Insights Type: Articles

By Kunal Shah, Associate Principal, ZS, and member of HSMAI’s Revenue Optimization Advisory Board

Technology is advancing at a lightning pace right now thanks to all of the innovation that has come out of the pandemic, changing how many revenue optimization professionals do their jobs. Along with being a topic of discussion at HSMAI’s ROC Americas event last month, HSMAI’s Revenue Optimization Advisory Board (ROAB) recently discussed how automation is coming into play on a recent call. Here are key takeaways from our discussion:

WHAT IS INTELLIGENT PROCESS AUTOMATION?

Intelligent process automation (IPA) is a system that mimics human action, is noninvasive, and is very quick to implement, making it a great choice for many revenue professionals to solve their problems. IPA can do things that many revenue management systems (RMS) cannot. “Where I think this could be valuable is that it almost can offer enhancement or customization to whatever your environment is, especially if you’re looking at something like portfolio management in some way,” one ROAB member said.

IPA is especially fruitful in problem solving, regardless of what area one is dealing with. By setting parameters or terms of search, IPA can mine data to identify potential problems. This allows human problem solvers to focus on solutions rather than trying to identify what is wrong.

Hoteliers shouldn’t worry about the scale of the problem when it comes to IPA; products are equally flexible when dealing with problems large or small. One ROAB member remarked that “even within IPA, there’s a spectrum of what can be done with it.”

Another ROAB member said that she found IPA to be valuable when she implemented it. “I had looked into it with one of our programs, where we had one person using a portfolio of hotels, and traditionally they would spend their morning collecting all of their reports,” the member said. “And by using IPA, they pressed a button and IPA went ahead and took all the reports, put it in a repository for them. And that freed up enough time per person that we were actually able to not only get more efficiency out of the associate, but we actually were able to reduce staff.”

WHEN TO USE IPA

ROAB members also discussed when IPA is most impactful. Companies must consider whether automating a system or simply replacing or upgrading it may be the best solution. One ROAB member suggested that when a project “crosses a certain threshold of investment that’s going to touch across the company and starts to get really big, that’s when you might want to start looking at some tech investments.”

Another issue to think about is the repercussions that come from automating a particular process. Companies should be wary of using IPA as a quick fix and should consider the downstream effects of automating a process. “IPA sometimes does something which will push the bottleneck somewhere else,” one ROAB member said. “Just think of it as a dam that you just open the dam and the water comes flowing in. Where two people might have handled it easily earlier, the increased efficiency might now necessitate a further investment, which companies may or may not be able or willing to make at this time.”

Another ROAB member added, “What I would suggest, if you’re ever going to go down this journey, is to be a little bit deliberate about choosing what automation software to use. Make sure you’re comfortable with whatever you’re building.”

With proven success on smaller projects, companies can feel more comfortable using IPA for larger projects. But whatever path a company chooses, they should build in ground rules and standardized processes, and above all, maintain a level of comfort with how they are using IPA. As one ROAB member said, “You have so many different pieces going on in these disparate ways as you scale up. But for some of these bigger things, you probably want to have some standard processes.”

As with anything, companies should approach IPA carefully, start small, consider the possible effects, and build in structure to ensure that IPA is achieving your objectives.

Adam Sacks from Tourism Economics spoke about the outlook for hospitality and travel to two HSMAI audiences at Commercial Strategy Week in Dallas — first delivering a general session at ROC Americas, then appearing before a combined Executive Roundtable program for brand and Hotel Management Company chief revenue officers and ownership group commercial executives. Adam is optimistic about travel recovery, which he says will have four characteristics:

1. Recovery continues under storm clouds.
2. The economy will fuel a rebound.
3. Travelers are more than ready.
4. The recovery will come in stages.

Other insights:

* Oxford Economics (TE’s parent company) is forecasting 5.5% growth in U.S. GDP this year and 4.4% in 2002.

* Group travel was at 60% of pre-crisis levels last month, but 68% of businesses are traveling now and 76% plan to travel within the next three months.

When Adam spoke to our Executive Roundtable participants, they

“The recovery really has remained constant even as things have gotten rough out there,” Adam said, which gives us a tremendous amount of confidence. In one word, the recovery is inevitable.”

Facilitating a conversation about recovery at our Executive Roundtables, Adam further identified three lessons that the hospitality industry learned from the pandemic, based on what he was hearing from Roundtable participants, who represent brands, HMC, and owner groups:

1. We benefited from better technology and the fact that fewer people were employed who could potentially override revenue management systems.
2. We had the confidence to hold rates because everyone understood the significant and real increased costs of operations.
3. When cash flow is challenged, everyone focuses on profit metrics and not just revenue-centric metrics.

For more on what Adam is thinking about the recovery, read our interview with him.

Brands are enjoying 2019 all over again — at least when it comes to leisure — while hotel management companies are more focused on cross-teams collaboration and how people work, according to participants at HSMAI’s Brand and HMC Chief Revenue Officer Executive Roundtables, held in Dallas on Sept. 30 during Commercial Strategy Week. As part of the programs, they shared these and other positive trends they’ve observed recently, including:

BRAND CROs:

• We’ve largely recovered to 2019 levels in some segments.
• We have a much deeper understanding of necessary travel. When we really dug into who was traveling and why they were traveling, it gave us greater focus on the segments and accounts that were really producing.
• By the end of the year, we will have exceeded 2019 revenues for leisure.
• We crushed it in Q3 in our market. There was very little group to speak of, but it didn’t matter, because leisure customers were there in droves.
• People are realizing that the way they’re going to optimize their business isn’t just through price by segmentation.
• While some groups are canceling, lead volume is still very strong and we can replace it.
• I’m bullish on international travel coming in; as the regulations allow that, they will want to come to the United States.
• How people used stimulus money was distributed evenly — both using it for immediate travel or saving for future travel benefited us.
• Our owners are ahead of 2019 for some markets. Volume is strong, and ADR is outrageous.
• Innovation could have been paused during the pandemic, but hospitality organizations are continuing on the innovation roadmap and making investments in technology.
• We’ve been able to better focus on what our guest experience should be.

The roundtable was supported by IDeaS Revenue Strategies and ZS, and attended by leaders from Best Western Hotels and Resorts, G6 Hospitality, IHG, Las Vegas Sands Corp. (Venetian/Palazzo), Margaritaville, Omni Hotels & Resorts, Outrigger Hotel Group, Preferred Hotel Group, Red Roof Inn, Sonesta+RLHC, Rosewood Hotels & Resorts, and Wyndham Hotels and Resorts.

HMC CROs:

• The siloing of disciplines is gone because we had to take into account occupancy, channels, redeployment, lean teams, and more. We’re clinging on to keeping those siloes gone forever.
• Team members are becoming real teachers and spending more time on education with hotels to teach why we do what we do (holding on to rate is just one example).
• The numbers of new users coming into software platforms, which indicates the onboarding of new team members.
• There’s more collaboration across sales, marketing, and revenue teams.
• We’re getting better with our data and making search more relevant to consumers based on how far they are willing to drive.
• Leisure ADR movement that is being driven by special events (college football games, for example).
• College football, concerts, beaches — they’re all bright spots. Plus, we’re seeing a decline in group cancellations (government and SMERF especially).
• An increase in IBT mix over the last few weeks with dynamic rates.
• It’s okay to talk about mental health at work.
• Borders are opening, vaccinations are increasing, and international travel is increasing.
• Talent is finally getting to decide where they live while still doing the work we need them to do.
• Getting back to some grassroots, 101 tactics — especially in our sales organizations.
• Improved relationships with the brands as we’re starting to come back from the worst. You need the brands on your side to face the owners.
• Increased interest in all-inclusives at the four- and five-star level.
• The lifting of international restrictions.
• Luxury ADR growth.
• An uptick in group leads.
• Progress made in automating the use and roll-up of data to do more with less — it didn’t cost as much as we thought it would.
• Growth in business travel and group leads for urban hotels.
• The investment community is spending more money on renovation and product improvement, which will help with recovery cycle and holding/increasing rate.
• A shift to being more strategic.

The roundtable was supported by OTA Insight and ZS, and attended by leaders from Aimbridge Hospitality, Chesapeake Hospitality, Concord Hospitality Enterprises, Crescent Hotels & Resorts, Highgate Hotels, Hotel Investment Services, HRI Lodging LLC, Kessler Collection, Marcus Hotels & Resorts, McNeill Hotels, NCG Hotels, Playa Hotels and Resorts, Preferred Hotel Group/PHG Consulting, Prism Hotels & Resorts, Regency Hotel Management, SBE Lifestyle Hospitality, Shaner Hotel Corporation, Stonebridge Companies, Vail Resorts, and VRI Americas.

Gregory Cross introduced revenue management to Hilton and helped evolve it at Hyatt. In a new book, he shares his story.

By Christopher Durso, Vice President of Content Development, Hospitality Sales & Marketing Association International (HSMAI)

Inspired by the high-level, cross-disciplinary conversation of HSMAI’s Curate event, the Curate Book Club interviews the authors of new and recent books that are relevant to hospitality sales, marketing, and revenue optimization leaders. Read previous Curate Book Club interviews here.

Gregory Cross has been part of revenue management since the beginning. Back when the airlines were still calling it yield management, Cross was among the generation of hotel professionals who figured out how to apply this new field to hospitality — starting in 1980 at Hilton, where he spent 29 years, leaving as senior vice president of revenue management, and continuing at Hyatt, where he served in the same role before retiring in 2018.

What was it like creating revenue management from scratch for Hilton and pushing it further along at Hyatt? The first-ever recipient of HSMAI’s Vanguard Award for Achievement in Revenue Optimization, Cross tells the whole story in his new book, Chasing Revenue: The Birth of Revenue Management. “I had started in the industry when forecasting, pricing, and inventory-control procedures were manual tasks — executed without computers,” writes Cross, whose first positions with Hilton were in front-office operations and management after ditching his college plan to become a writer. “And I was there at the beginning when everything started to change.”

In a recent interview with HSMAI, Cross talked about the “snotty” white paper that got him into revenue management, the “unbelievably weird” early days of online travel distribution, and the importance of perseverance.

What was it about revenue management that appealed to you so much?

When you work in a hotel, there is a hierarchy, and generally in those days, in the 1980s, the sales department and the director of sales was considered to be the top of the food chain for revenue generation. I was working in what was now my fourth front-office operation — Los Angeles, Pasadena, Irvine, and now Chicago — and I was coming to the realization that my department could also generate revenue, but nobody believed that it could. They thought we were just simply there to check people in and out, service the customer, keep our mouth shut, and do what the sales department said.

So, I wrote a white paper which was kind of snotty to the corporate office in Beverly Hills and strongly implied that nobody knew whether I was doing a good job or not because I didn’t have any technique for measuring what I was doing. Then I touted the fact that there’s actually money to be made here in markets that you take for granted that you don’t think can be yielded. Maybe two months after that, our vice president who was visiting Chicago came into my office and she had my white paper in her hand, and she said, “Would you like this job?”

I had never thought about it, because the job that she was talking about did not exist. It took another couple of years and she was replaced by another fellow. The subject kept coming up, because Hilton was watching Marriott and was kind of annoyed that Marriott kept bragging about their revenue-management prowess in their quarterly earnings reports and other things that would catch the eye of other hotel companies. A day finally came when they reached out to me again and said, “Would you like this job?”

By then, I was contemplating my first general-manager assignment, which had been my goal all along up to that point, and I made what at the time was the mistake of a lifetime. I turned down my first manager position and accepted a theoretical experimental position at the corporate level that involved pricing strategy. It was not called revenue management; it was called regional director of front-office operations, because there was no revenue-management department. I was in the position for roughly 18 months before it crashed and burned, and it deserved to crash and burn because it was set up wrong.

But when we did a reboot of that position, I was sitting on ice so to speak without a job, and they said, “Would you like to try it again?” And this time I got to write the job description. I met with the president of Hilton and I told him why it didn’t work the first time, how we had to set it up to make it work, and he said, “Okay, I want all of that in writing on my desk by nine o’clock tomorrow morning.” And that was where it all started.

Why did you want to write this book?

When I retired in 2018, we had a second home in Chicago where Hyatt was based. Well, my pastime is golfing, and if you live in downtown Chicago, there isn’t a golf course for 25 miles. Most days I would wake up with nothing to do, so I thought, well, maybe I should go back to what I had originally wanted to do before I ever got into the hotel business and see if I could write a book. All that summer, I took notes for what I thought might be an eventual book, and then I put it down for about year because we sold the Chicago place.

As life started to slow down, all of my former colleagues and employees and associates and people that I had mentored were reaching out to me for letters of recommendation because they were losing their jobs all over the world. Simultaneously, I live on the fifth hole of a golf course in a private country club, and in the early days of the pandemic, they actually closed the golf course and wouldn’t let anybody golf. So, when life became that stagnant, I pulled out all of those notes and said, “Well, I guess this is a signal that it’s time to write this book.”

Who’s your intended audience?

The primary audience is the hospitality industry. I’ve previewed it with a few people, and there are recommendations on the book. Sloan Dean, who’s the CEO at Remington Hotels, has read it, and so has Spencer Rascoff, who was one of the founders of Hotwire, because one of the key pieces of the book is when hotels first migrated to online travel distribution. Most people don’t remember just how unbelievably weird that was. I was the person who signed the first company-wide contracts with Expedia and the forerunner of Hotels.com, which was called Hotel Reservations Network.

Hilton became the first company to actively work with online travel agencies with a corporate relationship and the same strategy in place at all hotels across the company. That was not only a breakthrough, but it was also extremely controversial. Probably at least half the leadership within Hilton thought we were going down the wrong path, so every day I had to kind of fight that battle.

It came to me when I was taking notes for the book that that was a history that was lost on the next few generations of people who just might take the origins of revenue management for granted. It really had to stand up on what I call wobbly legs and survive in those early days, because it was not highly thought of. In fact, it was looked down on. I would have people tell me, “Do your magic!” or “Here comes the guy with all the elves and fairies who’s going to change our business for us!” It was not well respected at all, and so I thought it was important to capture that.

Are there relevant lessons from that time that you think the hospitality industry could benefit from today?

Absolutely. I tried to write the book thinking of readers who might still be at the academic level, studying for a hospitality degree, or who are working their way up in the hotel business. Most business books about hospitality are written by CEOs, and it’s usually a reflection on what they did to change their company or to change their industry from the CEO level. I tried to write a book for people who will never be CEO, from a person who never became a CEO, and put in there the survival techniques that you need to develop in order to sustain a 40-year career in the hospitality business without winding up out on the street at some point.

What’s your number-one piece of advice for building a sustainable career in hospitality?

Well, the key ingredient is perseverance — a lot of people say that. I was thrown into a period of time where everything about pricing and inventory management and strategy went from manual — and I mean on paper with an adding machine — to digital. I was forced and I forced myself to stay ahead of the technology curve.

The metaphor of online travel agencies is probably the best example of, if you can’t keep up with the way the customer wants to buy, you’re going to lose out. I was surrounded by a hotel industry that wanted to run tomorrow’s hotels the way they were run yesterday. They wanted to ignore the internet, and I do mean ignore it. They honestly believed in their hearts that if we didn’t work with them, the online travel agencies would go out of business and just go away. That was the mountain that I had to scale, and prove that not only was that theory wrong, but also if you followed their theory you were going to be way behind.