Search engines, OTAs, review sites, metas and other tools have changed the way travellers look and book rooms. But revenue management has remained the same during my fifteen years working in the business.
NB: This is a viewpoint by C S Ramachandran, director of revenue account management for Preferred Hotels & Resorts in India, Middle East and Africa.
We are still so caught up in managing rates, availability, inventory and occupancies on a daily basis that there are a lot of opportunities that are being missed, so caught up in a department-driven processes that we are losing focus on critical changes happening in the world around us.
The hyperconnected world
Technologies such as mobile, big data and social media now play a key role in influencing the travel decision process. Mobile is no longer the secondary device, but in many instances it is the device.
In today's connected world, it is important that the revenue manager ensures the right information is made available to the customer at the right point of the decision process in order to ensure conversion – be it at the price comparison stage (search/meta search), the looking for content stage (search/ OTA/website), or the expecting tailored offers stage.
Big data
There is an abundance of information (the accuracy of which is a question for another day) available to the revenue managers of today. Revenue managers can use the data to create pricing value for the guests to encourage spend. In a utopian world, pricing would be not on day of the week but personalized by individual. Can the revenue management tools of today help here? That’s another question for another day.
Some examples:
- If Mr X’s past history shows departure at 1600hrs on Thursday, would he be interested to stay over the night at a small supplement, considering that Thursday is the beginning of the weekend.
- Could a client who usually arrives early in the morning be tempted by a competitively priced early check-in option if he or she could be guaranteed a room? And data helps here as well by helping the housekeeping team to staff accordingly for faster turnarounds.
Internet of things based pricingRevenue managers need to combine this abundance of information to help hotels maximize not only room revenue but also overall on-property spend.
The focus should shift from a pricing strategy based on "best available rate" and move towards personalized offers. Netflix and Amazon do a great job of using past customer buying behavior to nudge them to the next purchase.
For example if a guest has spent a longer duration on the spa and recreation page of the hotel's web site, would it be possible to show a rate which includes spa offers?
Consider the opportunities opened up by allowing guests to log in to your website via Facebook. Imagine a guest who is part of the cycling community at home being shown a special offer from a hotel partner on a city bike tour?
Personalized messaging at the right time is key towards increasing conversions in the coming years.
Data is nothing but numbers until we can turn them into insights to improve the guest experience. Use data to encourage guests to book direct by offering instant gratification basis on their needs.
Newer measurement metrics
Food and beverage revenue management moved from average per cover (APC) to revenue per available seating hour (RevPASH) sometime ago, but hotels' metric of choice is still revenue per available room (RevPAR).
This is a legacy from an era where we did not have varying costs of distribution across channels. It is time to upgrade metrics to measurements such as GOPPAR (gross operating profit per available room) or TREVPAR (total revenue per available room).
With the emergence of flexible/24-hour check-in/check-out policies, the day is not too far out when we shall have a REVPARH (revenue per available room hour) metric as well.
Revenue-driven culture - educate, empower and amalgamate
This has been discussed ever since Robert Cross, "the guru of revenue management" published his New York Times Business best seller, Revenue Management: Hard Core Tactics for Market Domination in 1997.
There is no better time than today to work with your teams on how to maximize bottom-line by increasing direct sales.
Simple efforts such as training the front line team to leverage loyalty programs to convert OTA-booked customers into direct guests or ensuring that the quality of data inputted into the PMS are two obvious places to begin.
It is important that all team members understand the revenue vision of the hotel and their role in making it a success.
All in a name
Perhaps it is also time to review the designation of "revenue manager".
We are in the “new age” revenue management era where the lines of revenue, sales and marketing are blurring and converging. This means the revenue manager now needs to do a lot more than just manage rates across channels and generate Excel reports. In Edward de Bono’s style, some of the hats a revenue manager has to wear could include big data analyst, business strategist, trend forecaster, IT and systems expert, e-marketing guru and sales consultant.
It is time that hotels adapt and start training their "revenue leaders" to face these changes.
NB: This is a viewpoint by C S Ramachandran, director of revenue account management for Preferred Hotels & Resorts in India, Middle East and Africa.
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NB2: Image by Yastremska/BigStock