Bridging the Gap Between Marketing and Revenue Teams
By Michael McCartan Managing Director Europe, the Middle East, and Africa, Duetto | June 23, 2019
As hoteliers throughout the industry continue to realize the importance of the revenue team's role to the success of the hotel overall, revenue management as a discipline continues to rapidly evolve.
Revenue managers and their teams are no longer simply managing rates. Today, they're tasked with collecting and analyzing actionable data about your hotel and forecasting demand to not only influence pricing but inform all revenue and profit-related decisions across the hotel.
Revenue strategists today have much broader skill sets. When working collaboratively with the marketing team, the two departments are afforded more creativity to be disruptive and innovative, measuring what strategies translate into more dynamic results.
In today's hotel, the director of revenue management or revenue team cannot operate in a silo separate from other departments. Instead, the revenue team must work hand-in-hand with marketing, sales and operations. Each of these departments touches revenue in their own way. The revenue strategist should be doing much more than pricing; understanding a demand forecast will help each of these departments better prepare for the future and make more profitable business decisions. While revenue managers are focused on predicting consumer behavior and optimizing the room availability and price to maximize revenue growth, marketing and sales teams can use this powerful new information to make their own smarter, more profitable business decisions.
Perhaps the most important gap to bridge is the one that often sits between the revenue and marketing departments. Revenue and marketing teams should work together on a daily basis and it helps tremendously when the two departments report up to the same superior.
For example, marketing teams must be informed of future low-demand days so they can run promotions to spur demand at the right times. If teams aren't aligned and working toward a common goal, marketing may be incentivized to fill a set amount of rooms, leading to discounted promotions going out during a high-demand period.
Unfortunately, marketing and revenue have traditionally not been aligned and often do not understand each other's needs. With a common language, the two functions can execute together and ultimately determine strategies to the benefit of the hotel.
Revenue managers have always been tasked with compiling the data, forecasting demand and then making pricing recommendations. Marketers work to create the demand and then help convert it into sales. There are numerous examples of ways the two disciplines can better work together.
Aligning Revenue, Marketing and Sales
As technology improves, revenue managers continue to find new sources of data, like social media, guest reviews and even web shopping information, which could provide marketers invaluable information. Online marketers could track and analyze what offers and prices on the website have been booked, or not, and at what times and at what price points.
This is powerful new information the marketing department could be taking advantage of when working in unison with revenue management.
Systems and strategies should also be integrated with loyalty tools and campaign management systems to help dynamically yield loyalty rates and offers. Why does an offer always have to be at the same price? The more prices you can offer, the more opportunity and revenue you can capture. Once you consider loyalty rates that are independently yielded, you can move to the next step and offering tailored, 1:1 offers for individual guests based on their lifetime value.
Personalized offers truly bridge the gap between revenue and marketing, and it's here that revenue teams can tap into their creative side. Use your guest data to identify key segments that may need a push. For example, work with marketing to put together spa or golf packages and target these specifically at guests they could be most relevant to.
Dive deep into that guest data and consider marketing offers with 'sweeteners' attached, such as a suite upgrade, access to higher bandwidth WiFi or complimentary breakfast. All may equate to value to certain guests.
Tap into Loyalty
Marketing is often the gatekeeper when it comes to loyalty programs. Using fenced offers only available to program members can be a great way to not only get creative but also tap into your most lucrative customer base – your repeat guests. Segment this customer base and offer promotions to specific groups within that fence. Here you can really flex your pricing and provide a truly tailored and satisfying experience to your customers.
The marketing team is also often the one with the best finger on the pulse for what is happening outside of your hotel. Using their market knowledge, you can tap into dates and events that may create a spike in demand. This could be as simple as knowing what acts are booked at the local concert venue, or what conferences or conventions are due in town. Here, timing is vital. Getting ahead of the competition with timely offers will ensure you maximize on any potential surge in demand.
Marketing can provide the creative edge, but don't forget the value of historic data too. Deep dive into data from past events in order to better predict booking pace, demand and price elasticity. This will provide you with a clearer picture of what to expect from the market moving forwards.
And don't forget to use marketing for short, sharp promotions when demand is low. Use your forecast to identify potential downturns in demand. And if these start to be realized work with sales and marketing to run short-term sales, such as a 24- or 48-hour sale. You may find these promotions will generate new business and you may even increase your base business level moving forwards, enabling you to increase rates overall.
Even Revenue Should Be Social
At the start of this article we mentioned the creatives of the hotel industry: marketing, e-commerce and social media. In today's social media-dominated market, online reputation can and does have an impact on revenue. Therefore, revenue needs to stay aware and communicate with whoever manages the social media reputation of the hotel or brand.
A report by the Cornell University School of Hotel Administration found that is a hotel increases its review scores by 1 point on a 5-point scale, it can increase its price by 11.2% while still maintaining occupancy or market share. But remember, a slip in ratings can have a dampening effect on pricing and forecasting. That is a double-edged sword: if your ratings slip it will cost you, but if your competitor's ratings slip, you could see rates rise.
Ways to Shake Up Your Hotel Revenue Strategy
- Use an accurate demand forecast and proper reporting tools to ensure sales is not fill rooms with lower-rated group business during compressed periods when the revenue managers are yielding up room rates.
- Revenue and marketing teams should align objectives and goals, as well as how to measure success. Recently, the revenue teams have been tasked with looking not only at the top-line but at the bottom line numbers, so understanding Net ADR and Net RevPAR are critical. These two metrics help determine hotel profitability after costs are deducted from revenue.
- Help hotel owners and managers better understand the costs of customer acquisition through each channel. Once you've got that data, it can help marketing make optimized distribution decisions. This way Marketing can spread their budget out in the most effective ways.
- Develop a revenue culture, starting at the top. If there's buy-in at the C-level, that flows through to the rest of the organization. From there, everyone at your hotel, management company or brand needs to play their part in touching revenue.
- Consider re-thinking your organizational chart, with revenue management being elevated above sales and even marketing, in some cases. Look internally at how your company is aligned. Build a strong Revenue Strategy that encompasses all revenue generating elements of your business: sales, marketing, distribution, revenue management, loyalty etc. Ensure that all stakeholders are focused on net revenue - or profits.
Break Down the Silos
Revenue management and its supporting systems have historically been responsible for forecasting demand and pricing rooms to maximize revenue. That can no longer be done in a vacuum, separate from the marketers who are creating much of that demand and then working to convert it into sales.
Internal communication with other hotel departments, most notably sales and marketing, and e-commerce, but also reservations, your call center, channel manager, website designer, and more, is vital if you are to build a holistic revenue strategy focused on maximizing profit.
Central to this is having an open platform where all your source systems unify and share data. Get all teams working with the same data and aiming for the same goals. By unifying all teams around a common source of dynamic data and a company-wide mission focused on profitability, you can drive more direct engagement with customers and overcome the challenges from OTAs and other industry disruptors, such as Airbnb and the sharing economy.
No longer can your hotel marketing, revenue and sales departments work in silos. Identify common goals around building unique guest experiences and driving revenue and ensure your employees have the tools and resources to execute.
HotelExecutive retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.