A Case Study on Commercial Cooperation to Generate Incremental Revenue

By Stefan Wolf Senior Vice President Revenue & Distribution Strategy, Onyx Hospitality Group | October 04, 2015

The act of providing accommodation to travelers has been around for a very long time. But whilst actively selling and marketing hotels and resorts have been going on for some time already, revenue management in that context started only recently. In addition to being a relatively new function in the industry, the scope of revenue management has changed and increased at an incredible speed. In the past, revenue management focused on optimizing RevPAR using the right time, with the right price, right product, for the right customer and with the right channel approach, in isolation of other functions. This is no longer sufficient today. The merging of the different commercial functions is a trend that has commenced and will see GOPPAR increasing even in the most competitive markets. This article will explore this "new" revenue management, from a case study perspective about the collaboration of different commercial disciplines.

In order to improve collaboration between various disciplines (Sales, Marketing, E-Commerce, Communication and Revenue Management) in our organization, we decided to come up with a project that would incorporate all functions of the commercial department. This would be an annual project that generates incremental revenues through the improved processes and whose outcomes can be measured. Coming up with a project that would allow everyone to contribute equally and drive revenues at the end of the day is easier said than done.
For traditional revenue management objectives such as restriction setting through yield management, pricing strategies or distribution channel evaluation, it might be challenging to involve all other commercial disciplines. Projects on ancillary revenue management to improve RevPATH (revenue per available treatment room hour) in our spas or RevPASH (revenue per available seat hour) in our restaurants would require inputs from the operations department, but they were not part of this project.

At the end, we decided to focus on the market segment packages, with the objective to drive incremental revenue by strengthening the reflection of our hallmarks in our brand packages.

The first meeting was all about getting to know each other better, particularly about our functions. Each of us gave a brief introduction about our roles in the organization, in response to the question, "How much interaction in daily life is there between revenue management and communication – sales and branding?" It was quite interesting to hear the different departmental objectives and to learn, for instance, that Sales is very occupancy-growth orientated, whilst E-commerce looks at revenue growth, but only from the online market segments. The focus of Communication, on the other hand, includes compelling storytelling, whilst Branding feels strongly about compliance. Meanwhile, Revenue Management objectives incorporate revenue growth from multi segments and multi channels, but not necessarily giving a lot of consideration on brand compliance or being aware of how communication could support such objectives.

A presentation about our hallmarks was then made by our brand expert, who delved on the questions, "What are hallmarks?", "Differentiated service experiences that will create a strong identity for the brand – who knew?" and "How familiar are the members of your commercial team with your brand hallmarks?" The knowledge and understanding of the hallmarks, and with it the brand DNA, helps to strengthen the concept.

We decided early on that whilst being a multi branded organization, we wanted to focus on a single brand for this project and agreed on our core brand Amari, with its three hallmarks – 'Amari Host', who is there to lend a helping hand to guests throughout their stay, 'Better Together', which is the philosophy by which the Amari hotels facilitate human connections through on property offerings and by extension of this idea we also connect our guests to the local scene through 'Destination Amari', a tried and test guide of where to go, where to eat and what to see in each of our destinations.

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Coming up in October 2018...

Revenue Management: Getting it Right

Revenue Management has evolved into an indispensable area of hotel operations, chiefly responsible for setting forecasting and pricing strategies. Because the profession is relatively new to the hotel and hospitality industries, a clear-cut definition of what exactly Hotel Revenue Management is has only recently emerged - Selling the Right Room to the Right Client at the Right Moment at the Right Price on the Right Distribution Channel with the best commission efficiency. Though the profession can be summed up in a single sentence, that doesn't mean it's easy. In fact, it's an incredibly complicated and complex endeavor, relying on mountains of data from a wide range of sources that must be analyzed and interpreted in order to formulate concrete pricing strategies. To accomplish this, Revenue Managers rely on an array of sophisticated technology systems and software tools that generate a multitude of reports that are central to effective decision-making. As valuable as these current technology systems are, much of the information that's collected is based on past historical trends and performance. What's new is the coming of big, data-driven, predictive software and analytics, which is likely to be a game-changer for Revenue Managers. The software has the capacity to analyze all the relevant data and predict occupancy levels and room rates, maximizing hotel profitability in the process. Another new trend that some larger hotel chains are embracing is an emphasis on Booking Direct. For Revenue Managers, this is another new channel with its own sales and costs that have to be figured into the mix. The October issue of the Hotel Business Review will address these developments and document how some leading hotels are executing their revenue management strategies.