LONDON — Hotel revenue managers are addressing the anxieties of guests’ lives as much as they are processing the differences in owner goals and revenue strategy since the height of the pandemic.
With the various outside forces affecting hotel booking decisions — from geopolitical strife, inflation, higher energy costs and remaining health concerns lingering from the COVID-19 pandemic — guests are spending in ways they consider to be far wiser.
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.
Speaking at the Global Revenue Forum in London Tuesday, Laura Sharpe, operations director at Firmdale Hotels and a former general manager at Ham Yard Hotel, said flexibility with revenue strategy is more crucial than ever before. However, the nature of that flexibility has changed from year to year.
“In 2022, yes, there was the need to be flexible, but that remains the case now with guests finally becoming more confident to lock in dates a little farther out,” she said.
Joe Pettigrew, chief commercial officer of hotel asset management at Starwood Capital Group, said some of the changes the hotel industry made during the pandemic could be harmful if left in place for the long term. Among the biggest concerns is balancing lean staffing models with the high level of service guests expect, especially if they're paying more for it now than in 2019.
“How much of the current high [average daily rate] is based on economic factors, and how will revenue strategy change if these high rates are not sustainable?” Pettigrew asked.
Sharpe said not every trend will remain, but guests are demanding seamless bookings and the ability to self-curate their hotel and destination experiences and packages to erase anxiety from the booking process.
She said the industry should be focusing on ways the retail sector has smoothed the customer acquisition process, even though others suggested the hotel industry already has had ample time to do this.
Kadira Canavese, head of global revenue management and distribution at Corinthia Hotels, said revenue-management teams must continually reinvent themselves.
She said during the pandemic her company has reassessed customer markets — how they changed and whether any markets had been isolated — to determine revenue strategy.
What's Keeping Revenue Managers Awake at Night
With hiring, retention and staff turnover causing headaches in the past few years, Canavese said more artificial intelligence is entering the revenue-management discipline, but human teams are still required to perfect processes.
The panelists said shifts in segment demand are revealing more opportunities for information technology and artificial intelligence to find, sell to and upsell to new types of guests.
Revenue-management departments must keep one step ahead of external impacts and technology for their hotels to become more future-proof and be firmly in front of guests.
New generations of guests every year find new travel and hotel booking platforms, Sharpe said, and it is prudent to look at all platforms, but not to necessarily adopt them as a distribution channel.
“You go through TikTok, and of course it would bring you attention. You might also ask if that user will want to book hotels on that platform in the future? Even now, some users might be inspired by such platforms but would never buy through them,” Sharpe said.
Loyalty and points can be another source of anxiety for revenue-management teams, with guests having large stores of points and hotel owners not wishing to see too many of them dumped on their rooms, or at least having some say in when they are redeemed.
Firmdale does not have a loyalty program, Sharpe said.
“Yes, I know that’s controversial,” she said.
Canavese said Corinthia, being an owner-operator, does not suffer from such friction. But Pettigrew said the loyalty question is a pain point in discussions between brands and franchisees.
“The brands must increase their third-party data, as essentially that is all they have,” he said.
Pettigrew added a worry is that points will be handed out in larger quantities to secure loyalty, and not just for the hotel firms themselves.
Third-party firms can offer attractive rewards due to the volume of their businesses, paying for that from the generous commission percentages they earn.
Pettigrew said loyalty delivered by credit card companies could be a real threat. While an online travel agency such as Expedia or Booking.com could give rewards back to the customer but still retain bookings income, credit card companies can give all their commission away because they are making revenue anyway on the transactions.