How Revenue Managers Win Using Group Data and Technology

By Jim Vandevender Chief Marketing Officer, Knowland | October 01, 2017

Revenue Management Evolution

As hospitality revenue management began to take root, most actions were highly reactive in nature. Pricing and inventory controls, for example, were two of the more tactical approaches used to respond to existing demand. The key priority was basically to raise or lower rates. Minimum night stay requirements came into the mix as hotels realized how to maximize the room revenue potential for any given property. Predicting demand for both transient and group was a distant goal. In the early days when it was still called “yield management,” the transient segment saw the most immediate gains from elementary practices, mainly due to the fact that the discipline stemmed from the work airlines had been doing in the area previous to the world of hospitality embracing these ideals.

As the process for optimizing transient demand and revenue became more complicated, the need for and development of deeper levels of data to further hone forecasts increased. Hotel management teams have become savvier at collecting and analyzing available data on guests’ decisions of where and when to book a room. The tremendous data on the transient segment includes everything from web statistics as customers shop for rooms to historical data and statistics from a hotel’s website, as well as input from online travel agents. There is even data on review sites and social media regarding guests’ comments about particular brands or properties. There is data on booking pace that is integral now to accurate forecasting. Every change in any category affects demand for a hotel room. Revenue management sorts through that data to fill the most rooms possible and sell those rooms at the highest conceivable rate, driving higher levels of performance.

Hotel brands and management companies, as well as outside vendors, have developed and heavily invested in a wide array of refined software and revenue-management systems. These systems, however, are focused primarily on pricing; and while transient revenue management has applied and benefited from various forms of market data, group revenue management has been operating in a more opaque competitive marketplace.

The Shift Toward Proactive Group Segment Focus

Groups and meetings are a key component of revenue production for many hotels. Achieving a balance between earlier booking group demand and later booking transient demand is critical for realizing optimal revenue outcomes. Managing the group side of this equation is particularly challenging. Group demand is captured either from inbound RFPs or from outbound sales activities. Picking the right business from the torrent of RFPs coming to a hotel, and pricing that business right, requires foresight about other potential opportunities that might arrive later.

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Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.