By Kaitlin Dunn, Writer, Hospitality Sales & Marketing Association International (HSMAI)
As part of its Confronting Coronavirus: What’s Next? webinar series, HSMAI hosted a revenue-focused program on April 9 called “Staying the Course.” Timothy Wiersma, founder and principal at Revenue Generation LLC, moderated a panel of experts that included Karen McWilliams, CRME, vice president of Revenue Strategy at Concord Hospitality; Dave Roberts, professor at Virginia Tech; and Nicole Young, CRME, corporate director of global revenue management at Rosewood Hotel Group.
Wiersma tailored questions to the panel’s experiences and expertise and also took individual questions from the audience. Here are the panel members’ insights and answers, presented in their own words:
What’s occupying most of your time right now, since most of the hotels in your portfolio are closed?
Nicole Young: “I’ve never busier in my career. What’s occupying my time is constant communication. Everyone is seeking information. We’re trying to understand our place in this situation. There’s a lot of communication between brand management and our owners. The decisions lie in that partnership. We’re working on establishing new metrics. Everything you’ve been conditioned to look for as wins, those benchmarks don’t apply right now. Keeping up with the pace of play is incredibly difficult. What we might hold as a fact might be drastically different in three to five days.”
What are some of the things you’re doing to drive results with your teams?
Karen McWilliams: “Empowerment has never been more critical than it is today. We’re encouraging our teams to work on the business, not just in the business. We’re investing a lot of time in reinvention and helping our team members think creatively. It’s not going to be one idea, it’s going to be multiple elements that get us into a different place than we are today.”
What is the importance of managing expectations right now?
Dave Roberts: “Managing expectations is critical. No matter how talented you are as a revenue leader, it’s highly unlikely that you’ll be able to mitigate a significant portion of this disruption. It’s important to get your head around that and communicate that to your stakeholders.”
How important is revenue management in a downturn?
DR: “Inventory management matters about half as much during a downturn than a recovery. Pricing, however, is even more important in a downturn than in a steady state recovery. Pricing mistakes are more expensive. If you have a high-demand environment and you make a pricing mistake, you can make some adjustments and recoup most of the losses. You don’t have that opportunity in a downturn.”
KM: “We’ve got inquiries and bookings happening in Q3 and Q4, so if a hotel suspends operations through June, there are still lots of requirements that a revenue strategist needs to take care of.”
With reduced staffing, how are you looking into the future?
KM: “We’ve had to do some more cross training. We’ve also had to reevaluate what our tasks were. When we have to move forward, we have to think, what is the best value for our time? There’s a lot of pitching in and willingness to learn something different.”
Do you see any tactics that are working right now in your hotels in China?
NY: “I can’t say we expect to mirror recovery in China, but some elements will be similar. What we’re seeing in our China hotels is that demand is coming back hyper-locally. Before we have demand for overnight stays, we’ve got demand for local catering, spas, and outlets. That has informed how we’re stepping into recovery planning.”
How should revenue leaders be using AI or other pricing technology?
DR: “We’ve never had automated price modeling in place on a broad scale during a downturn. One thing to keep in mind is these price models look at competitor rates and compare your rate to figure out a price response. If every hotel is shopping every other hotel, you run the risk of an AI-driven spiral. I don’t think that’s going to happen, but we’ve never seen this before, so my advice to revenue leaders is to keep a close look at your pricing engine, and if you think you’re going to trigger a spiral, override that thing.”
AN EYE ON THE FUTURE
What can we learn from the past?
DR: “Anytime there’s a demand disruption, there will be enormous pressure to show you’re doing something. That pressure will come from bosses, stakeholders, colleagues, and even yourself. You’re going to have a to-do list, but don’t put things on it because it looks too short. Only put activities on it if the idea is a good idea in the present environment. For the newer revenue managers, get guidance from your teams. For the above-property teams, audits are really important to see the extent to which you’re executing your stated strategy.”
What can we learn from other industries?
DR: “Hyundai, in the last downturn, realized people that were afraid of losing their jobs weren’t buying cars. So, they offered to buy back people’s cars if they bought a new car and lost their jobs. It was brilliant. For us, we can waive cancellation fees, or have policies that if a guest’s event is canceled, we waive it.”
If we fast forward eight weeks, what do you think your biggest priorities will be?
KM: “The needs of our clients will be different. We’re really reaching out and seeing how this has affected customers and what their new objectives are to address the uncertainty and understand their needs for the future.”
Based on what you’ve seen in other markets, what can we expect and not expect?
NY: “We might not go from zero to 60. This recovery might be more of a tiptoe back into our operations. Health and safety will be paramount. What we have seen in markets that have relaxed restrictions is a resurgence, so it hasn’t been as simple as going back to business.”
What data are you looking at to give indicators of resurgence?
KM: “Every day, we look at what booked the day before and where, so we really understand that and see what’s coming into the sales funnel.”
NY: “We’ve been having some industry panels on the client side, from industries that we rely on heavily for demand. They’re opening up and talking about what they anticipate being the economic factors that will impact their tolerance for spending and how they will be looking at the health and safety factors.”
How do you communicate with owners who want to drop rates?
NY: “This is the time to open up our data with our owners, so they might be able to understand the profile of business to make pricing decisions. Everyone wants to do something and they’re facing their own pressures, and giving them insights is the best strategy to help align with your owner.”
What do you see happening in Q4 of 2020 or into 2021?
DR: “We’re in a two-phase downturn. One is the immediate health scare where nobody is traveling. When we come out of that, then we’re in an economic recession. It’s easier to hang on to rate if you’re running 10-percent occupancy. The challenge will be in the economic downturn, which will look more like 2008–2009.”
Watch the entire HSMAI Confronting Coronavirus: What’s Next? webinar “Staying the Course: Spotlight on Revenue Optimization” here. For additional information, insights, and tools, visit HSMAI’s Global Coronavirus Resources page.