Key Revenue Management Trends to Follow in 2018
With the increasing availability of revenue-management technologies, it's easy for hoteliers to get overwhelmed. But not taking the time to understand how to make revenue management work for your property is a sure path to declining performance. Here are five trends hoteliers should watch out for this year.
1. Integrated Systems That Do More
There are multiple systems hoteliers use within a day, from operations software to revenue management, and users can become overwhelmed with the multiple system options available to them. This is leading to the development of integrated systems that allow hoteliers to pull all their data into one place and easily forecast all hotel revenues, and not just room revenue, said Paul Bennie, director of global sales at ProfitSword.
“With that, another trend has emerged — forecasting beyond the room to include food and beverage, payroll and even project how much groups are going to actually spend on property,” he said.
Klaus Kohlmayr, chief evangelist with IDeaS Revenue Solutions, also believes nonroom-related revenue systems will be growing this year. “Function space, spa, F&B are all areas that are still underdeveloped,” he said. “At the same time, room rates have reached a ceiling in many high-demand markets. Implementing revenue-management principles across other revenue areas will help hotels generate incremental revenues.”
2. OTA Clapback
Kohlmayr believes online travel agencies will try to sidestep hotels’ revenue and pricing strategies even more this year. “We have seen that some OTAs are offering their clients less restrictive policies than hotels, in effect circumventing hotel revenue strategies,” he said. “Hotels need to be aware of these attempts and evaluate if they have long-term positive or negative impacts.”
3. A More Strategic Focus
Angie Dobney, VP of hospitality solutions for the Rainmaker Group, believes hotel and revenue managers will develop a better understanding of the profitability of the business—not just the top line but the bottom line, as well. Hotels also will better grasp what guests are doing on property.
“With all the tools now available, revenue managers are getting more involved in all areas of the hotel business,” she said. “They are becoming more strategic with group bookings — they understand how much it will take to get the business and at what price. Analytics are so important in developing more strategic group pricing.”
4. Continued Direct-Booking Push
Direct-booking campaigns were huge in 2017 and Fabian Bartnick, VP of Asia Pacific and international business at LodgIQ, believes that brands and independents alike will continue to implement tools that drive direct bookings. “This can come in the form of driving traffic via enhanced marketing activities and better look-to-book ratios due to an upgrade in the hotel webpages,” he said. “And, of course, conversions increase through booking engines that incorporate multiple features proven to drive conversion.”
5. Expanded AI Use
Artificial intelligence will help revenue management this year with enhancements that will take care of mundane and basic tasks, Bartnick said. “The first steps have already been taken with chatbots entering the arena,” he said. “Soon, booking bots on the hotel side and concierge bots on the customer side will drive user experience to new levels while increasing productivity and conversions.
“Hotels should not be afraid of making a leap of faith — bots have been tested and are working in other industries so hotels should not be averse to them. They should embrace them to drive a new experience for their customers.”
How to grow mobile bookings
As mobile interactions and mobile bookings continue to grow, how should revenue managers capitalize on this? After all, the OTAs are masters at conversion, according to Kohlmayr. Assuming pricing strategies are sound, getting guests from looking to booking takes a disciplined approach that includes continuous testing.
“Booking.com and other OTAs don’t have just one website—at any given time they have 10,000 or more sites, each of them with a slight variation to test and evaluate conversion,” he said. “Of course, that is not realistic for hotels, but understanding what drives conversion, and deploying a strategy that supports that, is a never-ending effort.”
Bartnick suggested that revenue managers need to become more knowledgeable. Most websites have traditionally been looked after by the marketing department and therefore revenue managers had little interaction with the website or the booking engines.
“This needs to change,” he said. “The website is a channel, the booking engine a means to convert lookers into bookers. It's key for any revenue manager to understand what can be done to improve either traffic or conversion across all devices, regardless if mobile or tablet.”
Dobney agreed. Revenue managers need to be aligned with marketing—they need to understand what’s out there, she said. “Revenue managers need to understand where the marketing promotions are coming from and they need to work together to be much more strategic about it.”
She also suggested revenue managers really need to dig in and understand the mobile channel—what it is and what it impacts.
There are many solutions out there and key is to capture the right features that are currently trending, Bartnick said, such as rate intelligence, including a widget that allows you to see your rate on the OTAs while being on your website; fast and reliable booking steps that drive look to book; and image- and video-resistant websites that won’t crash anytime you have to load the page. Also important is the ability to bundle and upsell products, set promotional activities and geotarget, as well as clear and clean calendar widgets, he continued.
Where to look for untapped revenue potential
Hotels in many high-demand markets are hitting a ceiling in room rates, Kohlmayr said. To continue to generate growth, it is critical for owners and investors to look at two areas. The first is what area in a room can be monetized. This means understanding what guests value and how much they are willing to pay for it. The second area is revenue beyond room revenue. Meeting and event spaces are an area that most hotels are seeing as underperforming. In fact, for many hotels, the profit potential of this revenue stream is so significant that it can contribute 40 percent to 60 percent of their total profits.
Traditionally limited to front-desk operations only, technology advancements are now finally making upselling possible across all stages of the customer experience, Bartnick said. “Whether it is to drive higher room types, offer in-house and local attraction experience promotions before the arrival or additional upsells at check-in, technology now can drive engagement and drive upsells,” he said.
Bartnick also said that packaging or bundling offers potential for hoteliers. “The combination of a room plus one or more add-ons, such as local attractions, in-room or in-house entertainment, can be hugely profitable,” he said.
One mistake that hoteliers often commit is oversell the base room category, which creates missed revenue opportunities, Dobney said. She also suggested that hoteliers need to understand the potential of every customer while they are on-property. “Hotels need to dig in, understand and track what your customers are doing on property,” Dobney said. “Are they going to the restaurants or the spa? Where are they going off-property? Can you partner with those places for added revenue?”
Because most hoteliers and revenue managers tend to focus on and prioritize room revenue, areas such as F&B, and ancillary revenue from transient and group business can sometimes be overlooked, Bennie said. “It is important to access and analyze that data for an accurate financial forecast,” he said. “Revenue managers need to utilize systems that go beyond revenue management and can give hoteliers the bigger picture.”
Hotels need to develop a disciplined and autonomous analytical approach to understand pricing opportunities, Kohlmayr said. “For rooms, that means a fully automated solution that continuously evaluates the pricing potential based on internal and external demand indicators and automatically uploads pricing decisions across all channels,” he said. “For other revenues, it means putting in place technology that will capture the necessary data to help hotels start their revenue-management journey.”
Source article: https://www.hotelmanagement.net/tech/revenue-management-trends-to-watch-2018