By Kaitlin Dunn, Writer, Hospitality Sales & Marketing Association International (HSMAI)
Over the past two weeks, HSMAI hosted two virtual Executive Roundtables for brand and hotel management company chief revenue officers to discuss the most pressing issues they are facing. The virtual Executive Roundtable for brand CROs was held June 30 and produced in partnership with Clairvoyix, ZS, and Phocuswright; find takeaways from HSMAI’s previous brand CRO virtual roundtable on March 24 here and here. The virtual Executive Roundtable for HMC CROs was held on July 1 and produced in partnership with Clairvoyix, STR, and ZS; find takeaways from HSMAI’s previous HMC CRO virtual roundtable on March 25 here and here.
Participating companies at the brand CRO roundtable included: Ashford, Auberge Resorts, Choice Hotels, Host Hotels, IGH, Loews Hotels & Co., Marriott International, MGM Resorts International, Omni Hotels and Resorts, PHG Consulting, Red Roof, RLH Corporation, and Rosewood Hotel Group.. Participating companies at the HMC CRO roundtable included: Charles Group Hotels, Colwen Hotels, Commonwealth Hotels, LLC, Concord Hotels, CoralTree Hospitality, Crescent Hotels and Resorts, Genuine Hospitality, LLC, Highgate, Hotel Investment Services, Inc., Island Hospitality Management, LodgeWorks, Lodging Hospitality, Marcus Hotels, North Central Group, OTO Development, Peachtree Hotel Group, Playa Hotels and Resorts, PM Hotel Group, Prism Hotels and Resorts, Pyramid Hotel Group, Shaner Hotels, Stonebridge Companies, Vail Resorts, and VRI Americas.
Participants at each roundtable chose what to focus on, but there were several overlapping themes between the programs. Here are key takeaways from the two discussions:
BUDGETING FOR 2021
Roundtable participants discussed 2021 budgets, which typically would start to be decided now, but some participants said they were holding off due to the uncertainty. “Internally we’re considering doing a very compressed budget season, not starting until at least September or October,” one brand professional said.
“We’ll have a delayed start and shorter than normal budgeting season,” one HMC participant said. “We have made the decision to do the modeling off of 2019, because it’s a better base to use than 2020.”
“We’ve started those conversations, as painful as they are,” another HMC participant said. “We had more than 30 ideas on our board on how to do this, but everyone kept coming back to the same thing, which is going back to 2019 and looking at the month-by-month decline to 2020, and build a transient and group forecast that supports that, which is the opposite of everything we’ve ever done. We believe if you try to do segmentation first, you’ll get what you’ve always gotten instead of what the market will bear.”
“We’re mindful that any time spent doing the budget is time away from the operation,” another brand CRO said. “We are looking at virtual options to save time and expense. We’re looking for our partners to tell us what they need and find something that works for everyone.”
One brand CRO said the budgeting process might be simpler in some respects this year because they have already been working much closer with individual properties and there is more clarity there. “We’re closer to the hotels that we ever have been, so it should be a seamless process,” the participant said. “They know our expectations and there shouldn’t be any surprises there.”
One HMC participant said that the forecasting information they need to present has changed. Another HMC participant said: “It’s not enough anymore for our owners and senior leaders, they want to see what’s on the books. There’s a lot more micromanaging and looking into details that in the past they never would have. Some of our traditional systems don’t work well to communicate the details, so we’ve been putting things in a Google Doc where it’s more easily accessible to them.”
Brand professionals said that they are mostly looking at predicting leisure travel and staying away from groups, because it will be a long time until those bookings return. “It seems like it will be so far off until we see any recovery in that area,” one participant said. “It’s sad, but it’s going to be the last part of our business that will return.”
Several other participants said the need for forecasting has increased, putting more pressure on their teams and elevating the importance of that skill. “Because the entire industry has been shut down, we don’t have any good data in our RMS system, so we’ve had to be a lot nimbler in our forecasting,” one HMC participant said. “Our team have been pulled into lots of different forecasting that they aren’t typically used to — ancillary revenue, rooms, total profitability.”
“We’ve centralized a lot more of our portfolio, but that means that we don’t have the bandwidth for that kind of forecasting that is needed,” another HMC participant said. “We’ve discussed hiring a dedicated forecasting team to take some of that off of the revenue managers.”
Participants said they are prioritizing customer sentiment data right now, citing several forecasting tools such as STR, internal data, and CBRE. “We’re relying more on third-party information than we ever have in this process,” one HMC participant said. “We have to listen to the customer.”
“What I found is that every region and submarket is very different, and we’re starting to see that some of the third-party data is messy compared to what our own data is telling us,” one brand participant said. “But we had to get to a point where we could rely on our own customer data again after our hotels were closed.”
PRICING AND ATTRACTING CUSTOMERS
There were several common themes between the two roundtables when it comes to making optimal pricing decisions. Many of the participants at the two roundtables have been through the 2008 financial crisis and/or 9/11, when the industry faced similar challenges, and said they were trying to communicate the lessons they learned from those events to their younger colleagues.
To start, many participants stressed that hotels should not lower rate, no matter what. “We’re sticking to our regular pricing philosophy, that pricing doesn’t drive demand,” one brand participant said. “This has not changed.”
While pricing is an important tool that hotels can use to attract customers, one participants pointed out that it’s equally important to focus on attracting customers who are likely to book instead of wasting resources and bringing down price in the hopes of attracting longshots. “We’re trying to help our hotels understand that they need to ‘fish where the fish are,’” another HMC participant said. “We’re coaching them to focus on travelers who are willing to travel right now, instead of trying to attract people who aren’t ready.”
Participants from both roundtables agreed that flexibility is still a key skill as it has been throughout the pandemic — and will continue to be for at least the immediate future. “We’re looking for team members who can reimagine the processes and know what they shouldn’t do anymore, in order to leave time to do what they should be doing instead,” an HMC participant said.
“We’ve automated and centralized a lot that used to be done at the property level, so that there is more structure and accountability,” a brand participant said. “Everyone else is doing things they haven’t done before. People have to be open to that and embrace it.”
Participants said revenue and sales have been working together more than ever. “We need people who can see beyond data and are willing to test new ideas,” one HMC participant said. “This is a departure for many revenue people, so we have been partnering with salespeople instead.”
“We need people who are able to cross over from revenue to sales,” a brand participant said. “Whatever gets thrown at us in the next 18 to 24 months, we need to know that they’re going to be able to handle it.”
Another brand participant added: “RFP season is coming up, but our salespeople are furloughed, so we have to take people from distribution to cover for them. It shows that there are some positive things that came out of this, like everyone being more willing to pitch in.”
For additional information, insights, and tools, visit HSMAI’s Global Coronavirus Recovery Resources page.