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?
Program Director, Master’s Degree in Hospitality Strategy and Digital Transformation at Les Roches Global Hospitality Education
We have all heard the proverb “Necessity is the mother of invention”, but in today's post-Covid, hashtag world, #DistressDrivesInnovation might be more to the point. This is clearly the case for hotel revenue optimization tech. I am proud to say that after attending the first two days of the Hospitality Marketplace Online earlier this week, where more than twenty of the industry's leading revenue management and distribution technology providers came together in an online speed-dating format to show off their latest stuff, it is clear that our industry's brightest have taken advantage of the forced downtime to re-evaluate and often completely redesign their approach to helping hotels make more money.
There were common themes, like: “…since COVID, all of your history is garbage except last week's, maybe…” and thus the need to decrease reliance on history and incorporate forward-looking data, but there are many different approaches. Here are some of my most important take-aways:
For the newbie to revenue optimization, the first consideration should always be the complexity of your hotel and your existing business processes. Starting with your PMS (if it is not cloud-based… come on!), it is critical to avoid functionality and processes that you do not need or do not have the manpower to support. Many smaller hotel operators have been wooed by the prospects of huge upside from a complicated system, only to have 50% of its functionality lost to “skill atrophy” after the first cycle of turnover in the hotel.
Some of the solutions presented are perfect for any size hotel, like channel managers, that automate existing, time-consuming processes. Others specifically target the small hotel operator, by consolidating data from a wide variety of sources using cool visualizations or brief daily “hot date” emails that allow the user to digest the most important information very quickly, without requiring detailed analysis.
Newbies should also get some help assembling the right combination of tools. The current environment is very fragmented, which means lots of innovative solutions and continual downward pressure on cost, but it also makes the task of assembling the optimal technology stack similar to buying a car by going to an auto parts store with a very long list. If you do it right, you will get the perfectly matched vehicle for a good price, but how many of us would even know where to start? DON'T RELY ON THE VENDORS. There are revenue management consultants and people dedicated specifically to aggregating the technology who can help.
For those who are already in the game, emphasizing forward-looking market data (and letting go of trying to make sense of your history) is a must. Several providers are combining internal hotel and market data with external data like flight and competitor searches to help hotels highlight opportunities while there is still time to take advantage of them. And be sure that your existing channel manager is constantly looking to connect you with new distribution partners. Consumer booking behavior has changed drastically. Someone is going to figure that out soon and you'll need to be able to connect to it to take advantage of it.