revenue gains on the bottom line," HNN's Terence Baker reported from the Global Revenue Forum in London in February.
Hoteliers in the U.S. were also waiting to see whether a recession would hit early in the year.
“The biggest obsession with both operators and investors is whether we’re going to have a recession, and if so, how deep and when, and all the questions that come with that,” David Loeb, a former analyst with Baird and owner of Dirigo Consulting — which advises on capital markets, strategy and communications issues — said in an article previewing the fourth-quarter and full-year earnings season. “Nobody knows whether we’re going to have a recession. If we are going to have one, is it going to be quick? Is it going to be shallow? Is it going to be bigger?”
Revenue experts then shifted their mindset from revenue management to revenue generation.
Alex Cisneros, who was senior vice president of revenue generation at Red Roof at time of publication in April 2023, said he had been coaching his team to ask questions about the revenue generation process. He said a revenue manager shouldn't solely focus on average daily rate and occupancy.
Attention needs to go towards building brand loyalty among customers.
“We remain as an industry where we are looking backwards. We are looking into transactions but not understanding enough [about] demand,” he said. “The good news is that now data is becoming easier to integrate," he added.
Popular markets that saw a surge in demand following the onset of the pandemic, such as Florida, were projected to see a decline in demand compared to past years.
“I do think we expected it to scale back because it has been so strong the last three years. Now that international travel has ramped up, I think we expected it,” Michele Mainelli, senior vice president of revenue management at Island Hospitality Management, said in an article in May. “We didn’t budget as aggressively for the Florida properties as we had in previous years.”
But some glimmer of hope arrived over the summer as Taylor Swift began her "Eras Tour." It ultimately drove up hotel bookings and rates.
Derek Sumpter, general manager of Reverb by Hard Rock Downtown Atlanta, said the three-day stop in his city was a "definite one-of-a-kind event."
"It felt bigger than even the Super Bowl, to be quite honest with you," he added.
Not only did hoteliers capitalize off of higher occupancy to drive rates and revenue per available room, they also benefited from higher food-and-beverage spending. Reverb achieved a 500% increase in food-and-beverage revenue week over week on the weekend of the concerts.
Beyoncé's "Renaissance World Tour" also lifted performance in some markets. The Virgin Hotel New Orleans rolled out promotions during the week of the concert to capitalize on the event.
This included hosting a Beyoncé burlesque and drag brunch that featured a two-course meal, the option to add bottomless mimosas or brunch cocktails, and a local vendor on-site with a hat bar. More programming was rolled out on the day of the show.
“If I could do anything different, I think we would have scheduled another brunch on [the concert day] to really capture everyone that stayed for the event. We'll probably look at doing something like that [moving forward] … to capture all of our hotel guests to enjoy something special on-property," Cody Bertone, general manager of the Virgin Hotels New Orleans, said during an interview in the fall.
Hoteliers also have had to consider how much guests are willing to pay above the room rate amid some consumer backlash.
Ancillary fees are "a profitable revenue stream. We have to continue to find a way to capture that. The biggest negative is the impact on the guest experience. We do have to remind ourselves that we're in hospitality, they're here for a great experience and we have to make sure we do everything we can to communicate that and not take away from that through the booking journey," said Jenna Fishel, senior vice president of commercial strategies at First Hospitality, during a panel at the 2023 Hotel Data Conference.