Beyond Room Revenue - Revenue Management opportunities for 2021 and beyond
— 23 experts shared their view
COVID has hit the global hotel industry hard. But as with every crisis, new opportunities surface. During the financial crisis of 2008/09, we saw Airbnb and Uber emerge.
Many revenue-generating ideas were born over the past year. From staycation and workation to renting out equipment and even offering outsourced services like housekeeping. Hoteliers have been creative in finding ways to keeping their business afloat.
What was born out of a need for survival might lead to a more permanent shift in a hotel's business model.
The idea of non-room revenue is nothing new and even pre-pandemic was something more and more hotels embraced. F&B or MICE revenue management is still in its infancy for the overall industry but terms like Total RevPAR have evolved from buzzword to serious KPI.
Is now the time to look at non-room, ancillary revenue? Where are the opportunities?
Managing Principal, ZS
Industry has been talking about moving beyond rooms revenue for decades. Concepts like Total Hotel Revenue Management have been extensively talked about, but not systematically acted upon. The pandemic forced operators to think very differently about the building, moving away from defined space usage, to a more flexible, need-based model. This forced innovation, and its (relative) success in generating revenue in difficult circumstances, will hopefully be the motivation to stop talking and start acting!
However, for this to become a true shift, the barriers that held industry back from achieving the vision pre-pandemic will still need to be addressed. Incentives will need to be realigned away from narrow function based goals like room nights generated, to more broad asset based goals like total profit or total revenue. Metrics will need to be developed that reflect these new goals. Access to more holistic data will be required, so that each department or function is better able to understand the impact of their decisions on overall asset performance. And finally, technology will need to evolve to a model that will allow hotels to price and sell the space more flexibly.
Overcoming these barriers hasn't gotten any easier, but hopefully the short term demonstration of the art of the possible will provide inspiration to continue momentum. I remain hopeful that this innovation will continue, but it is up to the entire industry to keep the pressure on to ensure that supporting systems and processes align to support it.