Hotel Revenue Management: the Roller Coaster Ride of Covid-19 Changes
By Anil Bilgihan Associate Professor, Florida Atlantic University | October 03, 2021
This article was co-authored by Peter Ricci, Clinical Associate Professor, Hospitality & Tourism Management, FAU
Dealing with uncertainty made hotel revenue management more challenging during the COVID-19 pandemic to say the least. Ironically, the majority of franchisors, management companies, and independent ownership groups were more likely to maintain revenue management talent over sales and marketing talent during the height of the pandemic, while revenues were simultaneously at their least.
At first, this seemed counterintuitive to the authors. Without revenues to manage, why bother?
We set out to chat with as many revenue managers as we could for the purpose of this article. Over thirty responded to our request to chat at various levels of depth. One common theme was that the majority seemed fearful to go out on a limb as no one is yet quite sure of the enduring impacts of the pandemic. And, another common theme, quite different from pre-COVID-19 times, was the request for anonymity in many cases. Here, we will attempt to summarize the overarching comments.
Several regional revenue managers for major hotel franchisors (speaking with the condition of anonymity) indicated that their goal during the pandemic was to make sure they did not rush to discount and kept rate integrity among the incoming bookings as strongly as they could. Faced with limited operations in some markets and outright hotel closures in others, ownership/leadership insisted throughout the pandemic to keep revenue management professionals on board.
The authors got the impression that revenue talent was kept on board to maximize the small stream to help pay the bills. One revenue manager in this group stated, "The speed at which had to operate, analyze, predict, change, and forecast was incredibly fast. At the height of the pandemic, my goal was to help pay the mortgage and keep the lights on."
Another theme among respondents is that history is not repeating itself. The historical pre-COVID-19-data ceased to provide the basis to draw a roadmap, resulting in revenue managers investigating different data points and approaching pricing with the most creatively in recent memory. According to David Viteri, owner of Viteri Marketing, "The most creative revenue strategies were deployed across hotels during the pandemic – hotels of every size. These included focused short-term price structures for those able to travel, relationship building, flexibility, and ongoing almost 24/7 monitoring of local and regional changes."