Why Now is the Time for Hotel Owners to Leverage Revenue Management

By Trevor Stuart-Hill President & Founder, Revenue Matters | November 09, 2014

The hotel industry, in virtually every global market, has recovered from the sharp downturn of 2008 and 2009. In the US market, during the first half of 2014, room demand was up 4.2% and room revenue was up 8.6%. Randy Smith of Smith Travel Research (STR) states, "The surge in demand we witnessed during the summer of 2014 even caught us by surprise…and it certainly is nice to be pleasantly surprised." So why is now a good time to harvest the value that revenue management can bring to the table? The answer relates to the cyclical nature of our business, combined with mounting pressure on profitability.

A Global View

According to Aron Gampel, vice president and deputy chief economist at Scotiabank, gross domestic product (GDP) globally is growing at approximately 3.4% on average. While this isn't dramatic by any stretch, it, along with very modest supply growth in most markets, has been enough to positively impact hospitality industry key performance indicators.

Of course, as would be expected, some regions are performing better than others. Brazil and the Eurozone, for example, are teetering on the brink of a recession, but according to Gample "still have some momentum potential through structural adjustments and economic stimulus initiatives." Manufacturing output in Germany (Europe's strongest economy) has slipped, France, UK and Netherlands economies are relatively stagnant and concern is mounting relative to a recessionary trend in Portugal, Italy, Greece and Spain.

Industry pundits, while hesitant to precisely predict the peak of the current cycle in the US, generally anticipate that we will experience a few more years of positive demand fundamentals before experiencing the inevitable downturn. US consumers and companies have become somewhat inoculated to threats of terrorism and news of pandemic outbreaks, so it is not anticipated that these will have a deep or sustainable effect on travel in the short term.

So, What's the Problem?

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Coming up in March 2019...

Human Resources: An Era of Transition

Traditionally, the human resource department administers five key areas within a hotel operation - compliance, compensation and benefits, organizational dynamics, selection and retention, and training and development. However, HR professionals are also presently involved in culture-building activities, as well as implementing new employee on-boarding practices and engagement initiatives. As a result, HR professionals have been elevated to senior leadership status, creating value and profit within their organization. Still, they continue to face some intractable issues, including a shrinking talent pool and the need to recruit top-notch employees who are empowered to provide outstanding customer service. In order to attract top-tier talent, one option is to take advantage of recruitment opportunities offered through colleges and universities, especially if they have a hospitality major. This pool of prospective employees is likely to be better educated and more enthusiastic than walk-in hires. Also, once hired, there could be additional training and development opportunities that stem from an association with a college or university. Continuing education courses, business conferences, seminars and online instruction - all can be a valuable source of employee development opportunities. In addition to meeting recruitment demands in the present, HR professionals must also be forward-thinking, anticipating the skills that will be needed in the future to meet guest expectations. One such skill that is becoming increasingly valued is “resilience”, the ability to “go with the flow” and not become overwhelmed by the disruptive influences  of change and reinvention. In an era of transition—new technologies, expanding markets, consolidation of brands and businesses, and modifications in people's values and lifestyles - the capacity to remain flexible, nimble and resilient is a valuable skill to possess. The March Hotel Business Review will examine some of the strategies that HR professionals are employing to ensure that their hotel operations continue to thrive.