Four Revenue Topics in the Forefront

By Jennifer Hill, Vice President of Development, Kalibri Labs, and member of HSMAI’s Revenue Optimization Advisory Board

As part of HSMAI Road to Recovery 2020, throughout the fall HSMAI will host Recovery Connections, a series of live webinars paired with small-group discussions, each focused on a different topic in sales, marketing, or revenue optimization. HSMAI’s Revenue Optimization Advisory Board (ROAB) discussed the program’s four revenue-focused topics on a recent call, with ROAB members offering their input. The topics are:

1. Consolidating RM Organizations: The Good, the Bad, and the Ugly

The pandemic has led to many organizations streamlining their revenue teams to cut costs. “What I’m struggling with is figuring out how much a cluster of revenue managers handle for a number of hotels at a level of accuracy and deliverability that it would be sufficient to garner fees from it,” one ROAB member said. “I think I’ve gotten it wrong both ways where I’ve overloaded people and then ‘’ve also kind of underestimated some of our team members’ capacity to take on.”

Another ROAB member, whose organization already had a consolidated revenue team, said the pandemic has forced them to find the most effective ways to deliver their services to hotels that are now on a budget. “The struggle we’ve had has been trying to find the right fit for all the different scenarios,” the member said.

ROAB members also said they were interested in diving deeper into the role of leadership in a consolidated model. “It’s been a long dialogue about the role of the director of revenue management as being a more significant commercial leader,” one ROAB member said. “Is this consolidated effort at odds with that leadership role? Does it need to adjust its vision in that leadership role in the future with consolidation on the table or shared services?”

2. Recovery Mode Revenue Management: Never Let a Good Crisis Good to Waste

One thing that ROAB members mentioned as being a positive result of the pandemic is the increased interest in technology — in terms of both optimizing existing tech and investing in new tech. “It’s a quandary not having the investment for things,” one ROAB member said. “But we likely have unutilized functions in a lot of the technology we’re using now. Maybe that’s where the focus on technology should go.”

Another ROAB member said that they are taking advantage of dynamic pricing during the pandemic to try to make it stick. “I think there’s an opportunity here because of what’s happened really drive forward the dynamic-pricing model, not just on negotiated accounts, business travel, but even on the group side,” the member said. “I look at it as a chance to really make it more of the norm and not the exception. I think that’s going to help our industry and give more clarity to buyers.”

3. From Revenue Optimization to Profit Optimization: Build Your Business Acumen to Make Your Revenue Strategies and Tactics Optimize Profits

“We need to make sure that as recovery begins to happen, that we don’t lose sight of the value of different pieces of business and the profitability equation,” one ROAB member said.

ROAB members are planning in order to maximize their profits and adjust for different scenarios. “This is a disruption, not a recession,” one ROAB member said. “The difference that I see is that in a disruption, I’m doing things right now that I would never do, but when it gets fixed, I’m going to go back to doing what I used to do. This was different than when I was in a recession, where I had to create strategies that were short, long, and evolving. This is more of thinking about the strategy for today and waiting for the vaccine of tomorrow, so I can get back to business.”

Another ROAB member said that there are still too many unknown variables resulting from the economic recession and the public health crisis. “The conversation is around what do we do now, and in the next quarter, and long term,” another member said. “We want to show our value, so we start focusing on the things that are happening right now, But everybody’s refocusing their effort now in the same direction and paying attention to it. What are we going to miss on the periphery while we’re doing that?”

4. Setting Meaningful Goals When the World Is Wacky

One challenge that ROAB members mentioned is being held to a normal budgeting schedule. “In a lot of ways, we’re having to use budget to satisfy financial institutions,” one ROAB member said. “That is confusing to hotel teams and unfortunate, but we’re held to the version that would satisfy the needs of the financial institutions and in line with our hotel management agreement.”

Another ROAB member said that because there is so much uncertainty, his company is trying to pull in third-party data to use for forecasting and budgeting, but that comes with its own set of issues. “If it came to arbitration, we feel like we could stand behind the fact that we looked at a baseline case for our market and use that appropriately,” the member said. “The other key principle is that the hotel teams on the ground have been eviscerated, so we’re trying to streamline the process for them as much as possible and put out a reasonable guess. But using a set like that means knowing there is a lot of variability.”

For additional information, insights, and tools, visit HSMAI’s Global Coronavirus Recovery Resources page.

Categories: Revenue Management
Insight Type: Articles