Hotel distribution is more complex today than ever and there are so many companies between the hotel product and the guest.
Along the way, two key functions – revenue management and marketing – have evolved into very specific and sometimes dissonant entities that don’t always connect. But they should.
NB: This is an analysis by Rich Maradik, founder of nSight For Travel.
When that disconnect happens, you’re less efficient and you can’t take advantage of real-time opportunities. The result? Your property is not realizing its optimal potential in terms of both occupancy and rate.
By working together better, revenue management and marketing could be more effective in helping their hotel maximize revenue and profit.
Three Ways Revenue Management and Marketing Aren’t Aligned
From technology to terminology, these functions are becoming separate.
1) Different frames of reference
Revenue management tends to look at rate and inventory by channel, with separate strategies and objectives based on achieving the optimal mix of hotel guests.
While this approach is proven and sound, revenue managers often overlook the opportunity to influence consumer behavior within the demand channels they are managing.
As a discipline, revenue management typically values predictability within each channel over targeted strategies and offers that can increase conversions and gain share of online demand.
On the other hand, marketing tends to look at guest history, leveraging the hotel’s CRM, email databases, source markets and target customer types in various marketing channels.
2) Different timing perspectives
One looks forward, the other looks back.
Most marketing decisions are based on past performance including historical booking patterns, previous campaign performance, last season’s guest profile and even research or intercept surveys that are a year or more old.
Traditionally, revenue management looks forward because it’s placing future inventory at a future rate.
But most most factors taken into consideration are in the past – using historic PMS data to best predict the future such as last year’s rate, last season’s inventory, last month’s competitive rates, and projected booking pace based on pace of previous years.
3) Different corporate objectives
Let’s be honest - revenue management and marketing are each incentivized to achieve different objectives. They address the same consumer, but with different corporate metrics to achieve – ADR growth, occupancy and RevPAR performance for revenue managers; website visitor growth and covnersions, social media likes and campaign ROI for marketers.
If these two groups that are critical to the success of a hotel are motivated to achieve different objectives, have different perspectives with different underlying foundations, no way will there be consistency in their decisions or outcomes.
So how can revenue management and marketing work together to generate a fair share premium?
The challenges to achieving this are many – from cultural reluctance to systems infrastructure via internal turf battles.
But if you rise above the fray the answer is simple: embrace a singular, foundational platform with common terms, metrics and goals that marries the insightful, data-driven approach of revenue management with the action-oriented, consumer-focused practices of marketing.
And there are ways to make the evolution close to seamless across the organization. Find the secrets to making this happen below.
Three Secrets to Bringing Revenue Management and Marketing Together
Success for the hotel is contingent on these two teams working side by side toward the same result.
1) Make Consumers the Common Denominator.
The key is understanding what the consumers look like who are actively shopping for a hotel room and their preferred dates. It’s the equalizer that brings both groups together, enabling revenue management to deliver the right product at the right price and marketing to target the most-likely-to-book consumer at the right time. Knowing the consumer is the foundation of success across the guest acquisition chain.
2) Look forward, forward, and forward again!
The past is an important indicator. But knowing what is happening now and in the future can redefine performance achievement across the enterprise.
Hotels who know which consumers have an intent to travel to a hotel, its competitors or the market, plus where they come from, what they look like and when they want to arrive have the edge.
And they can exploit this knowledge by being the first to pull the trigger with incentives to targeted consumers, innovative packages and aggressive, confident price adjustments.
Looking forward to consumer travel intent is the secret to ultimately shifting share and growing profitability.
3) Create a common vision through an integrated view of rate and demand
You can bring these diverse perspectives together by providing an integrated view of future consumer online search and market pricing with one perspective and one direction.
Decisions will dovetail to accomplish the same objectives – increase bookings at the optimal rate, especially to the brand.com website.
What’s Next: Game-Changing Demand Forecasting
Here is an example that puts the theory into practice using nSight’s data. As a frame of reference, nSight aggregates over 80 million consumer hotel shops from 5,000+ travel websites every day.
Our unique view of consumer hotel search brings together insights to help predict and shape future hotel performance based on forward-looking data such as arrival dates searched but not yet booked and the impact of consumer search volume on competitor rates.
Offering data that hotels have never had access to before now, nSight’s Demand Forecasting calendar provides a truly dynamic view of leisure online search by incorporating rate, booking performance and consumer intent to travel into a single view that is useful to both revenue management and marketing.
Here, in the forecasting calendar, color-coding makes it easy to take action on the forward-looking analytics.
- Green indicates higher than usual rate with strong booking performance.
- Yellow means your relative rate is high, but you’re not converting your fair share (based on your share of rooms in market).
- Orange can reveal a focus on occupancy with a low rate yielding more than your fair share of bookings.
- Red highlights low rate and low share of conversion.
Finally, arrows tell if consumer search for that stay date is up or down compared to the previous year.
This multi-dimensional view of rate, conversion and market potential gives revenue managers and marketers a more complete outlook for better decision making.
Knowing the volume of consumer searches for future arrival dates, hotels have powerful new insight for maximizing ADR, occupancy and overall profit in these typical scenarios:
- Holding rate in the face of lower available consumer interest can be the smartest way to maximize gross profit for that day.
- If rate is above the comp set but bookings are down, hotels may consider aggressive discounting and more marketing spend. But watch for low demand so as not to sacrifice ADR for a small number of new bookings.
- Multiple days in a row with low leisure search and, therefore, lower booking potential, offer a good opportunity to focus on groups, events and/or weddings to boost occupancy and grow incremental revenue.
- Days with low rate and conversion in the face of strong demand call for nSight’s unique persona-based target marketing to attract and convert consumers who are “most likely to book” as that are already searching the market.
By focusing on the consumer and travel search behavior, revenue management and marketing come together with a common perspective and approach. The result is stronger, better-aligned objectives and increased performance on ADR and bookings on the hotel brand.com.
NB: This is an analysis by Rich Maradik, founder and nSight For Travel. It appears here as part of Tnooz’s sponsored content initiative. More information for revenue management and marketing teams, click here.
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