The Game-Changing Rules Around Revenue Optimization
By John Smallwood, CEO of Travel Outlook
Maximizing Revenue While Adhering to New Service Standards
In such challenging times, it's tempting to drop room rates to stimulate bookings. But for many travelers, the priority will not be price, but safety. A $100 discount on the room rate is unlikely to tempt the decision-making of many but could end up harming a hotel's profitability if there's very little demand to drive in the first place.
Time to adjust revenue strategies
Up until recently, Revenue Managers could forecast demand based on historical data, such as monthly booking patterns and seasonal trends. But for obvious reasons, this kind of data is no longer much help.
As such, Revenue Managers need to carefully monitor automated recommendations from RM systems that might attempt to drive demand by lowering rates — something that could lead to costly pricing errors that hotels can ill afford right now.
Doug Kennedy, President of the Kennedy Training Network, notes that accurate forecasting will prove incredibly complex as the market flickers back into life.
"The market has changed in a way that our forecasting tools and technologies can't discern. So there has to be less reliance on automation and more emphasis on collaboration and discussion between departments. Revenue Managers and Sales need to be in constant communication to help monitor the market, identify where demand is picking up, and create effective pricing initiatives."
Marketing to a new mindset
Marketing teams will also need to rethink their approach. Not just in terms of how much to invest and on what platforms, but how the message itself matches the mindset of travelers.
According to Emily Bowen, Adjunct Professor and Director of Revenue, Reservations and Channel Distribution at Penn State University, it's especially vital to consider the emotional context behind current decision-making. While hotels will be eager to push bookings wherever possible, this needs to be done in the right way, and at the right time.
"Prior to the pandemic, the hotel space was all about booking direct, limited-time deals, and competitive discounting. It often involved promoting scarcity and urgency-based messaging. But we need to acknowledge a shift in the mindset of the typical traveler."
This shift in mindset involves a sense of hesitancy about traveling, which comes with a new set of priorities, concerns, and expectations. For Bowen, a hotel's messaging needs to be sensitive to how travelers are researching and browsing differently.
"As a travel shopper, do I want to hear about the cleaning and safety measures taking place at your hotel? Because my reasons for abandoning might be down to feeling unsure about whether I should even be taking a trip right now. A hotel could potentially alienate segments of its audience who are cautiously exploring their options if their message feels tonally off."
Of course, not all hotels have the luxury of having a marketing budget at present. If that's the case for your property, social media can play an especially important role in keeping your brand top-of-mind and offering the latest travel information.
For instance, inform your followers about which destination attractions are open, how you're enforcing social distancing, mentioning if local restrictions are in place, and what your cancelation policy is.
If you can be transparent, honest, and open up a dialogue with your followers, you'll help to cement trust in your hotel brand when it matters most.
Flexible ways of working
Accurate forecasting also has implications on staffing levels. Many hotels have laid off and/or placed large numbers of employees on furlough. When is the right time to bring people back? Revenue Managers and Sales will need to work closely to ensure staffing levels meet expected demand.
For John Smallwood, CEO of Travel Outlook, hotels must rethink traditional employee roles and consider the associated costs of operating in the current climate.
"When hotels bring staff back, they need to work out how to keep them socially distanced, minimizing contact time, and providing enough personal protective equipment. So, there's got to be a methodical approach to how people return to work, because overstaffing a property can result in wasted time and expense."
Along with upskilling employees to perform other duties, Smallwood believes outsourcing can help reduce costs and ease practical complications — including the use of a well-trained call center team.
"Voice agents can be a key part of the solution as hotels find a new way of working. If on-site staff have to take on additional responsibilities, voice agents can ensure sales calls are always picked up, help drive revenue, and relieve the burden on a busy hotel team."
Reimagining the hotel space
Finally, there's the question of how to normalize new standards and potentially re-fit a hotel's business. How can a property open spaces (such as lobby areas, meeting rooms, gyms, bars, and restaurants) that ensure social distancing while remaining profitable?
While undoubtedly a challenge, some properties are finding creative ways to service guests with new experiences, ranging from virtual spa treatments and outdoor pop-up bars to revamped in-room dining and cocktail-making outside the guest's room.
Other hotels are developing additional revenue streams by focusing on new markets. For example, Red Roof is providing office space replacement for people who want to work remotely and escape the trappings of their own homes with its "Work Under Our Roof" program.
While there's no denying the challenges are great, creative thinking and a willingness to embrace new ways of working can help hotels start on the path to recovery.
For additional information, visit www.traveloutlook.com/openvirtually, or contact:
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