As we hit mid-point of the first quarter, the lodging outlook is bleak. Both PKF and PricewaterhouseCoopers lowered their 2009 RevPAR targets again at the end of January. Smith Travel Research is reporting preliminary January RevPAR down 15-17% nationwide. Lodging stocks continue to be a roller-coaster. While we cannot deny these facts, we can choose our response. In revenue management, this is not the time to just hunker down and survive. This is an opportunity to shine, add value to your organization and help it thrive. The following initiatives should help position your revenue management efforts for success in 2009.

1. Look carefully at your pricing.

A lot has been written and discussed recently about not dropping rate, but what do you do when there is downward pressure on rate in your competitive set or market? Is it realistic to hold your rate?

As there are plenty of valid points in the argument to hold rate, now is the time to carefully and thoroughly analyze any potential shift in pricing. Start with your STR report to understand your rate index versus your occupancy index. As you create strategic test periods, be sure to review the STR report in detail to determine if you achieved the desired result. One thing to consider before making a pricing change is your market segmentation mix. Typically, the higher percentage of Best Available Rate or Retail Rate business you have, the better your hotel will perform. Hotels that have very low percentage of BAR/ Retail business may be suffering from an over-priced BAR/ Retail rate. In underperforming hotels, it is sometimes possible to decrease BAR/ Retail rate and actually increase overall ADR due to the mix of business.

2. Employ realistic forecasting which leads to higher revenue, and better labor and expense management.

A forecast is a short term projection which has many objectives that it needs to communicate – financial expectations, necessary staffing levels, supply needs, expense guidelines, etc. Some key steps to realistic forecasting include:

  • Bring the key stakeholders together to agree that a forecast is meant to be realistic based upon the facts known at a particular point in time.
  • Be clear that information changes over time and so will the related forecast, but it should not change based upon the fear of documenting a low number to ownership or simply avoiding market realities. An inflated forecast may lead to less than optimal pricing, market segmentation and distribution strategies. It may also lead to over-staffing and over-ordering.
  • After completing your forecast, your proactive revenue management team should focus on what actions need to be implemented to achieve or exceed the forecast.

3. Acknowledge that marketing and revenue management are intertwined.

After your realistic forecast is completed, a strategic revenue management team should review that forecast with the marketing team to identify need periods or opportunities. This communication should result in the generation of customer-focused, revenue-generating offers.

Marketing and Revenue Management should work together prior to the launch of any marketing efforts to make sure the goals of the campaign are clear, the messaging is appropriate for the business needs of the hotel, and that tracking is in place. Once the campaign begins, the departments should regularly review results to make sure they are achieving a desirable Return On Investment.

With most online marketing efforts, you have the ability to manipulate pricing and/or messaging almost instantly. If clicks are high and conversion is low, pricing might need to be tweaked. If clicks are low and conversion is high, the message might be wrong. Offer an analytical, revenue management-based approach to your marketing team’s work. You may be more likely to get additional marketing funds to help you weather this downturn.

4. Treat your third party Internet partners as an extension of your revenue team.

Strategic relationships with your third party Internet partners are important, now more than ever. In bad times, as in good, treat your third party partners as an extension of your revenue team. Good market managers have their fingers on the pulse of the overall market and can provide great insight into broader trends that you may not see.

  • Share need periods, discuss production targets and how you can work together to achieve agreed upon goals.
  • Celebrate when those targets are met and have open discussions when there is a shortfall.
  • Re-evaluate your distressed/last minute channel strategy based on feedback from your market manager and the needs of your hotel.
  • Research if there are any sites that can drive business into your market with which you do not currently work.

5. Be a brand expert and expect the best.

For those hotels that have brand representation, the revenue management team should understand what assistance and support the brand can provide to drive revenue. The brands that are taking a proactive stance in focusing on revenue generating plans and actions are to be applauded for earning their fees.

In addition to knowing the brand systems, you should be on a first name basis with your regional support person. Ask what is working and not working for other hotels, what they are seeing and hearing on a global level, and if there are any initiatives being discussed that your hotel could beta-test for the company. In addition to these frequent conversations, make sure you understand all of the audits, reports, training, and marketing opportunities available to you.

If you feel you are missing something from the brand that could help you drive more revenue, make a recommendation. Share your need periods with the brand and ask what they can do to assist you in exceeding your forecast. Take a proactive stance in your relationship with the brand and it will pay dividends.

6. Make your weekly revenue management meetings more strategic.

Spend the first fifteen minutes of your next weekly revenue management meeting discussing what is going well and what could be improved in the effectiveness of the meeting.

  • Review the agenda, the attendee list and the flow of the meeting to look for opportunities to make changes that will shake things up in a positive way.
  • Get beyond the “what” and make sure you are diving into and understanding the “why.” It is no longer good enough to say that a market segment is up or down from last year. To have a truly effective meeting, a revenue manager needs to be able to speak to the reasons for these variances. This will enable the revenue management team to adjust strategies going forward.
  • When making pricing changes, note what the desired result would be and follow-up with those results next week to inform future pricing changes.
  • Market share is of pivotal importance and now is the time to dive into weekly STR reports and rate shopping tools every week to recap last week’s performance against last week’s strategy.
  • With the surge in groups falling into attrition or cancelling their programs entirely, make sure you are spending time discussing this important revenue stream.
  • Brainstorm ways to increase conversion and up-sells through the call center.

7. Understand that displacement analysis is not what it used to be.

If you are still using last year’s numbers when running displacement analysis on groups or base business, you might want to reconsider your strategy. With things changing as much as they are right now, it is wise to use very recent history as well as your realistic expectations when you are reviewing business. Don’t throw away the idea of displacement analysis all together as there are still times of medium and high demand. Work with the sales team to understand a group’s propensity to spend and balance that with your knowledge of potential rate offers or promotions that you will run during the same dates when determining your group rates.

8. Conduct a comprehensive system audit.

Make sure that 2009 is properly built in all of your booking systems.

  • Take advantage of any rate configuration reports offered by your PMS and CRS, and be sure you have rate seasons built and bookable through at least 2009.
  • Be sure that there is inventory for sale in all channels as now is not the time to be stingy.
  • Test your availability for multiple dates and lengths of stay on your own website’s booking engine and on the third party Internet sites.
  • Test all “book now” links from promotions and other parts of your website. Ask your corporate account travel managers to do the same – they’ll appreciate your concern.
  • Befriend a travel agent and see how your hotel is appearing on the GDS.
  • Review production reports to see if any of your distribution channels, consortia, or corporate accounts are under-producing last year by more than the economy can explain.
  • Re-evaluate strategies that were implemented in good times to step up channels or specific discounts that might bring incremental revenue in today’s environment.

9. mplement a self-funded revenue generation incentive program.

Declare the month of March to be “Revenue Generation Month” at your property. Ask all staff members to provide revenue generation ideas to your director of revenue management.

Ideas can include specific things like a short-term group or catering lead from personal contacts, or a more general idea like offering late checkouts for $25 on low occupancy nights. Get the competitive juices flowing in the reservations and front office departments and see who can generate the most up-sells to suites or premium accommodations.

For every idea adopted, consider awarding a savings bond, gift card or cash to the employee who generated the idea. Do make sure to set some limits and maximum payouts in advance.

10. Increase your market acumen.

Create space in your schedule to increase your market acumen, focusing on what is going on outside of your hotel. Market acumen falls into two main areas – competition and potential demand opportunities. Ideas that can help you address both areas include:

  • Review the current STR competitive set to see if it accurately reflects the hotels with which you compete. If it does not, put together a competitive set that you can use as a true benchmark of your performance. This is especially important in a time when market share will come into greater focus.
  • Once you have agreed on your true competitive set, research and understand where they get their business and why. Ask “What do they offer that we do not?” and vice versa.
  • Build relationships with your competitors so you can understand their business better, but beware of anti-trust regulations.
  • Get involved with your City Development Department to be aware of what new businesses, restaurants and retail stores are coming to your area and how they can help you fill hotel rooms.

11. Appreciate that customer service and revenue generation go hand-in-hand.

With hotel demand at some of the lowest levels in decades, basic customer service skills are a valuable asset in guest retention, word-of-mouth advertising, and maintaining and increasing hotel demand.

Share guest feedback with the staff and discuss the hotel’s strategy when it comes to responding to online customer reviews. Social networking sites with customer reviews are having a major impact on how our guests choose their hotels. Make sure you are not ignoring this feedback and the revenue implications it can have.

In addition to providing great guest service, leverage frontline associates’ interactions with guests to increase demand for your hotel. These employees can work as liaisons for your sales staff to drum up new business or rejuvenate relationships with current accounts. Train these employees to briefly document guest feedback, comments, and contact information, so the sales staff can reach out and build a positive relationship with these guests. Consider asking them to track the answers to simple questions like: “What brings you to the area?” and “Do other people in your company travel here?” This can be a powerful way to find hidden gems of business for your hotel.

12. Increase Your Organization's Intellectual Capital.

The world watched the "Miracle on the Hudson" in awe as the plane landed on the river and passengers safely streamed out. The success of the pilot and flight crew was the direct result of their intense training and preparation.

Training and preparation are essential to prepare for and pull out of times of crisis – be it engine failure or economic turbulence. It may be tempting to cut expenses by cutting training, but it is not how smart organizations will thrive. Now is the time to increase rather than erode your organization's intellectual capital, which may already be suffering from a loss of knowledge and experience as a result of layoffs.

Continuing education doesn’t have to be expensive to be effective. Low or no cost initiatives include mentoring, peer coaching, and informal best practices sharing. HSMAI offers affordable online and face-to-face learning opportunities including webinars, strategy conferences, publications and more.

As you can see, despite the doom and gloom being projected for 2009, there are many things your revenue management team can do to take a proactive stance in driving revenue and gaining market share in this difficult time.


For a more in-depth look at some of the topics addressed here, attend the HSMAI Revenue Management and Internet Marketing Strategy Conference on June 25th in Anaheim, California. Presented by HSMAI’s Revenue Management and Travel Internet Marketing Advisory Boards, the conference will feature the latest trends in two of the most important disciplines in sales and marketing today. Revenue optimization, pricing, e-commerce and Internet marketing topics will be explored by industry leaders in the context of today’s challenging economic environment. For more information about this conference and other opportunities to focus on driving revenue, visit .

About the HSMAI Revenue Management Advisory Board | The Revenue Management Advisory Board is responsible for providing leadership for HSMAI’s Revenue Management Special Interest Group (SIG). The SIG is advancing the revenue management discipline by being its leading source for education, best practices exchange, thought leadership and networking for professionals in the hospitality industry. It accomplishes this through a wide range of information sharing, networking and educational opportunities.

Members include:

  • Chair: Timothy Coleman, CRME, Consultant, The Coleman Company
  • Vice-Chair: Warren Jahn, Ph.D., Revenue Management Training Consultant, InterContinental Hotels Group
  • Elizabeth Cambra, CRME, Corporate Director, Revenue Optimization, Outrigger Hotels & Resorts
  • Michael Cohen, Director, Revenue Management, Hyatt Select Hotels Group
  • Jack Easdale, Corporate Director of Revenue Management, Gaylord Hotels
  • Bernard Ellis, CRME, Managing Director - Americas, IDeaS Revenue Optimization
  • Dan Kowalewski, Vice President Strategy & Service, Wyndham Hotel Group
  • Scott Roby, Vice President, Revenue Management, Tarsadia Hotels
  • Stowe Shoemaker, Associate Dean of Research, University of Houston
  • Miguel Solis, CHA, CRME, VP, Sr. Director Revenue Management, Hospitality Resource Group
  • Kristi White, CHSP, Director of Client Revenue Strategy, TravelCLICK

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