Revenue has been in short supply the past year, which makes every dollar that much more important. That means a hotel’s revenue-management strategy has the power, more than ever, to make a break a property’s success.
“Over the years, more companies placed higher value on revenue management and within the past year, throughout the pandemic, this became even more paramount,” said Cassie Bond, VP of revenue strategy for Chesapeake Hospitality. “Hotels literally didn’t survive or have been left behind in the climb back up to recovery.”
While revenue management has always been a very integral part of the success of hotels, said Lior Sekler, VP of revenue management for HRI Properties, the pandemic has forced his company to shift some of its strategies.
“The way we sell, the way we distribute, the way we look at business because right now, it's very much less leisure-centric and it's very much drive markets and very discount reliant,” he said. “We have to see how we play in the arena of proper pricing, not cannibalizing our price points, keeping rate integrity, and making sure that our hotels are still positioned well for the long-term vision, and not just focusing on the short-term successes.”
Chesapeake recently launched its own third-party revenue-management program called RevAdvantage to help hotels understand the importance of a solid revenue-management strategy as well as how to execute one.
“Forecasting can be a challenge in the best of times if you don’t have the right expertise, systems and tools at your disposal. It became even more difficult with the level of certainty that became the norm throughout this pandemic,” Bond said. “Bottom line is we are consistently using our systems and processes to run different forecasting scenarios weekly for our owners. “We forecast our day-by-day trends daily by segment—it then becomes a rolling forecast that is a live moving target that is updated as accurately as possible based on everything we know that day for the future.”
The recently renamed hihotels by Hospitality International is in the process of evaluating revenue-management systems to add to its preferred vendor program and educating franchisees about how a system can guide them in making sound revenue-based decisions.
According to Gary Gobin, Hospitality International’s director of operations, hotels typically use historical data to forecast their rates, which is dependent on the demand for room inventory in their market. They also take into consideration their competitive set, high demand dates, advanced bookings, special events and holidays when setting their rates and planning for room sales for an entire year. Gobin said that the process needs one adaptation during the current crisis.
“Hoteliers need to structure their forecasted rates and room demand, continually making updates so the hotel is always looking ahead,” he said. “They also need to take into consideration the current state of the pandemic in their market before setting rates and make an allowance for current room inventory. Keeping track of COVID outbreaks in a hotel’s market, including feeder cities, allows the hotel to change its rates according to the current demand and crisis.”
Because the historical data isn’t truly reflective of what the future is going to look like, there’s actually more human influence on revenue management right now, Sekler said.
“What the brands have done is paused a lot of the algorithm calculations and allowed more of the user interface or the user intervention with technology to determine the direction, the pricing and the selling strategies for the future,” he said. “There is a lot more human intervention and human interaction now. In the future, hopefully there's going to be a little bit less of that and more streamlining, but that's going to take time for those systems to recalibrate and readjust.