Hotel revenue managers are going to have more tools at their disposal this year, as they navigate the changes in the hotel industry and prepare for an influx of business and group guests.
An important trend in 2024 will be the continued adoption of technology. Chain hotels employ and even develop their own sophisticated revenue management systems utilizing machine learning and automation, said Miri Vasilevsky-Pinto, vice president for Global Hotel Asset Management at CBRE.
These systems apply complex models to analyze historical and on-the-books data to forecast future demand, aiding revenue managers in optimizing pricing, restriction and inventory strategy, she said.
"This allows revenue managers to develop prescriptive solutions and actionable tactics that influence demand, maximize [average daily rate], capitalize on sellout opportunities and help hotels achieve their [key performance indicators]. For large, branded operators, these systems have become the industry standard for both transient and group business," she said.
Traditionally, larger hotel companies have had the advantage in technology access due to high costs, Vasilevsky-Pinto said. However, in recent years, small and independent hotels have been able to catch up somewhat with successful integration of revenue management and dynamic pricing software. These tools provide data-driven automation to hotels of all sizes and scales, allowing them to maximize revenue and not leave money on the table.
"Hotels need to evaluate their potential by weighing the advantages they offer. We encourage revenue managers to make profitability-driven decisions, adapting an asset manager perspective and shifting the emphasis from top lines to bottom lines by considering acquisition, distribution, operation and overhead costs," she said.
To improve business outcomes this year, Vasilevsky-Pinto recommended that revenue managers develop strong relationships with asset managers.
"Establishing a collaborative synergy between revenue and asset management is crucial for strategic planning. It is required for attaining a clear understanding of performance in relation to the market and enabling hotels to leverage industry insight, enhance decision-making for effective revenue management and stay ahead in a dynamic market," she said.
In a landscape of shortened booking windows and last-minute stay patterns, a proactive commercial strategy is important to implement. Revenue managers need to adopt a cross-disciplinary approach to demand generation, focusing on effective sales and marketing strategies, supported by communications, public relations and social media management, she said.
Staying ahead also requires staying informed about consumer preferences and travel behaviors.
"By aligning with travel insights, hotels can tailor their offerings to meet the dynamic demands of potential guests, enabling effective marketing strategies and personalized services," she said.
Adjusting to evolving trends is critical, Antonin Duez, director of revenue strategy at The Ben West Palm in Florida, agreed. He said he anticipates a slowdown in leisure demand, prompting a shift in focus this year towards the strengthening of corporate transient and group accommodations in hotel revenue management strategy.
"This entails a strategic allocation of rooms to cater to the group segment, aiming to optimize both retail and retail-tied demand, while maximizing opportunities without overlooking potential business," Duez said.
Maximizing hotel revenue by utilizing all spaces and outlets creatively and crafting valuable guest experiences will be important as well, he added.
"Since the onset of COVID-19, each year has presented unique behaviors. Exercise caution against assumptions based on previous patterns, given the evolving landscape; rely on data to assess trends and make informed decisions," Duez said.
Heidi Cosio, Aimbridge Hospitality's senior vice president of revenue strategy, said she also expects group business and events to come back in full force — especially with the rise of what has been dubbed "revenge group."
Many major conventions and events were scheduled for 2020 but had to cancel due to the pandemic. Given that this level of gathering can take several years of planning, 2024 is going to be a big year for the return of these events across all property types and markets, Cosio said.
"Data is going to be a critical piece of how revenue managers prepare for this return of events, allowing them to be a more powerful force," she said. "We’ve been focused on capturing the right mix of data to develop and bolster a holistic roll up of forward-facing, market-centric revenue insights — using these data points to the advantage of our managed properties and our owners."
She added revenue managers this year should commit to being more strategic on how their properties are represented in their particular markets.
"Across the industry, we can no longer just consider topline revenue, as profits are becoming a critical part of a hotel’s success. This requires us to balance strategic priorities with innovation and creativity, so that we can meet this moment when there is so much opportunity to generate results and make an impact at the property level," she said.
Joe DeMarco, senior vice president of revenue strategy at Coury Hospitality, is optimistic about 2024.
"As we kick off 2024, the outlook is incredibly promising, marked by substantial year-over-year growth evident in our pacing and pipeline. Initial speculations suggested a potential summer pullback compared to 2023, but current indicators strongly point towards another bullish year," he said.
To stay ahead, the company has examined segmentation and fine-tuned percentage adjustments off retail rates for discounts on advance purchases, for AAA and seniors. Additionally, Coury has conducted an evaluation of its revenue management systems to ensure data is accurate to assess and set retail and group rates throughout 2024.
"However, a paradigm shift in our mindset is perhaps the most significant aspect," DeMarco said. "It's time to shed the need to 'buy' business and stand firm on those retail rates."
He said pricing strategy has to mirror overall price increases.
"In a year dominated by headlines on inflation, the question arises: If everything else is becoming pricier, why should our rooms be an exception?"
He also anticipates consistently re-evaluating the booking windows of transient customers at each of Coury's city-centered properties. Over the past quarter, DeMarco said he has observed potential shifts in these booking patterns.
Understanding the transient customer's behavior remains paramount. It's noteworthy that this segment tends to book within a 10-day window.
"Armed with this critical insight, we can strategically navigate when to push the gas or pump the breaks concerning retail pricing placement and other transient-focused strategies. This commitment to staying attuned to evolving booking dynamics positions us to proactively adapt and optimize our revenue management strategies for continued success," DeMarco said.