Going After the Right Guest: Combining Marketing and Revenue Management for Better Guest Outcomes
By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | March 11, 2012
Co-authored by Kelly A. McGuire, Executive Director, Hospitality and Travel Global Practice at SAS Institute, and Nick Curcuru, Lead Consultant – Americas, IDeaS Revenue Solutions
As an industry, the hotel sector has become good at proactively chasing bad business. Every time you turn around it seems that there is another opportunity to dump inventory at drastically reduced rates. Recent economic pressures made it even more tempting to unload distressed inventory through channels some hoteliers may never have considered four years ago. As demand recovers though, hoteliers now have an opportunity to change their mentality and cultivate high value segments and improve revenue performance. However, in order to properly target the right guest and attract them to the hotel at the right price, it is vital that a hotel's revenue management and marketing departments collaborate and work closely together.
The idea of integrating decisions from the revenue management and marketing departments is not new. Most hotels have organized weekly or monthly meetings to bring both sides to the table. However, in this new environment, weekly is not enough. Revenue managers and marketers need real time access to the right information for efficient decision making. Instead of bringing spreadsheets to weekly meetings to trade routine information, revenue managers and marketers need to be able to access the information they need, when they need it, in the systems they use every day, and in an accessible format. When routine decision making is automated, revenue managers and marketers can better spend the time in weekly meetings working together to address events that require more rigorous analysis and carefully planned strategy.
While revenue management traditionally works with demand at the market segment level, marketing cultivates the relationship with the consumer more directly. Marketing is responsible for generating demand, while revenue management controls it through profitable pricing strategies. These may seem like opposing responsibilities but when goals are synchronized, there are natural synergies. Revenue management knows where holes in demand are, and marketing knows the consumer preferences to target the right customers to fill those holes. Together the departments can move the hotel away from out-of-synch demand generation and towards proactively targeting the right type of guest.
Importantly, hotels whose marketing and revenue management departments collaborate have reported revenue increases of more than six per cent, increased market share, and increased demand for shoulder and low-demand periods. In order to understand how and why this works, it's important to examine each department's strengths and how the departments can help each other – and ultimately the hotel – enhance profitability.
Marketers want the information revenue managers have