Breaking Down Silos and Building Up Profit on the Quest for Total Revenue Management

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | December 16, 2018

Booby traps and secret passages, solving puzzles and venturing into the unknown. The greater the goal, the harder the journey will be, and the pitfalls are aplenty as we chase the things everybody wants, but few can find. Whether our quests are personal or professional, aren't we all seeking a holy grail of sorts?

Down-to-earth business leaders at hotels and resorts probably don't feel like they have much in common with someone like Indiana Jones or Lara Croft, but attaining total revenue management for their properties is an ambitious mission, and one that may be treacherous.

How many years has this been the "hot topic" of the hotel industry? Professor Sherri Kimes of Cornell, ever the adventurer blazing a trail for hospitality revenue management, was pushing studies on restaurant revenue management and total revenue management dating back to 2004 and even earlier. 10 years later, IDeaS Revenue Solutions launched its Function Space Revenue Management Solution to help hotels expand their revenue management strategies beyond guest rooms. Yet, here we are in 2018, and total revenue management is still an enigma, wrapped in a puzzle, hidden away somewhere in a dark back office at a few select hotels or in the minds of quirky innovators at the corporate offices.

Few hotel companies have achieved a successful holistic revenue management strategy. Most hotels still manage revenue generating business units in isolation. The good news is that, as silos come down, total revenue performance comes into view. Hotels must adopt the tools and best practices that bring together key business stakeholders from marketing, sales, meetings & events, food & beverage, revenue management and operations to unify goals and profit potential.

Indiana Jones always faced three main obstacles on his quests: traps & puzzles, other adventure seekers, and team members with other agendas. Despite being in a wildly different line of work, leaders at hotels and resorts often face these same challenges in trying to implement total revenue management.

Traps & Puzzles

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Social Media: Getting Personal

There Social media platforms have revolutionized the hotel industry. Popular sites such as Facebook, Twitter, Pinterest, Instagram, Snapchat, YouTube and Tumblr now account for 2.3 billion active users, and this phenomenon has forever transformed how businesses interact with consumers. Given that social media allows for two-way communication between businesses and consumers, the emphasis of any marketing strategy must be to positively and personally engage the customer, and there are innumerable ways to accomplish that goal. One popular strategy is to encourage hotel guests to create their own personal content - typically videos and photos -which can be shared via their personal social media networks, reaching a sizeable audience. In addition, geo-locational tags and brand hashtags can be embedded in such posts which allow them to be found via metadata searches, substantially enlarging their scope. Influencer marketing is another prevalent social media strategy. Some hotels are paying popular social media stars and bloggers to endorse their brand on social media platforms. These kinds of endorsements generally elicit a strong response because the influencers are perceived as being trustworthy by their followers, and because an influencer's followers are likely to share similar psychographic and demographic traits. Travel review sites have also become vitally important in reputation management. Travelers consistently use social media to express pleasure or frustration about their guest experiences, so it is essential that every review be attended to personally. Assuming the responsibility to address and correct customer service concerns quickly is a way to mitigate complaints and to build brand loyalty. Plus, whether reviews are favorable or unfavorable, they are a vital source of information to managers about a hotel's operational performance.  The February Hotel Business Review will document what some hotels are doing to effectively incorporate social media strategies into their businesses.