Revenue Managers Use Resources In Downturn

The nation's credit crunch, coupled with signals of an economic downturn, fuels forecasts that segments of the lodging industry face a slowdown in occupancy and revenue per available room.

As crowds dwindle and properties devise ways to keep income flowing, revenue managers inevitably will consider adjusting their prices to stimulate demand. Understandably, it's the first instinct—but it's also a mistake. My advice: Wait and explore other strategies first.

Even where demand has flattened or declined, many properties possess onsite amenities already appealing to travelers. Consider what these are and create bundles that might lure a consumer, especially one who may be on the fence waiting for something that tips him or her toward making the trip. That could be something as simple as providing complimentary parking or credits for food and beverage. If your property has a spa, golf course or tennis courts, guests may be tempted to make reservations if they receive credits for add-ons.

For limited-service properties, revenue managers should consider partnerships with local coffee shops, breakfast restaurants or other businesses. A $10-$20 gift card to nearby establishments that can be used during a patron's stay might be just the thing that causes them to call your reservations number.

Keeping the income stream flowing during a sluggish economy can't fall solely to the revenue manager. The responsibility rests with the entire revenue team, including operations, sales and marketing. A tight economy should motivate properties to compete for every prospect and request for proposal with a coordinated strategy. Everyone at the table should offer perspectives that feed into the strategy and be prepared to execute. Revenue managers can't sell something they can't operate. That great value-add for customers won't attract attention unless the marketing team is getting the word out. The sales force should use the Internet and other methods to track what competitors are doing—not only in its immediate market, but also in destinations far away.

So, when should you assess? That will vary by your booking windows. For some destinations it could be six months out, for others, 18 months. The idea is to know what the future holds before it happens. In the event of a group reduction or cancellation, the revenue team should develop a strategy to identify the market segment best suited to book the new inventory.

Despite the current economic climate, properties will be able to generate revenue with proper planning that extends beyond price adjustments.

Elizabeth P. Cambra is the chair of the HSMAI Revenue Management Special Interest Group ( ) and the corporate director of pricing and revenue optimization for Outrigger Hotels & Resorts.

Article appeared originally in Hotel & Motel Management