Better Pricing Decisions Leveraging Marketing Data and Analytics
By Kelly McGuire Vice President, Advanced Analytics, Wyndham Destination Network | May 22, 2011
Revenue management is responsible for demand control, including setting rate and availability controls. They own the rooms inventory and hold information about price sensitivity and demand by property, market segment, date and rates. They know when and where demand is expected and needed. Marketing, on the other hand, is responsible for demand generation including campaign strategies, guest relationship management and loyalty programs. They own the guest, and hold information about preferences, purchase behavior and guest value. They know who the guest is and what offers they are most likely to respond to.
So, when you think about it, revenue management and marketing really are two sides of the same coin. Each department holds key pieces of information about demand that, when integrated, result in critical insight about demand patterns, product preferences and purchase behavior. Unfortunately, employees in these two closely related functions do not always work well together. Misaligned goals and poor communication result in situations where marketers, with a goal of generating demand, sends out discount promotions that dilute rates during peak periods. While revenue managers, trying to maximize revenue, close off promotional rates meant to encourage stays from the most loyal guests. These conflicting activities damage revenue performance and guest relationships.
During the recent economic downturn, traditional playbooks were thrown out of the window. Without excess demand to control, all departments in the hotel were forced towards demand generation, working closely to understand where demand could be sourced and building pricing strategies designed to encourage bookings. Weekly demand planning meetings, where marketers and revenue managers sit down to strategize, have become the norm for many firms. Departments that used to be siloed have been reorganized to report through the same Director or VP, resulting in better alignment of responsibilities and goals.
Now that we are out of the downturn and preparing for recovery, lessons learned during the downturn need not be forgotten. As the role of the revenue manager is evolving from tactical inventory management to a more strategic demand management focus, marketing data and analytics become even more critical to maximizing revenue while staying focused on maintaining price position within the market. These departments that often lead the charge to create an analytics culture must continue to share key information and move towards an automated, integrated environment.
Evolving Revenue Management Analytics
Revenue management has traditionally been less concerned about who the individual guest is, but more concerned about demand, in general, for the hotel rooms. Careful analysis of demand patterns by location, date, room type, length of stay, market segment, channel, and rate, as well as competitor price and positioning provides a comprehensive view of demand.
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