Integrating Revenue Management, Marketing Data and Analytics

By Kelly McGuire Vice President, Advanced Analytics, Wyndham Destination Network | November 02, 2014

It is not news to hoteliers that there are advantages to revenue management and marketing working more closely together. The better synchronized these two activities are, the more profitable the enterprise becomes. As an industry, we've been talking about opportunities in this area for a while, and recently with the advent of digital marketing and personalization initiatives, the need has grown for these groups to work more closely together. In this article, I'll talk about emerging opportunities to synchronize demand generation and demand control activities with the goal of profitably increasing guest engagement and guest conversion.

Intelligent Demand Management

In past discussions, I have outlined the kinds of data and analytic results that should be shared between marketing and revenue management. For example, revenue management should provide demand patterns and prevailing rates to marketing so that campaigns can be placed in need periods, and pricing does not dilute revenue. Marketing needs to let revenue management know when campaigns are running and what the expected lift will be so that revenue management can adjust forecasts accordingly. This ensures that promotional rates stay available, and pricing reflects where the demand is really coming from. Both groups need access to this information when they need it and in the systems they use every day. They should not have to wait for the next weekly meeting.

After this simple data sharing step, I have advocated that this kind of data can be incorporated into each departments analytics, so the RM forecasts automatically account for demand from promotions, and the marketing systems automatically predict what campaigns should be deployed to which segments to stimulate the "right" demand to fill the need. I have called this vision of synchronized decision making across pricing, revenue management, campaign optimization and customer relationship management "intelligent demand management". It should no longer be about one group generating demand and one group controlling demand each in isolation. Rather, both teams manage demand through the funnel, ensuring that decisions made at the points where demand is generated or controlled are synchronized to what is most profitable for the hotel as a whole, not what is likely to meet a departmental goal or incentive.

I have always recognized that this vision of intelligent demand management was not just a technology strategy. While technology could be the glue that binds these departments together, in most cases, achieving this level of synchronized decision making requires organizational and culture change as well. Reporting structures may need to be adjusted and incentives realigned. Departments will need to spend time to understand how each other work, and to develop a common business language. Then automated reporting and analytics can support a shared vision and strategy.

Since I started writing about intelligent demand management, the industry has made a lot of progress. I have seen many examples of companies adjusting their organizational structure to have marketing and revenue management reporting up into a common VP or SVP. I hear stories about sharing reports across divisional lines, and adjusting marketing plans based on demand patterns. This is really exciting to me because the market has certainly not slowed down to allow us to catch up! In fact, new initiatives across the hospitality industry are making a tighter relationship between marketing and revenue management even more critical.

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The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.