Revenue Management - Industry Journal by eHotelier

September 2019 Is your RMS revealing a true picture?

INDUSTRY JOURNAL

Top 6 ways to capture more ancillary revenue

Revenue

Management

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Diving deep into the future of hotel revenue management

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What the future holds for tomorrowâ&#x20AC;&#x2122;s revenue manager Beyond pricing recommendations: what else is RMS good for?

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Results from the 2019 ehotelier Revenue Management Professional Global Survey

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INDUSTRY JOURNAL

September 2019

Revenue Management 2020 Diving deep into the future of hotel revenue management

Platinum sponsor

Gold sponsors

3 Industry partners

Contents 7

Global Survey: What GMs and professional Revenue Managers have to say about revenue management Professor Peter Jones, eHotelier

Is your RMS revealing a true picture? The IDEAS Team

Trends in Revenue Management

Global Survey: What users have to say about the benefits and effectiveness of Revenue Management systems

Ira Vouk of what is in the

Professor Peter Jones, eHotelier

Top 6 ways to capture more ancillary revenue Margaret Mastrogiacomo, Next Guest

HOSPA RM Insights Jane Pendlebury, HOSPA

What the future holds for tomorrow’s revenue manager Scott Pusillo, Sabre

Global Survey: A look to the future: desired improvements Professor Peter Jones, eHotelier

Beyond pricing recommendations: what else is RMS good for? The OTA Insight team

From Revenue Management to Revenue Strategy Robert A. Gilbert, HSMAI

Global Survey: The revenue management training gap Professor Peter Jones, eHotelier

Source Market Behaviour – why we must consider the ‘right guest’ more in revenue management Li Min Cheng

Industry Journal - Revenue Management SEPTEMBER 2019

Welcome Dear Hotelier, I am delighted to present the latest edition of the eHotelier Industry Journal for 2019. In this issue we take a deep dive into the art and science of revenue management for the hospitality industry. Our insights are derived from the results of our latest Professional Global survey on Revenue Management, with insights from almost 1000 industry professionals around the world. In this issue, our Dean of the eHotelier Academy, Professor Peter Jones, gives us a cogent analysis of these results, highlighting the rate of change between 2016 and today. Some of the questions we explore are: Who is using RM systems? Are they effective? What does the future hold? We highlight some surprising findings in these reports. This issue, weâ&#x20AC;&#x2122;ve also sourced some penetrating insights from a range of industry leaders and partners. The IDEAS team outlines the latest technological developments of revenue management and asks whether your current RMS passes muster. Ira Vouk outlines her predictions for Revenue Management in 2020 and the new decade ahead. Margaret Mastrogiacomo from Next Guest highlights unexplored ancillary revenue opportunities to dramatically lift the bottom line. Scott Pusillo from Sabre outlines what it takes to create the revenue leader of 2020, while the team from OTA Insight identifies the untapped potential that can be found in contemporary RM systems. Finally, weâ&#x20AC;&#x2122;ve gathered industry comments from Robert A. Gilbert of HSMAI, Jane Pendlebury from HOSPA and Li Min Cheng on the state of revenue management across the industry. At eHotelier, we believe that education and professional development is the key to engaged staff, robust businesses and a sustainable and successful industry. We believe that the insights curated for this edition not only provide a comprehensive overview of revenue management in 2019, but also a rich exploration of what great revenue leadership will look like in the decade ahead. Regards, Matthew Stephens President

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Industry Journal - Revenue Management SEPTEMBER 2019

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Industry Journal - Revenue Management SEPTEMBER 2019

2019 GLOBAL SURVEY Revenue Management

What GMs and professional Revenue Managers have to say about revenue management eHotelier has again conducted a comprehensive global survey on Revenue Management. Who is using RM systems? Are they effective? What does the future hold? Read on for a deep dive into our important, and at times surprising, findings.

By Professor Peter Jones, Dean of eHotelier Academy

o better understand the implementation of RM systems and users’ views on their effectiveness, eHotelier first conducted and published the findings of a Revenue Management Survey in 2016. With the continuous development of RM systems and the now more wide-scale practice of using revenue management techniques across the industry, we’ve taken the opportunity to rerun the survey in 2019. This time, we included some additional questions related to training to understand changes that have

taken place in that space as well as practitioners’ views on the benefits, effectiveness and desired changes in the RM systems hoteliers use today. The survey was conducted over a three-month period (May – August 2019) using a variety of online collection methods. With feedback from more than 1000 RM practitioners, responses were up 23.5 percent from the 2016 survey, a likely indication of the greater penetration of revenue management practices through the hospitality industry.

Industry Journal - Revenue Management SEPTEMBER 2019

eHotelier 2019 GLOBAL SURVEY Revenue Management

Respondents distribution by global region between the two surveys saw a seven percent increase in Asian and Australasian respondents and a corresponding decrease from those in Europe. This possibly reflects a degree of maturity in the RM market in Europe and its continuing growth in Asia While there was a small degree of geographical variation in the location of the respondents between 2016 and 2019, there was little variation of job roles. The largest respondent group was General Managers. The second largest group was comprised of self-reported specialist job roles such as revenue manager, revenue director, revenue executive and so on. The level of correlation in the groups defined as “users” over the two surveys indicates a validity in the data both comparatively and in the individual surveys.

The validity of the data is further emphasized when comparing the industry sector of the respondents. In the 2016 survey, 79.5% of the respondents were operating in hotels, with Education the next largest sector at 5.2%. In the 2019 survey, the respondents in the hotel sector had increased to 84%, with a marginal decrease in Education to 4.5%. The surveys are therefore broadly comparable and provides a validity to the findings in relation to the ‘users’ of RM systems and their views on the effectiveness and developments of those systems. It could be expected that, with the continuing development and improvements in RM systems, the scale of implementation would have increased between the two surveys. This assumption is borne out by the data as the illustration shows above.

Industry Journal - Revenue Management SEPTEMBER 2019

eHotelier 2019 GLOBAL SURVEY Revenue Management

There is an eight-point increase in the use of systems in 2019, with a small reduction in those intending to implement within 12 months and a very marginal difference in those intending to implement within 24 months. Taken together, the current situation still suggests that 23% respondent’s do not yet have a revenue management system in place. The percentage of those with no intention of implementing a system is broadly the same, but there is a difference in those who feel this is not relevant to their business. With the current developments of RM systems, there is perhaps a better understanding of how such systems can be applied across the sectors. ◆

For more see

• RM systems: Benefits and Effectiveness pg. 18 • RM systems - Desired Improvements pg. 32 • Training pg. 45

Professor Peter Jones MBE FIH is the Dean of the eHotelier Academy. With a distinguished career in hospitality, education and training, Peter has been involved in national and international projects for clients involved in hospitality education. Peter holds the following directorships; The Edge Hotel School, Wivenhoe House Hotel and Hotel Future, he is a Visiting Professor at the University of Derby and the University of West London and has recently been awarded a Doctor of Science (Hon DSc) from that university. He was made a Member of the Order of the British Empire for his services to the hospitality industry.

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Is your RMS revealing a true picture? Different customer segments have different booking and staying patterns. Like a kaleidoscope, small recalibrations in their analysis can greatly influence key behaviours and bookings. What does your RMS system need to keep pace with accurate forecasts?

By the IDEAS Team

otel technology has advanced significantly over the last few years. Channels are evolving at a rapid pace, customers can compare options like never before, and even selling systems are finally seeing investment to keep pace. That said, few solutions hoteliers interact with are as analytically advanced as their revenue management system (RMS)—and it’s imperative these systems also keep up with business changes. So, do you know if your hotel’s RMS has what it takes to keep up?

The Right Rate & Segment Controls Many RMS solutions roll up transaction data into aggregated groupings such as market segments, or simply classify reservations based on value alone. Unfortunately, important information is often lost as a result of this aggregation process—in particular, the information regarding how different rates are priced and controlled. Individually capturing information by transaction allows an RMS to separate these

Industry Journal - Revenue Management SEPTEMBER 2019

transactions based on factors that influence their key behaviors as well as critical aspects of the rates that influence how they should be priced and controlled. Once that is done, it is possible to build the most effective groupings to support accurate forecasting and optimization decisions. Imagine we have two corporate rates: one is contracted at a fixed price, but the hotel can restrict availability for it as required on peak days. Meanwhile another corporate rate is contracted at a guaranteed 10 percent off the best available rate (BAR) with last room availability—meaning this rate cannot be restricted in its availability. These two rates will often end up in the same market segment, simply because they are both corporate contracted rates. However, from a revenue management—and particularly an advanced analytics—perspective, these two rates will behave differently and must be controlled differently. There are many rate attributes that should be used to properly separate them into proper analytic groupings. Creating analytic groupings by differentiating how rates will be “controlled” in your RMS (along with other factors) will result in more optimal decisions and ultimately, better bottom-line performance. Meanwhile, forecasts can still be made available to revenue managers and other system users, including users from other departments, in a manner consistent with their current organizational reporting needs. True Demand Forecasts Different customer segments have different booking and staying patterns. For example, corporate customers typically stay on weekdays and generally have short booking windows— but leisure transient guests have different patterns, as do groups, tours, etc. Channels can also influence these patterns. If you add on the fact that customer behaviors change over time, you begin to see why it’s going to be problematic to try to “fit” one demand forecasting approach to all of these segments and channels. Still, some systems continue to do that—use a single By the IDEAS Team forecasting approach to predict the disparate behaviors of many different segments.

“

Creating analytic groupings by differentiating how rates will be ‘controlled’ in your RMS will result in more optimal decisions and ultimately, better bottom-line performance.”

At SAS and IDeaS Revenue Solutions, analytical techniques that automatically review the distinct patterns in each property, segment, or channel are applied, thereby determining which of a wide variety of models will best fit these patterns. Within a given property, different segments may well have different patterns and thus require different forecasting approaches— and utilizing the immense variety of forecasting methodologies offered by SAS provides for this. Then, the system regularly reviews properties and segments to see if these patterns are changing, and refreshes the forecasting

Industry Journal - Revenue Management SEPTEMBER 2019

model appropriately, moving the needle just a little bit further. The result is a more accurate and dependable forecasting process that is not bounded by the limitations of a single approach or forecasting methodology. Elasticity & Competitor Rate Effects As the industry has embraced the concept of BAR—a dynamically priced rate available to transient guests—the importance of measuring and accounting for price sensitivity has moved to the forefront in revenue management. It simply isn’t possible to optimize this rate without understanding how demand will change as a result of increasing or decreasing it. Often lost in discussions regarding elasticity is that we are not looking for a single number: elasticity can vary by market segment, time to arrival, day of week, season, and many other factors. Accounting for these factors and differences is essential to selecting the right rate at the right time. Accounting for competitor rates is an important part of understanding price sensitivity. Guests do not view hotel rates in isolation: internet distribution has made comparisons amongst competitor rates so easy that most customers evaluate rates within a marketplace of available offerings. In this environment, it is very easy to simply follow the market, by pegging your rate to competition. But setting the rate based solely on competitors’ rates is a risky thing to do and can lead to significant errors in revenue management. Rather, competitor rates need to be considered when estimating price sensitivity. That is, the degree to which your property’s demand will be impacted by a rate change needs to consider not only how much we change our rate, but also how our rate will compare to competitor rates: will we be higher than or lower than our competition, and by how much?

Managing Rates & Availability Even with the prevalence of dynamic pricing and BAR in the industry, most hotels continue to have rates that need to be managed through availability. In this environment, it’s not sufficient to optimize rates alone. The availability of these rates also needs to be managed. The impact of rate pricing decisions on demand makes simultaneously optimizing rates and availability extremely complex—particularly when accounting for length of stay—but that is the reality of today’s marketplace. The hospitality industry and travel distribution continue to evolve, and a hotel’s RMS needs to keep pace. This needs to be true not only at a technical level, but on an analytical level as well. Changes to business practices necessitate changes to analytics, and technology changes and new data enable new analytic methods that previously have been unavailable. ◆

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Trends in Revenue15Management While the hospitality industry traditionally has been considered relatively conservative in adopting new strategies and technologies, things are looking better than they did just a few years ago.

By Ira Vouk

evenue Management is a set of optimal strategies that are aimed to yield the highest potential revenues and profits for capacity-constrained and perishable assets (hotel/hostel rooms, if we’re talking about hospitality industry). The key word in this definition is ‘optimal’, which will help you provide the right service to the right customer at the right time for the right price – by understanding, anticipating and influencing consumer behavior through demand forecasts. Revenue Management has been playing an

1 14

increasingly important role in hotel operations in the last decade. While the hospitality industry traditionally has been considered relatively conservative in adopting new strategies and technologies, things are looking better than they did just a few years ago. I would highlight the following trends that we’re noticing in the Revenue Management world today, as we conclude the current decade of innovations:

Industry Journal - Revenue Management SEPTEMBER 2019

1. Increasing adoption rates in “the long tail of hospitality” (adoption of new technologies and Revenue Management strategies in general). Due to a higher number of RMS startups that have been joining the market in the last few years, the awareness about the benefits of revenue management (and ROI associated with it) has been rising. These startup companies made it possible for the smaller independent properties to compete with big box hotels for market share and employ more optimal pricing and overall revenue management techniques. These companies are forcing more and more hoteliers to start paying attention to their pricing, channels, restrictions and competitors on a regular basis, which is definitely a positive trend.

It is obvious that Revenue Management Systems have now become more crucial than ever before in pricing and other revenue management decisions for hotel operators of different property sizes and star ratings. These decisions are based on the analysis of vast amounts of information including: booking pace, booking history, compset rates, hotels’ parameters and specifics, and other variables.

2. Automation and simplification of RM tools. This tighty correlates with the previous trend. New tech entrants in the market find it easier to target independent properties and smaller hotel groups, rather than larger chains that are sometimes slower in adopting new technologies and tend to be more conservative and less flexible. These RM startups began to realize that due to budget constraints, those smaller chains and independent properties are lacking deep understanding of Revenue Management discipline and in most cases are not staffed with dedicated revenue management professionals. Thus, newly designed RM tools have become more and more simplified, user-friendly, intuitive and automated, with the goal to shift the decision-making from the user to the builtin algorithm. 3. Adoption of Artificial Intelligence More and more RMS companies implement some type of AI in their pricing (and nonpricing) recommendation algorithms and this trend is definitely not going anywhere. In a few years, Excel-based revenue management tools will likely be completely replaced with machine learning algorithms that are becoming more accessible and widespread.

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New RM tools are more simplified, user-friendly, intuitive and automated, with the goal to shift decision-making from the user to built-in algorithms.

Industry Journal - Revenue Management SEPTEMBER 2019

Although many individual tasks of Revenue Management can be performed manually, the most efficient way to handle data and generate profits is through Revenue Management softwares. However, the conservatism of the industry is still there, and as 10 years ago, it is still one of the biggest obstacles for Revenue Management software companies. Slow adoption rates don’t only pertain to the operators themselves (as many owners, GM’s and CFO’s are still quite reluctant to embrace the fact that science is more reliable than gut feeling when it comes to pricing), but also to the numerous PMS software vendors. Only a few forward-looking PMS providers offer built-in (seamlessly integrated) dynamic pricing solutions. Those who don’t (which is the majority) haven’t yet embraced open API policies to allow for quick and seamless integrations with numerous thirdparty RMS providers. As we know, Revenue Management systems are not standalone products and require constant data flow in order to operate efficiently and offer valid pricing and non-pricing recommendations. In order to truly empower hoteliers to make dynamic and timely decisions, RMS companies need to support real-time seamless data exchange with PMS providers. The lack of PMS integrations becomes another barrier to entry for those new RMS entrants. Recently there has been a lot of talk about open architecture and marketplaces to improve integration. I’m hopeful that these discussions will be followed by some real action and positive direction towards open API.◆

Ira Vouk is Successful Revenue Management professional and RMS Product Manager with over a decade of practical experience in the hospitality industry and a deep passion for technology. With her diverse educational background and experience, she has applied her knowledge to the hotel industry and populated many innovative ideas. In recent years, she has developed a new index for profit maximization (Adjusted RevPAR, or #ARPAR) and helped design a revolutionary automated Revenue Management tool – iRates (the first RMS created for the limited-service hotel properties). In addition to ongoing daily Revenue Management services, she provides onetime consulting sessions, and hold Revenue Management classes and webinars. For more information, please visit

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Industry Journal - Revenue Management SEPTEMBER 2019

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Industry Journal - Revenue Management SEPTEMBER 2019

2019 GLOBAL SURVEY Revenue Management

What users have to say about the benefits and effectiveness of Revenue Management systems Do revenue management systems do a good job in driving income in hotels? What are their major benefits? Hint: generating revenue was not the top response in our eHotelier survey.

By Professor Peter Jones, Dean of eHotelier Academy by

o ensure that the respondents views on the benefits and effectiveness of RM systems were based on an operational rather than a theoretical view, their responses were filtered by the question "Do you currently have a revenue management system in operation?â&#x20AC;?. Of those responses, 91% reported they were operating hotels, with the balance providing accommodation services, education and training, and professional services. Over 72% of those respondents were in operational or senior management roles including those self-reporting as revenue managers. The largest individual group identified their roles

as General Managers (19%). This provides a degree of confidence that the responses are based on operational experience. Of those respondents reporting themselves as being members of a professional association, the largest membership grouping was HSMAI (46%). This correlates with the findings on training (See training article p.45). Both HOSPA and AHLI members together represented 30% of the sample. As the illustration (right above) shows, 97.83% of the respondents reported that RM systems are effective in driving income to the business, with over 86% considering their system to be either extremely or very effective.

Industry Journal - Revenue Management SEPTEMBER 2019

Key Benefits

Summary

Given their effectiveness at generating revenue, it is interesting to note that respondents did not rank income generation as the principle benefit, ranking it the third most important, as the illustration above shows. However, it could be argued that by improving yield and pricing decisions, the logical outcome is revenue.

Those respondents operating an RM system considered the systems to be effective in generating revenue, with 86.52% considering them to be extremely or very effective. That effectiveness is based on the operational benefits that the systems provide, principally as tools to improve yield and pricing decisions. While the other operating benefits are all positive, including its use as a tool to maximise occupancy and manage inventory, the oft quoted ‘holy grail’ for hoteliers - that of improving direct bookings – ranked as a revenue management system’s least positive benefit in the eHotelier survey. ◆

All of the benefits listed can be considered to be positive outcomes of the use of RM systems. The level of positive agreement that RM systems improves yield exceeds 95%, and the level of its positive agreement on helping pricing decisions at 93.5%. The variation between those benefits at 2% is marginal and both of those two benefits are ranked eight percentage points above the benefits of maximising occupancy, the fourth highest ranked benefit.

Industry Journal - Revenue Management SEPTEMBER 2019

Top 6 ways to capture more ancillary revenue 15

Here are the best ancillary revenue opportunities that are easily actionable and can dramatically move the needle on your hotelâ&#x20AC;&#x2122;s bottom line.

By Margaret Mastrogiacomo, EVP Strategy, Next Guest

oteliers invest ample marketing dollars in driving direct bookings, but many hotel brands fail to capture the full revenue potential of each and every guest. From spa to dining and room upgrades, once a hotel wins the direct booking, itâ&#x20AC;&#x2122;s just the beginning for ancillary revenue opportunities that can dramatically move the needle on a hotelâ&#x20AC;&#x2122;s bottom line. Are you capturing the full ROI potential of every booking? Examining average cost of sale, hotel

marketers can evaluate missed opportunities for capturing full revenue potential on every booking. For instance, taking into consideration the distribution mix, if a hotel property has an average cost of sale across channels of 15%, the ADR is $250 and average LOS is 1.8 nights, the hotel property is paying on average $67.50 for every booking. With revenue of about $450 per booking, the hotel can achieve a 6:1 return across distribution channels. By increasing marketing spend by just

Industry Journal - Revenue Management SEPTEMBER 2019

10% to capture more ancillary revenue ($74.25 cost per booking), which may result in ancillary revenue ranging from a $300 total spa treatment for two to $200 in dinner and drinks for two or a $135 room upgrade (average of $211 in ancillary revenue), the hotel can increase their return to almost 9:1 across distribution channels - growing revenue per booking by almost 50%. On a tight budget? If your occupancy is 80% or higher, consider carving out existing budget towards ancillary goals for even greater return.

features and tools where guests can explore treatments based on their problem areas or desired state of being are a great way to engage website visitors and help them find the treatment that is right for them. For example, if someone wishes to de-stress and has neck and back tension, the website tool can recommend a deep tissue massage treatment.

Here are the top 5 ways you can capture more ancillary revenue from existing and future guests: 1. It starts with the right content. Create rich imagery, website content, and experiential packages around spa, dining, and room types. Unlike any other industry, in hospitality and travel, you are selling an experience. Painting a picture of a guest’s stay that brings to light opportunities to indulge and unwind on-property is crucial to driving bookings and increasing ancillary revenue. Your hotel website should have the following content surrounding ancillary offerings: • Dining section: Content surrounding your restaurant’s cuisine, chef, cocktails, and weekly specials and events help make the dining experience at your restaurant come to life for website visitors and provides more context about your restaurant for search engines. Featuring menus, images of your most popular dishes, and demonstration videos of your bartender or chef making your most popular cocktails or dishes will inspire guests to make a reservation. Ensure that the reservation process on your website is seamless and consider partners like OpenTable or Resy. • Spa section: Create robust content surrounding spa services, amenities, and packages to build awareness of your onsite spa services. Feature an image gallery of your spa facility and treatments so website visitors can get a true sense of what the spa experience is like. Interactive website

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Examining average cost of sale, hotel marketers can evaluate missed opportunities for capturing full revenue potential on every booking.

Industry Journal - Revenue Management SEPTEMBER 2019

• Experiential dining and spa packages: One of the best ways to drive ancillary revenue is to create enticing packages where spa and dining is paired with a hotel stay. Romance packages that include a stay in a suite with dinner or spa treatment for two for weekend stays tend to be a high converting package for couples. Meanwhile packages that offer an F&B credit for each night booked tend to be popular amongst groups or families. Don’t be afraid to get creative and experiment with different package pairings that work best for your property. For instance, if your hotel is pet-friendly, creating a package with simple pet add-ons such as a pet bed and welcome treats could provide your hotel with low-margin value-adds that allow you to drive significant incremental revenue.

2. Implement interest-based content personalization It’s no secret that a hotel’s website plays a critical role throughout many phases of the travel planning journey. From dreaming to booking, the hotel website serves as a travel planning resource for potential guests. Website content personalization based on users’ interests is not only an effective tool to increase conversions by as much as 40%, but helps to boost awareness and revenue towards ancillary offerings. For instance, if a website visitor has already been to the website and has visited the spa or dining section, you can tag the user as interested in that

• Editorial blog content: Fresh, consistent content surrounding your ancillary offerings is an impactful way to drive awareness and interest of your spa and dining offerings. Once again, creativity is key. Editorial content should have something in it for the reader outside of driving awareness of your spa and dining offerings. For instance, an editorial article could be “Our Top 5 Spa Treatments you can Recreate at Home” or even feature easy at-home recipes from your restaurant’s chef. Aside from adding value to the reader’s life, editorial content should position your spa and dining options as the hero of the hotel stay. For instance, an editorial blog post could focus on the perfect couple’s weekend getaway and feature a weekend itinerary for couples integrating your restaurant and spa throughout the itinerary. Consider promoting your editorial content through native advertising for additional engagement and reach.

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If your hotel is pet-friendly, creating a package with simple pet add-ons such as a pet bed and welcome treats could provide your hotel with low-margin value-adds that allow you to drive significant incremental revenue.

Industry Journal - Revenue Management SEPTEMBER 2019

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Providing content that interests website visitors at the right place and time when they need it most is one of the most critical ways to drive ancillary revenue.

content, and when they return to the website to continue their research and planning, the spa or dining content should be highly visible and personalized on the homepage. Content can include a homepage hero image featuring an image of a spa treatment and a spa package prominently displayed when scrolling on the homepage. Once a potential guest explores your hotel and its unique selling points, upon revisiting your website the user should never have to dig around for the content that interests them most. Overall, providing content that interests website visitors at the right place and time when they need it most is one of the most critical ways to drive ancillary revenue. 3. Drive awareness of ancillary offerings in your CRM strategy Once a potential guest books with your property, consider sending a pre-stay email highlighting critical revenue growth opportunities such as a room upgrade or spa and dining packages,

and include seamless calls-to-action where recipients can easily book a spa treatment or dining reservation. Capitalize on the excitement and anticipation of the upcoming trip by sending the email about two weeks before the guests’ arrival. While a pre-stay email is a great opportunity to drive ancillary revenue, don’t forget communication with guests during the in-stay experience. For instance, as part of your CRM strategy, consider an in-stay email sent to guests on the day of their arrival. The in-stay email can include crucial information to their stay including a weather forecast, upcoming events during their stay, and of course, dining and spa offers. To further enhance guests’ experience, include personalized messaging and complimentary offerings. For instance, if you are already collecting website pathing behavior for content personalization and the user has been tagged as interested in spa, your in-stay email can be personalized with a complimentary spa add-on with a treatment of $250 or more.

Industry Journal - Revenue Management SEPTEMBER 2019

4. Remarket spa and dining offers to guests who have already booked

6. Create unique ancillary revenue opportunities

Another strategy to drive awareness and revenue towards spa and dining is through remarketing. Once a website visitor books, include the user in a new remarketing pool to serve display campaigns surrounding your dining and spa packages or other ancillary opportunities leading up to their stay. Retargeting users who have booked across social media channels is a great way to reach upcoming guests where they are spending the most time online. Campaign messaging can also build anticipation and excitement for guests’ upcoming stay with creative messaging such as “Your Upcoming Stay is so Close You Can Taste It… Enjoy Dinner for Two and Indulge in Two Complimentary Appetizers.”

To truly move the needle on boosting ancillary revenue, hotel brands need to think outside of the box and create new revenue opportunities beyond dining and spa. For instance, creating a seamless way to book onsite property features online such as cabanas, bicycles, or even paying a bit extra to reserve that perfect seat at the lobby bar are all unique examples of ways hotels can get creative to boost ancillary revenue. Website visitors should be greeted with endless opportunities to upgrade their stay throughout a simple online booking process. Hotels can even consider allowing guests to book welcome champagne, a treat basket, or a welcome suprise. ◆

5. Market spa and dining with content during the in-stay experience Once a guest is on-property, it’s important to ensure that your spa and dining options are front and center. One easy way to accomplish this digitally is to serve an alternate version of your website for guests within a specified radius of the hotel. When hotel guests visit your website on-property, they should be served the most relevant information to their stay including check-in and check-out times, nearby activities and events, as well as spa and dining specials and packages.

Margaret Mastrogiacomo leads creative strategy and provides strategic direction for marketing initiatives including copy, website design, and campaign development for NextGuest Digital clients.

Consider making these packages exclusive and above and beyond any packages they may have explored on your website prior to their stay. They may have already explored your packages but were not enticed to book, so a “sweetener” to the offer while on property might inspire guests to indulge.

Her responsibilities include strategy and consulting, campaign management, new product development, and more. She has been instrumental in developing award-winning multi-channel marketing campaigns and interactive mini-sites and applications for NextGuest Digital clients. Learn more about the next level in hospitality digital marketing at

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Industry Journal - Revenue Management SEPTEMBER 2019

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HOSPA RM Insights Over two-thirds of survey respondents have an investment in an RM system at their property, but more need to spend further on staff training to exponentially increase their results.

By Jane Pendlebury, CEO, HOSPA

ane Pendlebury, CEO of hospitality association, HOSPA, said: The survey results make for interesting reading. More than half of the people questioned haven’t taken a course or done any form of training, yet over three quarters admitted that revenue management is either 'extremely' or 'very' effective in driving income in their business. Further still, over two thirds said they have a revenue management system in operation at their property, so investment has been made - however perhaps further investment in staff development would exponentially increase results. Revenue management offers a wide range of benefits, from maximising occupancy to improving yield, but it is an ever-evolving topic and there are continuously things to be learnt there’s always room for improvement.

It is surprising then that less than half of those questioned said more training would make revenue management more effective in their business. By enrolling in a course such as ours, it ensures that teams are kept fully up-todate with industry trends and developments, essentially future-proofing their offering. A solid understanding of revenue management principles, with the opportunity to relate back to their own property, is invaluable. We always get very good feedback from those who have taken part. For more information or to enrol, visit

hospa.org

Historically, revenue management was known as ‘yield management’ and was all about selling ‘the right room, at the right price, to the right person, at the right time’. While the name has changed, it’s still a very commercial part of a hotel and can still be incredibly useful for hotels when looking to target both new and returning guests and utilising ALL of the facilities on offer at your venue.

Industry Journal - Revenue Management SEPTEMBER 2019

Video: Creating a culture of revenue management

HOSPA - the Hospitality Professionals Association HOSPA is a not-for-profit educational organisation, formed to bring together professionals involved in all things commercial within the hospitality industry in the UK.

for all the latest news on HOSPA & HOSPACE

www.hospa.org | hospa@hospa.org Industry Journal - Revenue Management SEPTEMBER 2019

What the future holds for tomorrow’s 15 revenue manager In 2020 and beyond, revenue managers will need a mélange of skills. Here are three core areas of focus that true leaders of this discipline will need to evolve.

By Scott Pusillo, CRME, Sabre

he last decade has seen an interesting shift in the roles and responsibilities of hotel revenue management professionals. Gone are the days of simple pricing changes, Excel spreadsheets, and restriction management; tasks that at one time seemed so complex it could fill a whole day. As we prepare to cross into a new decade, this crucial position has evolved into a mélange of skills – multiple roles manifested in a single

leader who is part pricing optimizer, part digital marketer, part trend analyzer, and part technological innovator. A focus on so many aspects of true revenue and profit optimization can seem like a near-Herculean task. So how are the revenue leaders of today to be successful in this brave new world of tomorrow? Here are three core areas that will help focus your vision for 2020 and beyond.

Industry Journal - Revenue Management SEPTEMBER 2019

Break the silos In my experience, the best revenue managers are the ones who form deep partnerships with their sales, marketing, ecommerce, and operational teams. The leaders of tomorrow keep one eye on developing appropriate strategies, and the other eye on the way those strategies reach their intended audiences and are implemented in the hotels. This convergence between what are typically independent workstreams is paramount to success in a world where the lines between distinct commerce models are increasingly blurred. A progressive revenue leader will have as much say in how digital advertising budgets are spent – down to the channel, period, and keywords – as they do in what length of stay strategy to deploy on a given date. They will be acutely aware of guest feedback and RFM scores, involved as much as their guest service counterparts, in order to understand areas of opportunity to package guest experiences differently. They will understand ROAS and CTR as much as RevPAR and GOPPAR, helping to steer marketing dollars to the most profitable channels. In addition to departmental silos, it’s important to also break down skill set silos. No longer is it just enough to be a “number nerd”, instead we need to use both sides of the brain – the analytical and the creative – to capitalize on opportunities to maximize guests’ share of wallet. As we groom and recruit new talent, we must seek out business leaders who can effectively develop robust microtargeted strategies in nontraditional commerce mediums. Such evolution will result in the leaders of tomorrow being true commercial visionaries. Think outside the room Traditionally, hotel revenue management focused on managing room rates and inventory to drive optimal revenue and profitability. However, such

a room-centric strategy will no longer be enough to set you apart from your competition as you chase increased market penetration. We can begin by elevating our strategies to account for the ability to unbundle certain, or all, aspects of a hotel experience. Shifting consumer behavior necessitates a new focus on retailing and personalization. While I’m not suggesting hotel distribution becomes an Amazon marketplace, I do suggest we look hard at understanding perceived value and willingness to pay, and then monetizing appropriate aspects of a guest experience. Ask yourself, what if the hotel room wasn’t the center of the purchasing decision? What if it was the restaurant? What if it was a local attraction? What if it was a unique amenity, like a water park or a concert series? How about hourly usage of a vacant small meeting room or those covered poolside cabanas? Imagine the possibilities in retailing if the room was secondary in merchandising, and a hotel could serve up relevant offers based on a wide array of inspiration points, in addition to guest rooms.

“

The next decade is sure to see changes in the people, skills and technology that make up what we’ve traditionally called revenue management.

Industry Journal - Revenue Management SEPTEMBER 2019

As important as personalization of the shopping experience, is developing and understanding traveler personas – thereby personalizing what is displayed as an offer and avoiding inundating consumers with irrelevant content. It is easy to shift to retailing without understanding how to target those greatly expanded offers to the most relevant shopper. By shifting from a room-centric transactional view to a personalized retailing view, the industry has the opportunity to generate revenue at every point of inspiration. Embrace new technology In order to take full advantage of this changing mindset, we must adapt and recognize the limits of our time and skill set. While it’s important that revenue leaders in the next decade think more strategically than tactically, we must also employ new tools to optimize those initiatives. Passion and perseverance alone won’t fundamentally change performance; technological systems and tools must complement efforts to implement such bold and industry-changing strategies. As we break down silos and shift towards sales beyond just a room, it is important to embrace technology that facilitates smarter decisions and faster adoption. Take, for example, Sabre’s Synxis Intelligent Retailing, a first of its kind product to aide in retailing, distribution, and fulfillment within the hospitality industry. It is built on the premise of “Infinite SKU’s”, a concept which puts product packaging in the hands of the buyer and therefore unlocks an endless number of potential combinations. SynXis Intelligent Retailing will not only allow guests the flexibility to choose what’s uniquely important to them, but it will be able to offer up suggestions to add-on in much the same way as Amazon, based on known behavior and refined through artificial intelligence and machine learning. This process of decoupling the rate,

room, policy, and enhancements will offer a truly personalized guest experience at the point of purchase. Without a robust technology system to support creative distribution strategies, the same output would take tremendous time and effort, and result in infinite permutations simply unmanageable for a single individual. The next decade is sure to see changes in the people, skills, and technology that make up what we’ve traditionally called revenue management. As this exciting transformation continues in front of our eyes, it’s important to be self-aware of the opportunities before us, and to not be afraid to ask “why” or “why not”. Indeed, such curiosity about the possible and the unrelenting pursuit of innovative strategies positions the revenue leader of 2020 with a focused vision for success. ◆

Scott Pusillo, CRME, spent more than 18 years in the hospitality industry, including senior leadership roles in revenue management, distribution, and sales with leading global hotel brands. At Sabre, Scott is lending his industry experience to help deliver the next generation of hospitality technology solutions to a hotelier community excited to step into the next decade of revenue and distribution. For more information, please visit sabrehospitality.com

Industry Journal - Revenue Management SEPTEMBER 2019

THE POWER OF ONE

Industry Journal - Revenue Management SEPTEMBER 2019

2019 GLOBAL SURVEY Revenue Management

A look to the future: desired improvements What users want: a wish list of ways revenue management systems could be developed to make them even more effective for hotel businesses.

By Professor Peter Jones, Dean of eHotelier Academy

o complement the views collected on respondentsâ&#x20AC;&#x2122; views on the effectiveness and utilisation of RM systems, one section of the eHotelier survey focused on the nature of improvements from the point a view of the user. This was achieved by asking "What would make revenue management more effective in your business?â&#x20AC;?. Better data Respondents were asked to indicate on a five-point Likert scale, from significant improvement to no improvement, their responses to a number of preset statements. The results are shown in the illustration (right). The responses have been presented in ranking order using a weighted average. Respondents considered that all aspects would make

improvements in the systems, but the most significant improvement areas desired were overall improvements in data. This could take the form of both improvements in the data on which to base more detailed analysis for decision-making, and ways in which data could be presented to the user in a more usable form. The overall strength of the responses indicates that such improvements would lead to a significant improvement in the systems as the 90th percentile line indicates. What is also clear from the responses is that users are positive in the use of the systems and are looking for improvements within revenue management systems. This correlates strongly with the overall view on the effectiveness of the systems. Over 97% of respondents considered the systems to be very or extremely effective. (see Benefits and Effectiveness article p.18)

Industry Journal - Revenue Management SEPTEMBER 2019

eHotelier 2019 GLOBAL SURVEY Revenue Management

The one standout finding that does not rely on improvements to the RM systems themselves is the clear view of respondents on the importance of more training for all staff. Training leads to improvements in the systemâ&#x20AC;&#x2122;s use, and as the systems become more complex with better data and more detailed analysis, the need for enhanced training will increase. Practical considerations A textual analysis using word cloud (illustration next page) indicates that the majority of the users are still looking for something more obviously practical to do with the reporting of data, pricing decisions and revenue generation. The Word cloud shows through the sizing of the words, the frequency in the use of the words in the collective responses. This is illustrative and a collective view of where improvements can be made. The second question in this section provided opportunity for the respondents to complete free form fields with their own recommendations and suggestions for further improvements. Many of the 79 responses were detailed, with the users looking for very specific types of improvements. Industry Journal - Revenue Management SEPTEMBER 2019

eHotelier 2019 GLOBAL SURVEY Revenue Management

Free form responses

Summary

• “Incorporate the use of automated eCommerce management; social media, meta/ppc spend, travel ads management, targeted e-campaigns, etc. linked to trigger at certain thresholds”

Users have a high degree of correlation in the consensus that improvements in RM systems will come through better data presented in a more usable form. That in turn will support more detailed analysis on which to make appropriate decisions.

• “Make interchangeable pricing decisions automatically updated based on OTA sales and occupancy levels of surrounding properties” However, one user in particular was looking for something less specific and beyond just data more omnipotently suggesting: • “Have that sixth sense, as many times we override the system!” This could be achieved through Artificial Intelligence one day, perhaps?

The detailed additional comments indicate a degree of understanding of the limitations of current systems and the specific areas that would improve the effectiveness for users. The need to invest in training rather than recruiting revenue professionals is self-evident and given its importance to users, it is surprising that only some 50% had undertaken relevant training. ◆

Industry Journal - Revenue Management SEPTEMBER 2019

Video Insights Video: The Power of One

Video: From revenue management to revenue strategy

Industry Journal - Revenue Management SEPTEMBER 2019

Beyond pricing recommendations: 15 what else is RMS good for? The savviest revenue managers use a collection of tools to help refine their decisions and gain insights into discounting and distribution as well as their competitorâ&#x20AC;&#x2122;s pricing strategies.

By the OTA Insight team

evenue management: art or science? Well, the discipline has elements of both, and probably always will: sometimes revenue managers just have to go with their gut feeling on pricing decisions. But the past 20 years have seen an unstoppable rise in ever-more sophisticated technology and data for the hotel industry.

This also coincides with the proliferation of online travel agents (OTAs), and the internet more generally as a toolâ&#x20AC;&#x201D;now the main toolâ&#x20AC;&#x201D; to search for, compare and book rooms. This mix of tech and data has fed into and bolstered the scientific side of revenue management. This has always been strong, with

Industry Journal - Revenue Management SEPTEMBER 2019

mathematically robust theories on everything from price elasticity of demand to calculating a room’s break-even point dating back decades. But putting numbers gathered from the field into these equations via tools designed to help analyse them has brought scientific practice level with theory. Of course, revenue management systems (RMSs) are playing an increasingly important role in the hotel industry. 62% of the 1,000 respondents to eHotelier’s recent survey reported that they use an RMS, with a further 24% indicating that they planned to implement a system within two years. And 42% of respondents said that revenue management is “extremely effective” in driving income in their business. But revenue management doesn’t stop with RMS pricing recommendations. The savviest revenue managers use a collection of tools to help refine their decisions and gain insights into their competitors’ pricing strategies. Complementary systems Keeping on top of competitors’ prices is one of the most important—and potentially onerous —daily tasks for a revenue manager. That’s where rate shopping tools come in. In some ways simpler than RMSs, they can provide a fuller picture and help drive strategic business decisions with more confidence.

A good rate shopper, such as OTA Insight’s Rate Insight, helps you respond to your competitors’ prices and other factors, using quality, real-time data to provide actionable insights that allow you to boost hotel performance with minimal fuss. We outline the features to look for when choosing one for your property or properties in this article. These include: freshness, quality and accuracy of data; shopping across multiple distribution channels; monitoring parity; including a good events database; robust applesto-apples room-type comparisons; and offering rate evolution data and visuals on your own and your competitors’ rates. Indeed this last item helps you infer whether your competitors are using rate shoppers themselves: unlike the small automatic adjustments of a few dollars here or there that are typical of an RMS, big jumps in rates are more likely to have been made manually by someone taking insight from a rate shopper. But for this article, we’re more interested in what aggregate data from the thousands of hotels tracked by Rate Insight can tell us about pricing, discounting and distribution strategy. Length-of-stay discounting Good revenue management is more than a reactive exercise; it’s underpinned by a solid pricing strategy. This varies from one hotel to the next, but many hotels include length-of-stay (LOS) discounts as a component.

Rate evolution for a hotel and its compset showing rate against leadtime (OTA Insight)

Industry Journal - Revenue Management SEPTEMBER 2019

These are rarely needed when demand is high. But by offering guests a discount in return for a guaranteed number of nights, this strategy can help drive up occupancy during periods of low demand. As Matt Stephens, president at eHotelier, says of his time as a hotelier: “One of the regular challenges I experienced, which is shared by all general managers I speak to, is not what to do when business is strong, but how to effectively manage revenue during seasonal or economic downturns?” So the practice of LOS discounting will chime with him and many others reading this article. But just how common is it? And what else can we say about the way hotels discount by LOS? Starting with the leading global chains, we analysed the rates of over 50,000 hotels around the world for a global LOS report. To drill down into discount strategies applied, we compared three consecutive one-night prices with the price for a length of stay of three nights across a selection of hotels. From our Rate Insight data, we investigated: the proportion of hotels that apply some sort of LOS discount; how often they are applied; how high those discounts are; and what we know about the types of hotels that deploy this strategy. LOS discounting in ANZ: a short regional case study We also broke the data down further by world region. 1,801 of the properties we looked at are in Australia and New Zealand. The results from this, the first of the regional reports we published, were eye-opening. When you consider all of the investment in revenue management, pricing strategy and other technology that large hotels make, one of the most interesting and surprising findings is that 72% of this region’s properties in the study applied no LOS discounting whatsoever for the period in question.

“

Monitoring and taking action on parity is where revenue and distribution management meet.

And of the 28% of the market we tracked that do offer LOS discounts, only 74% appear to have a properly defined strategy, as described in the report. That’s just 22% of the total hotel count for the region. That said, the importance of having a strategy for LOS discounts is underscored by the clear evidence that all 15 of these highly successful international chains that we analysed do have one, at least for some of their properties. Our regional report breaks down our other findings in ANZ, with highlights including: the spread of discounting frequencies; the spread of

Industry Journal - Revenue Management SEPTEMBER 2019

discount sizes; and how chains with seemingly similar discount frequencies apply significantly different strategies, as revealed when digging deeper into the data. Other regional reports will follow. Other discounting we’ve tracked: members’ rates and advanced purchase Later this year we’ll publish the findings of another study into discounting. Based on analysing the data of over 27,000 properties across eight global chains, it looks at members’ rates and advanced-purchase discounts. Here’s a preview of some of the key findings: The hotels we tracked offered members’ rates virtually all of the time (99.5% of the time, to be precise), with an average discount of 4%. Advanced-purchase discounting wasn’t quite as ubiquitous, the average frequency for all the properties we analysed being 77.9% of the time. But the average discount size was more generous at 9.1%.

More granular analysis reveals subtleties in strategy when looking at factors such as lead time and day-of-week. But we’ll save that for the report. It also shows the frequency of combining both types of discount, which is usually lower, and the size of combined discount, which is always higher, as you’d expect; for one chain, it’s close to 20%. Distribution and parity in North America and Europe: what the data tells us One report you can access straightaway is our latest annual hotel parity review, which covers 28,000 properties in North America and Europe belonging to nine global chains. Monitoring and taking action on parity is where revenue and distribution management meet. Taking advantage of the wider reach offered by OTAs is a sensible strategy, but only if you minimise the reputational and revenue damage of OTAs undercutting your rates, be these contracted OTAs or those to whom wholesalers have on-sold your rooms. How big a problem is it? According to our analysis, it’s significant.

Industry Journal - Revenue Management SEPTEMBER 2019

“Win” (light blue), “Meet” (dark blue) and “Loss” (orange) stats for independent and local chain hotels in Europe vs OTAs (OTA Insight)

Here are some of the highlights, based on data for the whole of the 2018 calendar year: • In Europe, OTA rates were more competitive than Brand.com 45% of the time for the major chains we looked at. The equivalent figure for independents and local chains rose to 53%.

would make revenue management more effective in their business, with over half saying the improvement would be “significant”. Good rate shoppers meet this demand, whether from the insights they offer in making dayto-day decisions or the rich array of data that informs your overarching pricing strategy. ◆

• In North America, the picture wasn’t quite as bleak, but at 35% and 46% for major chains and independent and local chains respectively, there’s still a significant issue for hoteliers to address. We divided rate disparity ranges into buckets. In both regions, the most common size of disparity was between 5 and 15%, which occurred in nearly half of European cases and 61% of North American ones. But it was as high as 25% in 10% of North American cases and 5% of European ones.

Better, useable data

Insight empowers hoteliers to make smarter revenue and distribution decisions through its marketleading suite of cloud-based business intelligence solutions including Rate Insight, Parity Insight and Revenue Insight. With live updates, 24/7 support from our customer success team, and a highlyintuitive and customisable dashboard, the OTA Insight platform integrates with other industry tools including hotel property management systems, leading revenue management systems and data benchmarking providers. OTA Insight’s team of international experts are based all over the world, including the UK, US, France, Germany, Belgium, Spain, Italy, Brazil, Mexico, Singapore, Australia, India and Greece, and supports more than 40,000 properties in 168 countries. Ranked one of 10 “Ones to Watch” in the Sunday Times Tech Track 100, OTA Insight is widely recognised as a leader in hospitality business intelligence.

Almost all of eHotelier’s survey respondents said that “better data in a more usable form”

For more information, please visit

The full report highlights the channels responsible for these potential losses. How many do you work with? What could your losses add up to? Parity can be monitored through Rate Insight’s parity tab or on its sister tool, Parity Insight. See also: the real rate parity problem no one is talking about, which identifies the wholesalers behind on-selling to non-contracted OTAs.

otainsight.com 40

Industry Journal - Revenue Management SEPTEMBER 2019

Hotel solutions that empower you to make smarter revenue and distribution decisions with

RATE INSIGHT PARITY INSIGHT REVENUE INSIGHT

“It’s a real game changer” Alexis Warburton, Regional Director, Revenue Management and Distribution, Highgate

Visit www.otainsight.com to start your free trial Industry Journal - Revenue Management SEPTEMBER 2019

From Revenue Management to Revenue Strategy The ‘path to differentiated performance’ involves the convergence of all revenue-impacting functions — including sales, marketing, and revenue optimization.

By Robert A. Gilbert, CHME, CHBA, President and CEO, Hospitality Sales and Marketing Association International (HSMAI)

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Inspired by HSMAI’s work on the new edition of Evolving Dynamics: From Revenue Management to Revenue Strategy — the study guide for the Certified Revenue Management Executive (CRME) credential — leaders within our community have been thinking and talking about the future of hospitality sales, marketing, and revenue optimization both as separate disciplines and as an interrelated, fully converged profession. Similarly, at HSMAI’s ROC 2019 event in June, there was much discussion about the future of revenue optimization specifically — fueled by a keynote address from Virginia Tech hospitality professor and former Marriott International executive Dave Roberts. He suggested that the discipline will go in whatever direction we take it and lobbied for a “path to differentiated performance.”

is the science of managing a limited amount of supply to maximize revenue and profits by dynamically controlling the price and quantity offered by distribution channel. It is selling the right amount of inventory at the right pricing levels based on the customer’s willingness to pay.

HSMAI is convinced that this path is essentially Revenue Strategy, which is the convergence of all revenue-impacting functions — including sales, marketing, and revenue optimization. Indeed, it’s fair to ask, what’s the difference between revenue optimization and Revenue Strategy? Simply this: Used in many industries, revenue optimization

Industry Journal - Revenue Management SEPTEMBER 2019

Revenue Strategy takes revenue optimization to the next level. It is a longer-term, comprehensive, holistic approach to driving profitability that is dependent on the collective and interdependent efforts of the equally important disciplines of revenue optimization, sales, marketing, distribution, and analytics. Revenue Strategy further breaks down these often-siloed disciplines so they have access to the same data, are aligned on their goals, and are ultimately collaboratively focused on profitability.

This is our future and itâ&#x20AC;&#x2122;s exciting â&#x20AC;&#x201D; because it offers a role for almost every hospitality professional in streamlining operations, maximizing revenue, and transforming the guest experience. For more information or to enrol, visit

www.global.hsmai.org

Prove your skills and experience by earning a globally-recognized certification from HSMAI. The Certified Revenue Management Executive certification offers you the chance to confirm your knowledge, experience, and capabilities in the field of revenue optimization. New study guide now available: Evolving Dynamics: From Revenue Management to Revenue Strategy

For more information, visit www.hsmaicertifications.org.

Industry Journal - Revenue Management SEPTEMBER 2019

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Industry Journal - Revenue Management SEPTEMBER 2019

2019 GLOBAL SURVEY Revenue Management

The revenue management training gap The growth in hotels adopting revenue management systems has not been accompanied by a corresponding growth in revenue management training. How will this potential stumbling block be addressed?

By Professor Peter Jones, Dean of eHotelier Academy

he first eHotelier Revenue Management Survey undertaken in 2016 did not address the issue of the RM training. The 2019 survey added two questions to determine the scale of the training being undertaken and who provided that training. These answers have also been correlated against those of the effectiveness of the systems and the recognised benefits to see if training has had any discernible effect.

Are you undertaking, or have you completed, a revenue management course?

Of the respondents to the revenue management survey, less than half indicated that they had completed a revenue management course.

Industry Journal - Revenue Management SEPTEMBER 2019

eHotelier 2019 GLOBAL SURVEY Revenue Management

Who provided your revenue management course?

Those having completed a revenue management course were predominantly working in hotels (83.2%) with much smaller numbers in education (5.8%) and professional services (2.4%).

These results indicate that training provides some gain in both the effectiveness of RMS tools to improve yield, generate revenue and improve decision-making.

The majority reported their roles as being General Managers, revenue managers, or senior executives at divisional or regional levels. Thus, over 81% of the respondents were in operational or senior roles within hotels at the property or regional/divisional level.

Those respondents who had completed a training course were asked to identify who had provided that course using a free form field. These responses were then tagged into identified types of providers and further classified as either internal or external providers.

The respondents having completed a course tended to be more positive when considering the effectiveness of revenue management systems in driving income to the business. They ranked RMS systems as being extremely or very effective at 80.2% compared to the total respondentsâ&#x20AC;&#x2122; views of 77.5%.

External training providers

There was a marginal difference in the views of those having been trained that more training of all staff would improve the effectiveness of their RMS - 49% compared to 46% of the total sample. This should be expected given that they were also more positive about RMS as contributing to the income for their businesses.

Of the external providers, Cornell University had the largest training share by a significant margin, as shown in the illustration above. Of the other providers, both HSMAI and local education providers collectively had 40.8% of the total survey share. It is recognised that this is a smaller subset of the total respondents, but clearly illustrates the dominant providers of external revenue management courses. The geographical reach of the external training providers, given that are both the Cornell and HSMAI programs are delivered online, indicates that Cornell has a wider global reach.

Industry Journal - Revenue Management SEPTEMBER 2019

eHotelier 2019 GLOBAL SURVEY Revenue Management

Internal Revenue Management Training Providers

Those having undertaken Cornell courses were located in Europe (28.3%), Asia (26.6%), and North America (20%). This compares to HSMAI, with its market penetration dominated by North America (69.2%) followed by Europe (but at less than 8% of the total number of respondents). Internal/RM training The data also indicates that 67% of the sample had completed external courses compared to the 33% internal. Of those having completed internal courses, the largest number of respondents reported that they had completed internal courses without necessarily specifying either the hotel group or whether the internal course was delivered by an external provider. Where specific hotel groups or suppliers were named, the largest course provider was Accor (see illustration above).

Industry Journal - Revenue Management SEPTEMBER 2019

eHotelier 2019 GLOBAL SURVEY Revenue Management

Summary Those having completed revenue management training were still less than half of the total respondents to the 2019 survey. Where training has been completed, the respondents indicate that there are recognised gains from that training, therefore investing in training will improve the efficiency and effectiveness of the revenue management systems. This supports the findings where more training for all staff was ranked third by all respondents in improving the effectiveness of the systems.

Internal courses are clearly important in improving the training base, but it is not possible to determine the standards of the outcomes of these uncertified in-house courses from the data collected. A more detailed study of the scale and type of the courses offered would be a useful in developing a better understanding in the future. ◆

While it could be considered to be selfevident that investment in training improves performance, it is of concern that training investment lags well behind investment in the systems. When training is seen in the context of respondents’ views on recommendations for the improvement to existing RM systems— citing more detailed analysis and better data in more usable form—it suggests that without training, these improvements will not be realised. RM training is not as extensive as may at first been thought. External certified courses account for two thirds of all courses, with Cornell and HSMAI being the major providers.

Industry Journal - Revenue Management SEPTEMBER 2019

Source Market Behaviour – why we must consider the ‘right guest’ more in revenue management Source market behaviour requires a deeper reflection on consumer behaviour when you observe the data and that is something that systems cannot do, and some humans are too lazy to do.

By Li Min Cheng

he textbook definition of revenue management in the hotel industry is ‘selling the right product to the right guest at the right time at the right price through the right channel.’ If you break down this simple definition, you see the 5 things you need to get ‘right’ in order to maximize revenue and ensure great customer satisfaction. The discipline and science of revenue management has been focused on controlling or

influencing the right price (Should it be $250 or $265?), the right time (Should we have 21-day book early package or not?) or the right product (Should we add breakfast or champagne to this package?) without sufficient focus, in my opinion, on the right guest. This is where the discussion on source market behaviour can make a difference in understanding why our guests are choosing to book or pay for a certain room. It requires a

Industry Journal - Revenue Management SEPTEMBER 2019

deeper reflection on consumer behaviour when you are observing the data. That is something that a system cannot do, and unfortunately, some humans are too lazy to undertake. Can you give us some examples of source market behaviour you’ve observed? During the recent HSMAI Revenue Strategy conference in Singapore, Google did a great presentation sharing with us the booking patterns of Indonesian customers in relation to Singapore. There were some distinct trends about them – they were brand conscious (according to the data, there were only 2 hotel brands that they were loyal to) and they booked extremely last minute. What was so revealing was contrasting their lead-time to book in comparison to other markets like India, who also exhibited a very last-minute booking behaviour. Understanding this nuance, whether their natural lead-time to book 7 days out or 14 days out, makes a big difference in a revenue manager’s ability to control price if the Indonesian market is a key source market for you. This prevents unnecessary anxiety-driven price adjustments which fundamentally cannibalize the integrity of your pricing strategy. Based on my observations, Chinese and Korean consumers also book at a notoriously short lead-time, but when it comes to certain familyoriented holidays (summer holidays), they can be inspired to book more in advance. I can imagine that these consumer booking lead times can vary by channel and segment to other countries as well.

longer and spend more within the destination to experience the culture, arts and local restaurant scenes. These variations are fascinating and absolutely essential in driving the right product and at the right price to sell to each guest. Based on my observations, source market behaviour answers the essential ‘why’ behind consumer behaviour and is a key cornerstone in strategic planning and a superior revenue optimizing strategy. ◆

With more than 10 years’ experience and an unwavering passion for the hospitality industry, Li Min is thankful to be in a career that marries the thrills of revenue management with the dynamism of a mega-hotel/integrated resort. Having been a blessed beneficiary of wonderful mentors throughout her career, she is most interested in nurturing and mentoring revenue and distribution professionals of the future. Li Min is also currently serving on the Alumni Board of her alma mater, the Blue Mountains Hotel School, based in Sydney, Australia.

The impact of source market behaviour also drives length-of-stay and ancillary revenue spend behaviour. If a certain source market is only interested in sight-seeing and taking selfies, their length-of-stay at a destination tends to be shorter. If they have a more mature traveler outlook on the destination, they tend to stay

Industry Journal - Revenue Management SEPTEMBER 2019

ehotelier.com

Industry Journal - Revenue Management SEPTEMBER 2019