A Conversation on Compensation Programs, KPIs, and Forecasting in Revenue Optimization

HSMAI recently hosted its Hotel Management Company Chief Revenue Officer Virtual Executive Roundtable, including revenue leaders from Chesapeake Hospitality, CoHo Services, Concord Hotels, Crescent Hotels & Resorts, Crestline Hotels & Resorts, First Hospitality, Highgate, Hotel Investment Services, Inc., HVMG, Kessler Collection, Marcus Hotels, McNeill Hotel Company, North Central Group, Pacifica Hotels, Peachtree Hotel Group, Prism Hotels and Resorts, Real Hospitality Group, Shaner Hotels, Stonebridge Companies, and VRI Americas. The roundtable was presented in partnership with ZS.

The group discussed a wide range of topics affecting revenue optimization, including forecasting data points, compensation programs, evolving KPIs, food and beverage pricing, and more. The following provides a look into some of the takeaways and insights shared, as well as a snapshot of ZS’s presentation on compensation programs.

Positive Trends

Roundtable participants said they have noticed the following positive trends so far this year:

  • ADR has maintained high values
  • Continued expansion of leisure pattern
  • Strong direct bookings returning
  • Beginning of business travel recovery
  • Strong future pickup

Business Travel

When it comes to the rebound of business travel, revenue optimization leaders are monitoring various elements:

  • Midweek occupancy
  • BT/NEG segment performance, plus GDS channel performance
  • Arrival and departure patterns as well as trip length
  • Local restrictions easing
  • TSA pass-throughs midweek

When describing the challenges of the return of business travel and relationship management, one group member expressed, “When talking with our sales leaders recently, we asked how many of their BT contacts are the same people they were working with in 2019 and, overwhelmingly, it’s all new people they’re talking to. It’s a totally new client base they have to build from scratch because every industry has had turnover during the last couple of years.”


On the topic of forecasting, roundtable participants said these datapoints are the most insightful for their total demand forecast:

  • Pace progression
  • Booking window expansion
  • Focusing on short-term pickup trends
  • Understanding pace by segment and channel
  • K. recovery trends
  • Recent COVID variant recovery trends

Key Performance Indicators

In this new and ever-evolving landscape we’re in today, revenue optimization leaders say these KPIs are the most important for them:

  • RevPAR, ADR growth and GOP
  • Staff retention
  • There’s still a big focus on comparing to 2019
  • Pricing increases and changing food costs
  • OTA Insight: Revenue Insight

Food and Beverage

Since the start of the pandemic, participants said they have done the following to manage pricing for F&B:

  • Implemented limited menus and shorter hours
  • Meeting room rental increases
  • Dynamic pricing through use of QR codes and digital menus to update options in real time
  • Increased market items
  • Educating event team on profit margins so they can sell the right items

Another issue related to F&B, as one revenue leader expressed, is staffing. “Some of our hotels are delayed in reopening food and beverage because we can’t find the staffing. For a while, it was housekeeping staffing we were challenged with, but now it’s F&B and being able to find cooks.”

Incentive Compensation Programs

ZS presented on best practices for developing an incentive compensation program for directors of revenue management. These programs are important because they:

  • Align the team to the revenue strategy
  • Motivate people to implement strategy
  • Reward performance and achievement of strategic goals
  • Attract and retain talent to maintain and grow a strong company culture

ZS discussed that all incentive plans have advantages and disadvantages, and that the right plan type for your company will depend on the main objective you want to address. ZS recommends goal-based plans for property revenue management teams in hospitality that are aligned with strategy, fiscally responsible, fair, and simple.

Categories: Revenue Management
Insight Type: Articles