Traditionally, revenue management has operated on its own, but increasingly it is moving toward working together with many different departments for the most impact.Sales, Catering, and Front Office are obvious first choices. However, revenue management is ready to evolve to bring online marketing and technology into this fold. Some brands and small chains understand this and work to maintain this integration but it is missing from most chains and independent hotels.
As marketing acts as an amplification of current revenue strategies and technology provides tools to execute on those strategies, today’s revenue managers must understand these disciplines well. The relationship built between these three areas is critical in building a thriving revenue management culture and giving a single source of truth of your guests, also known as 360-degree view of your guest.
What does having a complete view of your guest mean?
To get to this level of sophistication all your data sources must be synced to a single database. This includes transactional and non-transactional data. This means you will have access to your PMS data, Web analytics, social, email, and more from one single platform.
A complete view of the guest allows an understanding of the guest beyond what rate he or she booked and how much was spent in the hotel. It really allows you to get to know the guest and his or her preferences, booking pattern, favorite foods, socializing preference, and feedback about previous stays. You can tap into this data to communicate in a way that feels one to one. You can personalize the stay. When the guest lands on your site or logs onto your app you can personalize the content. And, once you start using the data to have targeted actions like these it grows conversions and loyalty which leads to increase in bookings and revenue.
The role of marketing is quite complex but very impactful when done correctly. It allows for your rate strategy to be synchronized with guest buying behaviour.
Mobile-only offers have become popular but the truth is a device does not dictate the price elasticity at that moment. If the demand is high then people will book regardless of the device. There is no need to discount just because the offer is accessed on mobile device. You do have to provide the right experience for every device a person may access your offer. Otherwise, you will not get the booking. This is just one of the countless examples of where revenue management and digital experience play such an integral part.
A marketing team, when integrated with the revenue team, can deliver insights on consumer behaviour that can lead to better decision making on offers and conversions.
In some brands these departments operate separately where they are lead by an off-property team of experts and the on-property revenue manager does not have enough knowledge to really leverage the relationship. In independent hotels, due to lack of resources, it ends up being that the online marketing is given to an agency and the revenue manager has to work with the agency to drive results. This relationship only works well when the on-property is knowledgeable about marketing, not that they need to be experts but an understanding how to best leverage the relationship.
What are the benefits of deep collaboration between the two teams?
- Customer Acquisition Costs: Hotels always believe that direct bookings are the cheapest. However, they typically don’t know what is the cost. The cost is not just the booking engine transaction cost but also the ad spend or time spent in building campaigns for results. Acquisition costs are a bit more nuanced than commonly understood. This is where marketing can outline money spent in driving these conversions.
- Life Time Value: Moving the conversation from just a one-time transaction to guest retention. Retention is due to various factors. Experience during the stay is paramount but how you continue to have a conversation with the guest after checkout plays a key role in maintaining recall and overall retention. The Life Time Value of the guest helps you in understanding where you can continue to spend your marketing dollars as the guests acquired from those channels are more profitable from another over the long term.
- Audience segmentation: Similar to market segment in revenue management there is segmentation in marketing channels. These segmentations can be based on various factors such as location, rate plans, devices, and others. When designing an offer to be sent out to this audience, incorporate the value-add that matters to that audience. A boutique hotel in Vancouver increased its conversions from traffic from the province by 75 percent when it started geographically targeting the website traffic with a promotion targeting local residents.
- The age of having a website design for a few years is over: Booking.com famously spends a large amount of money and effort to get visitors to book once they land on the website. All of this is possible by continuously testing the website. Although the same tools are available for hotels as well, the expertise of using such tools is absent in most cases. The age of having a design for a few years is gone. Website design continues to evolve every few weeks based on statistically backed test results.
- High demand and need period discussions: These discussions are more insightful and allow for better preparation for an upcoming need period. When the teams are in constant conversation they can brainstorm ideas, have lead time to design better offers, test out ideas on sample audiences so conversions can improve. At the same time, it allows the team to know when to cut back on marketing spend. High demand periods don’t need as much spend. It reduces your acquisition costs.
- Understand changing consumer behaviour: It is not about the headlines but trendlines. As the shopping behaviour changes, it is important that the strategies and tools evolve accordingly. Marketing and revenue need to be integrated to understand the changing landscape. Mobile changed how consumers shop and it did wonders for those who adapted fast. The ones who did not adapt to the change were taken out of the consideration set of a prospective guest.
- Ask better questions: When these two departments work together they look at two different sides but are also very integrated. Each department has a big impact on overall revenue of a hotel. When they collaborate they can ask better and bigger questions. What can be done to improve conversions? What happens to the Google ad spend when you are sold out or do not have enough inventory? How can you increase your audience size? What is the right offer for an audience?
The role of technology in driving results
When you have the revenue strategy and marketing teams aligned, the next layer is to have the right technology infrastructure. Make no mistake, technology is a competitive edge.
Technology not only allows you to execute on ideas but allows you get deeper insights into your business. Typically technology infrastructure is viewed from a guest interaction point of view, and not how does the organization provide the tools that will allow the teams to deliver results.
The hotel industry has typically lagged a few years in comparison to other industries but now is seeing a change where new players in the market and changing consumer behaviour are forcing hotels to improve their setup.
Technology framework was never thought of as a critical starting point in setting up for success. People matter most, but, the right people need the right tool to deliver results. In comparison, OTAs spend millions of dollars to keep improving their setup to better execute or get better insights into their guests.
On the other hand, booking engines are the place where many conversions go to die. In some cases, you still cannot enter any analytics code to get conversion data on your website. It means you don’t know how well your website does. Whereas an optimized website with the right booking engine solution can really improve conversion.
Lacking easy access to data or being unable to combine it in a meaningful way are obstacles that become a hurdle for most companies. The limitation is not in the technology itself. The technology exists but it has to be setup with the right partners and there has to be a vision of what you want to achieve.
It is important to look through this lens when evaluating vendor partners to ensure that they have the right integrations with other systems so you are not being limited.
When you are evaluating how to improve performance of your hotel review your technology infrastructure.
Here are a few things you should consider before choosing a solution:
- The end goal: Clearly define what you are trying to achieve. This will allow you to work back from the end goal. You want to make sure that the tool addresses this need and how you will get there.
- People: Identify the internal experts on the matter and if you don’t have an expert then enlist an external party. The key is to get the right person involved.
- Fit: How does it fit in the current ecosystem of tools you have? The experience needs to be seamless. You don’t want to invest in systems that do not work with your current solution unless you are also planning to upgrade that to match the new solution.
- Data: Are you able to access the data so it can be combined with other datasets? This could be through APIs or other mechanisms but there should be a way to get to it.
- Vendor: Do some homework on the vendor providing the solution. Ask them for their current clients where they have implemented similar solution and get the feedback directly from those clients. Trust but always verify.
- Support: How does the team support once the implementation is done? Spend some time understanding the process. When talking to a reference get some feedback on this.
- Costs: Both implementation and ongoing costs should be clearly spelled out. And, local currency is always preferred to protect you from exchange rate fluctuation.
- Set up: Will the vendor set everything up right out of the box or do you have to do any customizations after installation? Many property management systems have to be set up for all the reporting as the ones that come out of the box do not cover some critical use cases.
Building a collaborative environment where online marketing, technology, and revenue management disciplines talk and interact with each other on a daily basis leads to massively improved outcomes. It not only reduces cost, it also improves revenues and keeps a hotel competitive over a very long time.
Think about the end-to-end experience when designing your strategy if you want the best outcomes. The time you spend fine-tuning each point will yield disproportionate outcomes for you. However, it is not something you can implement in a short amount of time. The key is to start simple and continue to build over time.
And, it doesn’t matter if anyone else is not doing it. You should lead the charge because it is the right thing to implement.