ATLANTA — As hotel revenue managers shift their focus more to revenue generation, experts in the discipline say the crux of the strategy should remain simplified.
On a revenue strategy panel at the 2023 Hunter Hotel Investment Conference, Alex Cisneros, senior vice president of revenue generation at Red Roof, said when he joined the company three years ago, he asked why his title specified revenue generation and not just revenue management.
“I was fascinated; I think it was the right transition for the company. We wanted to see the revenue generation process holistically. How do we work on getting more customers [in front] of the brand? It starts with brand awareness,” he said. “Then you go into [the thinking of] do we have the right price, do we have the right messaging, do we have the right promotions?”
What really enabled Cisneros' team to answer those questions was data, he said. Now, through a business intelligence tool, Red Roof has reliable insights into what’s driving customers to the brand’s website. Prior to implementing the tool, revenue managers were spending too much time pulling various data, he said.
The other key part of transitioning from a mindset of revenue management to revenue generation was involving other departments and “being able to elevate the understanding of how different pieces of information come together for revenue managers to make better decisions.”
For the past three years, Cisneros said, he’s been coaching his team to ask questions about the revenue generation process. A revenue manager shouldn’t solely focus on average daily rate and occupancy, he said. For example, more attention must be paid to driving brand loyalty among booking customers.
Cisneros said younger employees are asking different questions and are more interested in strategies such as converting lookers into bookers on social media. He said he expects there will be a push from Red Roof franchisees and hotel operators for the brand to offer better insights on demand.
Kate Burda, CEO and founder of Kate Burda & Co., which works alongside companies to elevate revenue performance in sales, marketing and price modeling, said hotel companies tend to invest the most technology at the point of sale, where booking decisions are often driven by price.
“When we take a look at those systems, or the thinking, the amount of systems and understanding we have at that point of awareness is very little, particularly within our hospitality industry,” she said. “If our whole idea is, let’s get away from price-driven sales, we have to have this thinking — and technology to go with it — to be able to understand that customer.”
Customer segmentation gives owners and operators a deeper understanding of consumers and how to engage with them, Burda said. She added the industry must figure out a way where segmentation isn’t derived just by distribution systems. The goal is to capture, understand and engage with customers earlier in the search and booking phase.
Sarah Williams, chief revenue officer at InterMountain Hotels, said “revenue management is the backbone" of the conversation around revenue generation. However, it’s critical that sales and digital marketing teams are also involved.
“It helps [revenue managers] understand how to deploy resources. If you’ve got holes that you need to fill in six months, who’s going to do that? Revenue management, digital marketing and sales all sit on revenue calls, and that’s the conversation,” she said. “We take about 20% of that call to look back, and the rest of it is looking forward.”
Cisneros said one of the challenges the hotel industry has had is looking forward in terms of demand, and technology is needed to enable data to come together in a more simplified way.
“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. We look at data from Google Analytics [for] web demand and integrate it with the data sources, STAR data, to start forming a picture of true demand so we can make price adjustments.”
Casi Johnson, chief operations officer and partner at cloud-based financial platform and services company M3, said some teams spend a lot of time forecasting and throwing data points “into every report or every dashboard” instead of taking time upfront to create a data map with the most important data to manage the business.
Convincing Owners To Invest
At the end of the day, these technology solutions cost money, Williams said. InterMountain owns and manages premium-branded, select-service and extended-stay hotels, “and [there’s] not a lot of budget to add on” more tools and systems outside of what the brands provide. This has forced her team to optimize the use of those provided tools.
“We have to be careful to go outside of those and procure other platforms or systems. They are necessary, absolutely, but it’s a real challenge to get an owner to understand them and buy into it,” she said. “We have our staples, the ones we say that are non-negotiable; if we’re going to manage for you, we need this one thing. But anything more than that is challenging because of cost.”
To help owners consider what they might need to invest in from a technology standpoint, Cisneros said it's important to understand what the owners’ needs are for making profit. Red Roof also deploys its operations teams to properties to listen to the struggles that franchisees are facing.
“Our job is to make their lives simple, so we do listen closely,” he said.
Cisneros said many franchisees are learning that automation is increasingly simplifying tasks that they’ve otherwise spent too much time on.
Who To Hire
Williams said the best revenue strategists understand the highly sophisticated systems and interact more with hotel owners.
“We have a lot of monthly calls with our owners and our revenue team reports the data,” she said.
A majority of InterMountain’s revenue managers came from a general manager role and have that mindset already. Building that culture with some of the newcomers, however, has been challenging, she said.
Integrating Commercial Teams
To ensure that the sales and marketing and revenue management departments are all thinking as one team with shared goals, there should be collaboration on how to build customer awareness of the brand and on point-of-sale strategy, Burda said.
Williams said it’s key that everyone understands what they’re responsible for in the shared goal and walks away with an action item after each team call.
“I’ll have an owner call me up and be upset about a revenue manager on the team, talking about why [performance] was down, and pointing the finger at the revenue person. I have to explain to them that everybody has their own piece of it,” she added.