How can hotels correctly calculate their costs per acquisition?
— 9 experts shared their view
Cost optimization and profitability: Cost-optimization has always been a central notion in revenue management. That being said, the pandemic brought renewed attention to the topic. Today, more than ever, proper cost control is crucial to navigate these difficult waters and prepare for the "new normal." Whether we like it or not, every single decision revenue managers take on a daily basis, has an impact on the bottom line, meaning that revenue management is not only about optimizing the revenue streams, but also about increasing profitability. Favoring the distribution channels with the highest profit has become imperative in our industry. But how can hotels calculate the cost-per-acquisition of each channel? What should be taken into consideration? And how can this analysis influence one's distribution decisions?
Hospitality Technology and Revenue Management consultant
While cost optimization (or rather, profit measurement in general) is crucial for hotel operators, just like for any other business, our current reality is that hoteliers are offered a very minimal amount of technical functionality that would make profit maximization a user-friendly task.
We need better tools that would allow the industry as a whole to track or forecast total revenue, or manage and optimize expenses, or easily benchmark performance against each other in a standardized manner, for different regions, sizes or types of hotel properties.
Traditional limitation of current systems (as well as integrations and data flows between those systems) to only concentrate on the top line room revenue also contributes to the problem of different departments working in silos as they don't use the same metrics to assess their performance and often contradict each other in their initiatives. We are lacking tools that would help different stakeholders understand what actions need to be taken in each department that will ultimately result in profit maximization.
The industry needs to generate investment interest in this area.
We can learn from the existing tools that have been introduced to help target profit maximization but there's still a lot of room for improvement in our tech stack in order to allow hotel operators to build optimal strategy that maximizes overall profit and not just top-line room revenue.
More integrations and partnerships need to happen to ensure reliable and consistent flow of data between key operating and reporting systems in the hospitality ecosystem.