How to manage revenue in a pent-up demand era?
— 20 experts shared their view
Considering the unprecedented global travel disruption and performance declines we've endured; hoteliers finally have something to look forward to. The world has spent the last 18 months dreaming about travel, but not actually going anywhere. Increasing vaccination rates combined with relaxed travel restrictions are bringing travel back… with a vengeance. Most agree that the worst is behind us.
But so far, this pent-up demand or "revenge" travel is different. Driven almost entirely by domestic leisure demand, the patterns have changed. Some premium locations are already exceeding 2019 pre-COVID levels, while hotels just a few blocks away are still struggling. Hotels that targeted the corporate, international, or group segments are reinventing themselves, with mixed success.
Considering the unique nature of the recovery, what should hoteliers do to optimize and manage COVID's pent-up demand?
1) The most important is to be realistic about what type of Demand there is out there. That means gathering data from any possible source. It can range from sophisticated areas such as forward-looking data Intelligence to simply speaking with corporate bookers. When segments and channels are identified they need to be surgically targetted with a clear value prop. Looking at profitability from the commercial point of view will be super important. What is my cost of acquisition, total customer spend, and profitability? Is it worth it? how much can I spend?
2) Secondly, I would say demand will be patchy. One day full, the other empty. So it will be important to have rock-solid predictions. This is important for 2 reasons. one to optimize revenue but secondly to manage staff levels and productivity. Welcome to the era of micro-optimization and connecting the dots across more disciplines: Commercial - Operations - Finance.
3) Third and last I would say is to be creative and assess which new demand can be generated. Again here it is important to be realistic. A run-of-the-mill hotel in an industrial area will not make a good co-working space. Digital nomads are budget conscious etc Also, it is important to be realistic when addressing different demand sources might require capital expenditure which can be difficult at this time.