The hotel industry has talked about the evolving revenue manager role for at least a decade, but the global pandemic accelerated the evolution that was already happening. As demand came to a halt, revenue managers needed to shift gears essentially overnight. Then, as travel restrictions changed disparately throughout the globe, they needed to continue to adapt on an almost daily basis. Now, demand looks very different than it did in 2019 and historical data won’t tell today’s story. The need to break down silos between departments has never been more important.
“What’s really changed, from a hospitality industry perspective, we’ve now evolved from a world in which we had demand coming to us. Now we have to go out and find new sources of demand,” says Mike Medsker, Co-Founder and President of Focal Revenue, and a Hotel Recovery columnist.
That’s why the need to bring revenue management, marketing, and sales together has become more crucial than ever as the hotel industry heads toward recovery. The message is clear: Silos stifle success.
Breaking Down Silos
But even though the industry has been working toward aligning revenue management, sales, and marketing for years, Medsker says there have always been some critical barriers to truly achieving a commercial strategy.
Some in the industry are really working to break through those barriers. For one, Kimpton Hotels & Restaurants rolled out a chief commercial officer on the corporate level, notes Justin Platt, Director of Revenue Management at the 200-room Hotel Born in Denver, which opened in August 2018.
“So, from a corporate standpoint, that’s the foundation they were able to develop,” he says. “From a property level, we’ve found success partnering with the director of sales and the director of digital marketing, and being able to cohesively drive strategy versus being in a silo and everyone doing their own thing.”
In order to find that success, Platt says he is in contact with the director of sales daily—and the communication doesn’t stop. “If we have a strategy we need to implement or if a thought comes into our mind, we pop into each other’s office and figure out how to make it happen.”
He also advises that now isn’t the time to “set it and forget it” when it comes to marketing, and flexibility is critical. Hotels are now tapping into new demand pools they hadn’t been accustomed to before. There is pent-up demand out there, no doubt, so marketing strategies need to be nimble in order to adapt.
“Specifically, earlier this year, you had certain cities opening or closing and guests wanting to get out of there. It was all about being able to tap into that market and say OK come to Denver. Be flexible. Every week and every month are a little bit different,” Platt says. “One of the biggest things we look at is month-over-month transient pace and being able to draw trends there. Before, everything was year over year, but now it’s month over month because things are adapting quicker.”
However, breaking down silos isn’t always as simple as facetime with the director of sales or director of marketing. It’s about the data.
“First and foremost, it comes back down to the way that you engage with your data. If you have siloed systems where you have a director of marketing who’s pulling data from one system, a director of revenue pulling data from another system, and a director of sales who might be looking at the sales and catering system, it’s really challenging for everybody to fundamentally align around the same objective,” Medsker says.
A cohesive commercial strategy can only find success if all the data is in one place and in a format that makes it easy for everyone to understand.
“It’s more than just a name change. It doesn’t do us any good to update a title without some improvements in the way in which we engage with our data and our data process management,” Medsker adds.
But it’s also about how often you’re looking at your data and meeting with key stakeholders. It’s not enough, particularly now when strategies and trends can change by the day, to only talk about your data once a week.
“If we can get everyone rowing in the same boat together, I think we’re going to be a lot more impactful as an industry,” Medsker says.
Good Data, Bad Data—What Data?
So, what are the critical data points that revenue managers need to keep an eye on? It changes from hotel to hotel, Medsker says.
“One of the challenges that I’ve seen play out again and again in the industry is that there’s a lot of consistency between the reports that a resort might look at and what an urban hotel would,” he says. “We’d do ourselves a favor by taking a step back and figuring out what the most important data points are for our particular hotel and building a report structure around that. I think oftentimes what happens today is we say, ‘I have this great report I used at my last job; I’m going to bring this over.’”
Some data points on the radar today that maybe weren’t a year ago include: geographic origin data and taking a closer look at length of stay or booking lead time data. While all of these metrics have always been around, Medsker says the industry hasn’t always been able to figure out how to capture them in reports in an automated way until recently. The goal is to be agile.
“If we’re spending 40% of our time compiling reports, that’s too much. We have to figure out a way to identify the most important metrics and then really streamline that analytical process so we can focus on taking action,” he says.
Additionally, over the past few years, the hotel industry has started to shift focus on data that tells a profitability story over the revenue narrative. While it might be a good start, the real question is: What are you going to do with that data?
“Everyone is focused on the bottom line,” Medsker says. “But, it doesn’t do us any good to understand that an OTA reservation might be less profitable if we don’t know how to backfill that.”
He says it’s become evident over the past year that hoteliers really need to understand their potential pools of demand and how to tap into those directly. It’s all about understanding your customer better and then building out a direct relationship. A lot of it ties back to the joint marketing and revenue optimization efforts. Once you start to bring those together, you can capture more direct customers.
At the end of the day, Medsker says the revenue management discipline needs to remove manual touchpoints that are bogging it down—especially as hotels are working with smaller teams in the aftermath of the pandemic.
“We need to get to a place where rather than relying on the revenue management team to deliver data to them, key stakeholders can simply pull up an intuitive report to answer their key impact questions,” he says. “It will allow for more agility.”