PHOENIX — As the hotel industry comes down from its leisure-driven demand high of the summer, revenue experts are being forced to look more closely at where and how they find new streams of demand.
Speaking during the "Finding the Most Profitable Demand: Marketing, Revenue Management and Distribution Channels" panel at the 2022 Lodging Conference, Cesar Wurm, vice president of commercial and revenue management at IHG Hotels & Resorts, said each hotel will need to have its own unique strategy as leisure diminishes and group and business travel take its place.
"There's not a one-size-fits-all [solution], and what might work for one asset, one location, one type of hotel might not work for another," he said. "But it's really important that at each hotel you have your optimal mix, and you have to know that with whatever data is available to you."
Sarah Williams, chief revenue officer for InterMountain Management, said that while overall demand might go down in the short term, the industry has a unique chance to continue driving rate, particularly for corporate travel.
"Right now, we're focusing on the business traveler," she said. "We haven't had a chance to negotiate with them for three years over the course of the pandemic."
She said at some "bigger branded hotels" business travelers developed a habit of booking at retail rates instead of negotiated rates because it was actually cheaper that way.
"Now we're really focusing on that segment, and we have the opportunity to negotiate with them and brands are doing a good job of communicating with them," she said. "We're aggressively pushing that segment."
Wurm said he believe the brands, including IHG, are "in a good place" with corporate negotiated rates. He added the strong demand environment has allowed hotels to be a bit more picky in negotiating rates with corporate clients.
"We've been in instances where we've walked away from large accounts at hotels where it really didn't make sense anymore," he said. "Sometimes you've got to take that risk."
He said IHG has also been utilizing some dynamic rate structures with corporate clients.
Williams said companies like hers need to take a much closer look at group demand and the costs associated with various groups.
"We've seen so many intermediaries enter even in the last couple of years," she said. "Even at our company, which is probably less than 10% group demand as a company, we have to question and really think about every single piece of group that we take because of the concessions and the kickbacks."
She said that comes back to knowing how a group will drive revenue and having a better understanding of "the cost of every guest."
Kimberly Furlong, chief commercial officer for Atrium Hospitality, said hoteliers need to evolve how they think about distribution and channels like online travel agencies. OTAs can no longer be viewed as a basic discount channel, and using them to drive demand is more complicated, she said.
"From my perspective, OTAs have a much better relationship with the brands because the brands finally gave in to the OTAs to allow for things like travel ads and accelerator and all the ways you can get the OTAs more money and brands more scale on the commission," she said.
That's not necessarily a bad thing for hotel operators, who can key in on more targeted ways to drive demand, she said.
"It helps an owner and a manager, too, because now I can spend on the day, on the channel, on the period where it benefits me," she said. "It's a win-win, and probably why the relationship is better."
She said as OTAs become more sophisticated in targeting and less about discounting, other discount channels will arise to replace that because deal hunting is simply part of human nature.
"When you think about it, you feel so good when you save some money, even if you could afford it at its retail price point," Furlong said. "You feel like you won when you get something for a discount, so that's human behavior."