Do we need a new revenue management toolkit for 2021?
— 18 experts shared their view
It is no longer news that the hotel industry has suffered the worst decline in history. The resulting business failures are starting to make the news and most industry experts agree that it will be several years until the industry returns to anywhere near the health it had in 2019. While the global picture is still very gloomy, we are starting to see isolated upticks in reservations. However, whether it is traveler's slowly adjusting to the "new normal", or just pent up leisure demand, the booking patterns are different than ever before. And just like the periods following previous disruptions, the most aggressive and innovative hotels will gobble up all of this trickle of new travelers, leaving most hotels still staring at the horizon, looking for signs of life. Although there will be few winners and mostly losers during the early stages of the recovery, most hoteliers are still working with the exact same set of tools they had, pre-pandemic, including over half of the industry that uses no dedicated revenue optimization technology whatsoever.
So, we ask our panel experts: 1) For a hotel just getting started implementing a revenue optimization process, what technology and services are most essential, and how should they be selected? or 2) For a hotel with an established revenue optimization culture, what new tools have emerged that could be game-changers?
COVID-19 has flipped the more traditionally relied upon revenue management practices upside down. The sudden unreliability of on-the-books (OTB) data and year-over-year (YOY) trends for forecasts has been one of the biggest shifts revenue managers have had to make in 2020. Not only has the day to day changed for revenue managers and hoteliers, we've seen that the entire industry has been disrupted. I believe the key for an industry recovery from this crisis is to drive decisions informed by actionable, high-quality data - specifically forward looking, top-of-funnel data sets.
So, what do I mean by forward looking data? For years, innovative industry leaders like Google, Amazon, Netflix and Apple (to name a few) have leveraged top of funnel data to better understand consumer behavior. Now with new pre-booking upper funnel data, the hospitality industry can better capture market demand. Upper funnel data consists of many factors, including the volume of searches for flights and hotels on search engines and OTAs offer insights into upcoming demand in a given market.
With the absence of bookings, these figures give revenue managers an idea of traveller intent. Length of stay (LOS) inquiries are similar in that they give hoteliers a heads up on the booking patterns they can expect. The geographical origin of demand for a given date should also be part of top-of-funnel data a hotel examines. It shows when certain source markets are most active. Finally, the competition's public pricing in the future as well as any knowledge of groups they've signed helps formulate a complete picture.
By analysing the above points, Revenue Managers and hoteliers are now able to anticipate future market behaviour and take targeted action to drive revenue and increase profitability. I'm convinced that Hoteliers who weigh pre-booking, upper-funnel data more heavily now than historical data will come out stronger because they will be able to bring together revenue and marketing strategies for greater market share.With travel restrictions changing daily/weekly/monthly, we'll continue to see demand fluctuations.
But with new forward looking data sets found in solutions like Market Insight, teams can establish a high-level strategy based on a complete, holistic picture of their market. Revenue Managers can now spot real-time market trends 365 days ahead, enabling them to budget plan and optimise both for the short and long-term.
For example, revenue managers can inform their strategies by understanding the potential demand for their hotel, e.g. what the most popular dates for travel are; how long guests are looking to stay, on average; and so much more. They can then compare these numbers to your competitors inside and outside of your market and your traditional comp set. This top-of-funnel data helps hoteliers better understand how they're positioned across various booking channels as compared to the lodging businesses they compete with.
With little pace and pickup visibility, hoteliers and Revenue Managers currently using standard or traditional tools and methods are struggling to determine an accurate forecast. But by starting with top-of-funnel data and then building a strategy around capturing those guests, optimising promotions and measuring conversion, hoteliers can ensure they're capturing their fair share of whatever demand might be coming into the market today, as well as the surge in demand when it arrives in 2021.