Looking Ahead to Revenue Management in 2020

By Brian Bolf VP of Revenue and Profit Optimization, Kokua Hospitality | October 22, 2017

From driving a vehicle to constructing a building, alignment is the foundation for ensuring stability ( competitive advantage ), obtaining optimal traction ( demand ), and safely handling capacity ( supply ). Despite revenue management remaining neutral in its pursuit of optimal performance, many other disciplines within the hotel organization remain fairly isolated and instead focus on departmental objectives. Although specialized areas of concentration, such as meeting group cross-over goals or improving customer satisfaction scores, can lead to improved hotel performance overall, establishing fundamental goals across all internal teams is the true bedrock to build upon. These goals must first be established by ownership and management, then shared through open and transparent communication to ensure each and every department’s objectives are aligned. The most successful organizations identify their vision, broadcast their everlasting devotion to their objective, and focus all of their efforts to achieving their goals, relentlessly. This model is what will lead to the perpetual success of a hotel.

Once the internal team is aligned and focused on an undivided mission, it is much more palatable to tackle bringing that vision to market. At this point, the hotel’s goals are actually measureable, hoteliers can be held accountable, and unified targets are identified. Establishing these target markets and guests is crucial. While that seems to be an obvious statement, over the last decade, this has been somewhat cast aside for a number of reasons. During and following the recession, hoteliers cast their marketing nets far and wide, attempting to satisfy the needs of all guests. Next up, we had an infinite amount of technological platforms become available providing new distribution pathways and allowing for the expansion of market segmentation, almost to the point of chaos. Rather than cast our net to the infinite depths available, success lies in utilizing resources to hone in on your targets. It is unlikely that a single hotel exists today that would serve as the property of choice for each and every traveler, so why try to satisfy that need?

With the specialization of room offerings, loyalty programs, amenity choices, social climates, and a host of other attributes, it is not a reasonable expectation that any one hotel can remain genuine and preferred by the entire market. Travelers are individuals expecting personalized service. They desire a customized, unique experience delivered to them in return for their booking commitment. Travelers are also faced with an overwhelming amount of hotel options that are continuously marketed to them, especially when compared to more limited travel options, such as car rentals and flight options. The deliberation process grows deeper as hotel bookings are known to be much more of an emotionally driven selection directed by personal preference. After all, the hotel serves as the traveler’s home away from home for the entire travel experience. In the end, a customer is seeking to meet his or her specific needs; hotels should be doing do the same, refocusing their external alignment to their respective audience and continually evaluating this match. It is a two way street.

Equally important to identifying unified targets is the need to establish a distinct and customized marketing mission for a property. The days of letting “location, location, location” rule the roost are nearing an end with the availability of improved transportation offerings like Lyft and Uber. Similarly, the majority of the legacy sort options for hotels are becoming less and less meaningful to many travelers, i.e. distance to city center, star rating, and even pricing ( to a certain degree ). Identifying who is the aligned, “right” guest today, tomorrow, and in the future is imperative for eternal success. No longer can marketing dollars be spent haphazardly across all distribution models, nor can efforts remain as generic as utilizing a single email bank to send quarterly, blanketed offers. It is time to recognize who truly is the target audience for a specific hotel and then allocate resources and funding to execute accordingly. As a recommendation, do not simply copy last year’s Sales and Marketing plan template and begin updating the pace and data fields. Take the necessary steps to ensure the internal and external goals are laser-aligned, then direct the necessary monies to execute as a collaborative team.

If it is recognized that a property is misaligned from several years of status quo performance, it may be necessary, or even easier, to start with a clean marketing slate. Beginning the process could feel disheartening or untimely, which can potentially stall successful implementation. Instead of foregoing another year of mediocre performance, it is better to tackle this fundamental task in manageable portions, such as quarterly or monthly targets. Before long, a full year will be established and can be built upon with the ambition to construct a five year dynamic program. This program can, and should be, continually reviewed and realigned as necessary. The only true challenge to successfully executing the internal and external alignment exercise is accepting that the process is perpetual and imperfect. Remaining flexible to adjust course as necessary will remain critical to remain a competitive leader.

With goals set, the team aligned, and marketing dollars allocated, the next course to take is digital execution. There are a variety of digital assets available to help meet customer expectations, beginning with ensuring proper availability across all identified distribution channels. In an effort to improve conversions, complement real-time availability with the richest of accessible content to showcase the property’s distinct and favorable strengths Highlight the most robust, high-resolution imagery, including full 360-degree HD video of all experiential areas of the hotel when possible. The confident display of customer affirmations and positive review scores is proven to be beneficial and further elevate pricing confidence, which will in turn promote consumer assurance. Although many business travelers continue to state that location and price are the most important factors in decision making, hotel photography and visuals rank at the top of the list for leisure travelers; a growing segment for many hotels.

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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.