Commercial has been a buzzword in the hotel industry for a while, but Aimbridge Hospitality is one of a handful of companies that have taken the jump.
Allison Handy, executive vice president of commercial, has led the efforts to transition the world's largest third-party hotel management company to a commercial model for its sales, marketing and revenue management operations. She has prior experience in this area.
It was about seven years ago, when Handy worked at Prism Hotels & Resorts, that she brought together her team under one cohesive commercial operation. Aimbridge acquired Prism in 2021.
“All of our strategies were aligned commercially, and when I say commercially, I mean there aren’t sales action plans, revenue action plans and marketing action plans,” she said. “There’s one set of goals across all three disciplines. They each play a role within that, the driving of performance within that goal.”
Making the move
The transition to a commercial model at Prism came from changing the organization’s mindset, Handy said. The company had in certain areas been operating with a commercial team, but it went on to change all of the branding across the company to be commercial. Doing so launched the mindset across all disciplines that the commercial team is working together.
“We're working as one team, and we are focused on not just top line, but we are also focused on profit,” she said.
The timing of this move coincided with the budget season when sales and marketing are working on their initiatives for the next year, Handy said. Taking the commercial approach, the team could holistically look at how sales and marketing initiatives would drive the highest return on investment.
The commercial model is still new across Aimbridge, Handy said. She’s been in her current role for three months after running sales for the enhanced select-service division and taking it commercial. That team has had it for quite some time, and they’ve been voicing their support across the larger organization to help the transition.
In making the move to commercial within the division, there were already people who believed in the concept and were willing participants to make the transition, she said.
“I didn’t have to spend a lot of time trying to sell people on this idea,” she said. “There was already an appetite for it in the ranks and among the team.”
While a big leap, taking the commercial model in an enhanced select-service division to Aimbridge company-wide felt organic, Handy said. It happened through a series of multiple steps, first with the merging of enhanced select-service with the select-service division, joining together 800 hotels. Then the company merged the full-service sales and select-service sales operations. At that point, Handy moved into her commercial role.
While it wasn’t a direct line from enhanced select-service to a fully commercial Aimbridge, the process moved quickly, she said. That was due in large part to support from the company’s leadership.
“We’re not waiting for something to happen,” she said. “We’re taking control, and we are making really great positive changes for the organization, and we’re doing them quickly. We’re moving fast so that we get the results and show the response quickly.”
Under this new structure, Handy said she has two divisional vice presidents of sales, one for full-service hotels and one for select-service hotels who report to her. Those executives have teams of more than 50 people combined under them. There’s also a vice president of marketing and e-commerce who has a team of about 60 people. There are three vice presidents of revenue with teams who reports to them. One of those vice presidents of revenue also manages distributions.
“All four of those disciplines roll up into me, but they each still have a primary head of those departments that are responsible within the department, and then my job is working to bring them all together,” she said.
Changing the mindset
To make the transition to a commercial model, two things need to happen, Handy said. It requires a change in mindset, and it requires cross-training.
Cross-training doesn’t necessarily mean someone must have worked in each job, she said. Instead, it means the employee needs to have an appreciation of what the job entails and how their role fits into the success of commercial strategies.
“We absolutely do have a kind of curriculum of cross-training to make sure that they are skilled in the depth of understanding, but there’s a misperception that you can’t be commercial if you haven’t done all three of the disciplines,” she said.
To take an organization commercial, it’s as much about leadership and setting the mindset as it is about the actual implementation of the skills, Handy said. Leaders need to get people to think beyond just what they’re doing and what they know to see how their discipline fits within the bigger picture.
“It’s commercially, what does this hotel need to move?” she said. “We determine what those priorities are, and then each team fits into the strategy in their own way of how they deliver, but all from an aligned standpoint.”
Another important shift in mindset is moving the focus from top line to profit, she said. There’s a persistent idea that sales is separated from profit, focused only on putting group and business transient in a hotel without thinking of the cost of acquisition. Revenue was further along the journey toward profitability as a goal.
Bringing them all together ensures the disciplines are focused on the business that is the most profitable, she said. By discussing and reviewing this as a group, there’s nothing territorial about it because everyone is looking for the most profitable mix of business and channel of acquisition.
Now Aimbridge is looking at the cost of acquisition across all departments, up to and including that return on investment of salespeople. That means adding in everything — the training, the travel, the events — and looking at what the return is on that investment from a profitability standpoint. It means looking at where the company invests dollars across any of the disciplines and other areas of opportunity to get the highest return on investment.
That’s where the training has focused, though the team has been moving along with the shift well, she said. That mindset involves not just revenue per available room growth but profitability growth and how those two correlate — or sometimes don’t.
What's next
While Aimbridge is still has sales leaders, marketing leaders and revenue leaders, there are certain people in certain positions that have developed over the years into commercial leaders, but those happened on an individual basis, Handy said.
“My desire is to expand into identifying additional people who can really make that leap from being discipline-specific and have the right mindset to move into commercial,” she said. “For the moment, it is structural in terms of how we work as an organization, not titles and discipline and position.”
There are discussions within the hotel industry about whether commercial will live only at the corporate level or move into individual hotels, Handy said. Her preference is to have a commercial model at the property level.
There are resorts now with people who have taken on the role of commercial leaders, she said. They don’t need separate sales, marketing and revenue leaders on property because of what a commercial leader can do.
“You need a commercial leader who is driving the initiatives and the goals and the targets forward cross discipline for the success of the resort,” she said. “And then, again, you have tactical specialists in each of the areas.”
There’s a commercial approach that covers the entire hotel, and hoteliers often forget to look in some areas, Handy said. To borrow from another industry, there’s revenue per square foot and profit per square foot.
“Where are the rest of the commercial opportunities throughout the hotel, and how do we infiltrate the same concept of commercial everywhere and truly be looking at that from a profit-per-square-foot perspective?” she asked. “And what is the commercial team’s role in delivering on that?”
A few years ago, the idea of total hotel revenue management arose in that the revenue managers touch everything in a hotel, she said. That has been evolving more to a commercial strategy across the whole hotel, and she’s leaning into that with a profit-per-square-foot mindset.
“That is where I see the next phase of where we're going with this, as we get beyond just commercializing room revenue,” she said.
The profit-per-square-foot approach is still in its infancy in hotels, so there wasn’t much detail she could share at this time, Handy said. From a retail sense, though, companies measure their results based on the profit they make in every square foot of their brick-and-mortar stores. Hotels have a lot of square footage, but a lot of it doesn’t generate profit.
To move forward from a revenue mindset to a profit mindset as part of the migration to commercial, the idea is to look at what opportunities there are for this square footage in hotels and making the most of it, she said.
To make some of these areas more profit-centric, that could lead to taking different approaches to a property, she said. That could mean in larger markets leasing space to car rental agencies. An analysis of meeting space at hotels has opened up new thoughts on finding other possible uses that would drive more profit.
“That's an exercise that I'd like to explore here as well,” she said.