Firing Up the Revenue Productivity Engine

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | July 22, 2018

As is covered in so many articles, blogs and news items out there today, we live in a world of change, and a lot of this change is driven by technology. We are being bombarded by the next best thing for the industry, including voice, IoT, analytics and many other buzzwords and topics. Certainly, advances in  technology open doors to new business opportunities, yet at the same time invite new challenges and costs associated with adapting your business to new ways of working. The approach you choose can propel you full steam ahead on a journey to revenue success or take you on a circuitous, side-tracking route that misses its target. Choosing the right path for your organization that aligns with your strategic objectives can be a daunting task.

With so many solutions available today promising to attract more guests, enticing them with your most profitable products to ensure their return, where does one begin? You could start with little tweaks at the edges of your current technology and processes and gradually work toward the core opportunities. Or you could set the bullseye right in the heart of the lifeblood of your organization: your revenues. If you follow the money, you'll find it comes from your guests-your livelihood. Being able to craft the right product assortment at the most compelling prices that keep them coming back will mean continuous revenues, even in tough times. I have touted the benefits of a guest-centric revenue strategy for a long time now, and this is amplified by the need for a revenue productivity engine that delivers results.

The concept of a revenue productivity engine begins with a theme lifted from W. Timothy Gallwey's best-selling book, The Inner Game of Tennis. Tennis is not only a game of endurance and skill, but also very much a game of psychology. The same can be said about creating your revenue productivity engine. It's imperative to understand your revenue psychology - making sure your revenue performance will equal your revenue potential, minus any interferences - before setting out on the journey. Operating in the here-and-now ensures you crystalize your goals throughout the organization. Using an analytics framework is the sure-fire way to instill a culture that operates on data proven by science and reduces overthinking which allows inconsistent judgment to cloud the vision.

A revenue productivity engine lets you shorten the distance between intuition and action and gets you to richer rewards faster, more economically, and with better buy-in and employee engagement along the way. Think of the revenue productivity engine as a navigation system on your J.O.U.R.N.E.Y. Let's deconstruct this analogy.

JUSTIFY – What is happening in your organization that is making change apparent? Perhaps it is from changes in market conditions, such as a rise or downturn in the economy, increased competition-including the pressures of alternative lodging choices or pressure to modernize to align with guest preferences and hospitality trends. Or, it's become obvious that internal processes are inefficient, outdated, laborious and causing you to lose talent. Maybe your technology is just covering the basics, only handling bookings and distribution, when you know you could be deriving more value from your data.
 
OPPORTUNITIES – Take a look outside of yourself and your organization. With fresh eyes, look for new segments that could be served or identify corporate change efforts that could align business units to work in greater harmony. Decide to make a positive change in your revenue strategy, ensuring you use modern technology to solve your business challenges. Create a realistic roadmap outlining your objectives and corresponding deliverables. Once your teams are on the same strategic path, you will have the commitment and resources you need to have a strong start to your journey.

UNDERSTAND – There are many roads you can take to reach your goals. Become familiar with the available choices and seek the technologies that align with your business objectives. Make analytics your best friend. Don't rely on hype or what could be. Rely instead on proven performance, using data in a validated and measurable way. Know that not all revenue management systems are created equally. A sophisticated solution will give you the foundation from which you can measure your pace along the journey, drawing from the vast analytical outcomes generated from your own data reserves and the market around you. With so many infinite data points to analyze and optimize, your technology should use this valuable information to understand the nuances of unconstrained demand, price and elasticity of demand and revenue-areas that cannot be effectively analyzed when you only skim the surface of available data-and help make more informed revenue strategy decisions.

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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.