Why Revenue Management and Marketing are Ideal Partners
By Marcela Trujillo Senior Revenue Consultant, Total Customized Revenue Management | June 30, 2019
Revenue and Marketing – the perfect data-driven pair. This dynamic duo makes a significant impact on hotel revenues – not only rooms revenue, but all revenue streams within hotels and resorts, including spa, golf, catering, banquets and other food and beverage outlets, and meeting space. Marketing and revenue teams that are aligned in goals and strategy garner significantly higher revenue contributions than siloed teams. While the disciplines are different, the focus on driving revenue for the benefit of the asset is the common thread that ties these partners together.
Looking at Both Sides Now
The term Revenue Management, as well as the job title of Revenue Manager, have long been associated with analytics, pricing, and revenue generation. At a basic level this still holds true, but the role and job description of a revenue professional has expanded far beyond this limited definition. An evolved Revenue Manager understands the importance of fusing marketing into the very core of the revenue strategy. At the same time, a Marketing professional understands that marketing strategy is now a key factor in Revenue Management.
Both Marketing and Revenue positions are defined by similar principles. Revenue delivers the right product to the right person at the right time at the right price. Marketing delivers the right message at the right time to the right person.
Messaging that aligns the product with a specific database can not only attract these direct consumers, but can lead the right consumers to the hotel – consumers who will increase average rate but will also add ancillary spend. By targeting that business traveler who loves to take advantage of room service to dine in-room after a long day, or the traveler that is looking for an unforgettable experience, marketing teams offer each guest exactly what they are looking for during their stay.
The design and navigation within the property website should be purposefully laid out to immediately engage the consumer and to incentivize them to book directly with the hotel. A solid partnership between Revenue and Marketing, crafting enticing offers with the correct pricing, whether on the property's website or a banner ad, will increase the likelihood of the consumer confirming their reservation.
Coming into Alignment
Though it may seem like a challenge to align the Marketing and Revenue teams, it can actually be as simple as working with the hotel or corporate office to restructure conventional roles – a great start to incorporating the ever-expanding practice of uniting Marketing, Revenue and Sales into one cohesive Revenue Team. The common goal of this now powerful team will be to increase revenue through higher booking-engine conversion. This will not only enhance overall hotel performance, but will also be the cohesive connection in the team.
Making sure the teams attend and interact in each other's departmental meetings is paramount to the success of revenue and marketing strategies. Additionally, each should be included in distribution lists for daily and weekly reporting.
The way to begin working cohesively is to dive into each other's roles to gain an understanding of what each one does on a day-to-day basis. The partnership will evolve into an effective revenue-driving team in times of need and in times of high demand. Setting up the process and establishing a revenue and marketing calendar of strategies and timelines will lay out the road map to great RevPAR gains. The goal is not only to impact hotel performance, but also to stay ahead of the competition by anticipating need times and managing higher ADR in busy seasons. When all parties feel invested in a common goal, the team will ultimately come together to ensure that these goals are realized.
Revenue and Marketing leaders need to work together to best guide the generation of revenue for an asset. Revenue Managers can become comfortable in their zone of numbers and their routines of pricing and reporting. Marketing Managers can also get lost in their own world – SEO, PPC, Social Media, targeting public relations opportunities, and developing and maintaining brand messaging and standards, including online presence, website design, and brand-conscious collateral. By ensuring that Revenue Teams and Marketing Teams have the common goal of attracting consumers to make direct reservations with the hotel, both departments will no longer look only at how to bring in revenues, but they will explore how these revenues can be generated in the most cost-effective way.
As properties look at channel production and overall segmentation, direct channels are most commonly the smallest percentage of revenue contribution. OTA, third party lead generators, and consortia all carry a commission and deep margins. Some of these are obviously better than others in that consortia will net a higher average rate than a third-party booking, however, it is still not as beneficial as having direct bookings, where 100% of the revenue flows to the bottom line.
The Marketing Manager can help the Revenue Team drive rate and attract direct users with consumer engagement. Revenue Managers can help the Marketing Team understand seasonality, need dates, and compressed dates in order to align overall strategy.
Revenue can assist Marketing with consumer information, geographical targets, and analytics on conversions resulting from various spending. When Marketing Teams can cross over into the world of revenue to understand how, why, and where marketing efforts are affecting the revenue process, and Revenue comprehends the world that Marketing can open up to them, magic happens.
It can be challenging for Marketing to show an ROI on all of the work that they do, since it is not directly converted into tangible revenues. Revenue can assist the Marketing Team in defending the need to invest in various marketing initiatives by gathering an immeasurable amount of data to benefit the marketing side in analyzing and assessing the performance of marketing strategies.
It can be an easier decision to entrust brand awareness and distribution to third parties who already have a vast audience that is generally not reachable without them. They already have a million users, so why not rely on them? Though there is no initial cost to joining various OTAs, this is the least cost-efficient channel to work with. Therefore, although they can bring in revenue, the property is automatically losing between 18-25% in commission for every dollar generated – a high price to pay for a consumer that is not necessarily the best match for the property.
By investing in marketing initiatives from PPC, website development, and digital campaigns, the hotel can see a shift from OTA to direct bookings. If these initiatives are supported by and aligned with revenue strategy, it is possible to estimate an ROI based on the collaborative effort of these teams. Once these strategies are deployed for not just short-term but also long-term dates, it will become evident that direct revenues are on the rise.
Revenue Teams can make some marketing strategies trackable by providing direct booking links with unique rate codes. These links can be used in various points of sale – eblasts, a social media push on Facebook or Instagram, and of course on the hotel booking engine. The resulting revenues are then measurable with rate code production directly associated to the specific revenue and marketing tactic. Similarly, the coding that can be done behind the scenes on websites to drive consumers to book direct continues to develop.
Revenue Teams can also work with the Marketing Team on digital initiatives. It is crucial for Revenue Teams to understand the funnel or the path of the consumer when visiting websites. Gaining knowledge on consumer behavior while visiting a property's website is vital to increasing the revenues from the booking engine. This can be drilled down to discover when the consumer leaves the website or booking engine, leading to a strategy of re-targeting popups or emails to re-engage the consumer to book direct. These offers can also be trackable by both marketing reporting as well as rate codes specific to these various campaigns.
In Tandem Toward a Common Vision
Revenue Management and Marketing are certainly ideal partners as these areas continue to evolve. This evolution inevitably ties these disciplines together as Revenue shifts to more marketing-based strategies that are proven to shift segmentation, increase ADR, and increase profitability. The biggest win is that the results that are driven by Revenue and Marketing managers working in tandem will be in line with the vision of management and ownership. At the end of the day, it is the gains in profitability that speak volumes in supporting revenue and marketing management techniques.
Hotel and Resort properties – redefine what the true Revenue Team is on property. It is worth the investment in knowledgeable and innovative leaders who understand that they do not work in silos any longer. Employing forward-thinking experts in their fields is how a property can develop their revenue strategy as an executive team. It is certainly worth aligning overall budget and incentive goals for revenue driving leaders. This will incentivize the teams to work together to reach the objectives laid out by both management and ownership.
Observing a synergetic team, one that is driven to provide the best mix of business while increasing direct and ancillary revenue, will bring owners and managers alike gratitude for the partnership developed between Revenue Management and Marketing – an ideal alignment of strategy and profession.
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