Insights Type: Articles

By Kaitlin Dunn, Writer, Hospitality Sales & Marketing Association International (HSMAI)

HSMAI’s ROC Americas event is coming up on Sept. 29, with breakout sessions to prepare attendees to fuel their company’s rebound, elevate their leadership and business acumen, anticipate and respond to headwinds, and drive profit throughout the customer journey. In advance of the conference, presenters from the breakout session “Three Things You Can Do Tomorrow to Improve Profit Optimization at Your Property” gave a preview of the issues and what attendees can expect from their session.

In a panel discussion, Soojin Kim, vice president of asset management at Roch Capital Inc.; Alexa Montgomery Krnjaic, vice president of distribution and channel management at RLH Corporation/Sonesta; and Raheel Moolji, CRME, senior director of revenue management at Ashford, will offer tactical steps to increase hotels’ focus on profit optimization instead of just revenue optimization. Here’s what the three presenters had to say about their session:

What is the difference between revenue optimization and profit optimization, and why is it an important distinction?

Soojin Kim: We can’t take revenue to the bank, but we can take profit to the bank (kind of). Once we recognize the difference between revenue and profit, we can strategize what is best for the hotel.

Alexa Montgomery Krnjaic: Revenue optimization is the combination of pricing, yielding, and marketing strategies to maximize revenue capture. Profit optimization combines those things, as well as the true understanding of cost per acquisition, other ancillary costs, marketing ROI, and delivering to your bottom line. Profit optimization is the long-term strategy, while revenue optimization delivers short-term impact.

Raheel Moolji: Revenue optimization fundamentals are based on selling the most rooms at the highest rate each day. This does not factor the cost associated with acquiring these rooms and the potential ancillary spend that these rooms may generate. As demand continues to recover from pandemic lows, it’s critical to understand the cost of selling a room to have the most profitable mix of business at your hotels.

What can attendees expect from your session or what’s the number one thing you want audiences to get out of your session?

Kim: Attendees can expect to explore “below topline” during the session — how topline revenue flows to bottom-line and what attendees can do to help it.

Montgomery Krnjaic: Understanding your total costs of doing business (cost of acquisition, including marketing spend) is the foundation for driving the most profitable mix and revenue for your owners. It is your responsibility to understand this in its entirety.

Moolji: Revenue professionals should not look at their roles only to optimize room revenue, but all streams of revenue at their hotels.

Is there anything else you’d like to share ahead of your session?

Kim: Read your STR and P&L!

Montgomery Krnjaic: There may be months when your marketing budget is cut due to unforeseen circumstances; don’t underestimate the power of all channels or close any doors. You can by all means drive your own demand by nurturing all channels and relationships in times of need. If you are getting too much business from one channel, consider yielding up, controlling restrictions instead of turning off channels.

Moolji: Having alignment on topline outcome between owner and operator is critical. Hotels are still running lower than their historic occupancy levels, and owners continue to feel the pressure of increasing costs to operate. Communicate frequently to remain aligned on what the path to success looks like.

ROC Americas is part of HSMAI’s Commercial Strategy Week in Dallas on Sept. 27–30, 2021. Learn more.

‘It was creating systems that had never existed before, and it was not something I ever thought I would do.’

Cindy Estis Green grew up in a hospitality-adjacent business, working at her family’s sleepaway summer camp, but it wasn’t until she worked for an actual hospitality company during college that she started thinking it might be a career. She’d started out as a human development and family studies major at Cornell University only to transfer into the school’s hospitality program during her sophomore year. “The economy wasn’t so great and everybody in the hotel school was getting multiple job offers,” Estis Green said in a recent interview with HSMAI, “so it sounded like a good idea to me. And it sounded interesting.”

That feeling was reinforced when she completed an eight-month work-study program with Disney in Orlando, focusing on food-and-beverage training at the company’s hotels and restaurants. “I loved the environment,” Estis Green said. “I knew I really liked the atmosphere of hospitality, but I still wasn’t quite sure what I was going to do.”

Her first job out of school was with the National Restaurant Association, publishing cookbooks and training manuals. That led to an interest in marketing, which prompted Estis Green to get an MBA from American University in Washington, D.C., with a concentration in market research. As she considered a career in hospitality, her timing couldn’t have been better. Hotel companies were just beginning to automate their systems and trying to figure out how to make use of the increasing amount of data they were collecting from their customers.

In 1983, Hilton International hired Estis Green as director of marketing information systems and research — a newly created position. She spent seven years with the company, including several as general manager of underperforming properties that she used her expertise in data and technology to turn around, then left to start Driving Revenue, a data-mining consultancy that she eventually sold to Pegasus Solutions. After that came The Estis Group and, finally, Kalibri Labs, a benchmarking platform for hotel revenue performance that she co-founded in 2012 and continues to serve as CEO today. Along the way she’s written industry-defining books and special reports such as Distribution Channel Analysis: A Guide for Hotels and Demystifying the Digital Marketplace, some of them supported and/or published by the HSMAI Foundation.

A pioneer in helping the hospitality industry understand big data and distribution, Estis Green has had the kind of career that wins you awards. The latest is HSMAI’s Vanguard Award for Achievement in Revenue Management, which Estis Green will receive during ROC Americas 2021 — part of HSMAI’s Commercial Strategy Week in Dallas on Sept. 27–30. “It’s been a long time that I’ve been involved with HSMAI, and it just makes me feel happy,” said Estis Green, who first joined HSMAI as a student at Cornell and has served in a variety of volunteer roles, including chair of the HSMAI Foundation. “I’ve been involved in so many aspects of it and I have so many relationships as a result of my involvement with HSMAI. So, it’s such a huge honor to get this award.”

Here are five other things we found out during our interview with Estis Green:

1. She made it up as she went along at Hilton — literally. “I was setting up automating sales and catering, which was new at the time; building revenue management systems and spreadsheets, which was new at the time; and creating databases to be able to make sales and marketing decisions. It was creating systems that had never existed before, and it was not something I ever thought I would do. It was really my interest in hotels and hospitality combined with my exposure to data and marketing information systems that led me to what ultimately became a focus on sales, marketing, and revenue optimization in this whole area.”

2. She also put her data into practice at Hilton. “At that time when I was with Hilton International, Hilton Domestic was a separate company, so most of the hotels were outside the U.S. Most of the GMs were traditional European general managers; they were all men, and when I would talk to them about what I was working on, they would say, ‘Oh, this data and technology doesn’t really matter. If you worked in a hotel, you would realize that it is meaningless and it’s not going to change anything we do.’

“I got tired of hearing that, because I knew that data and technology could make a difference, so I asked to go into a hotel. I went into a hotel in Washington, D.C. — a pretty big hotel, 420 rooms and a fair amount of meeting space. They were really struggling. I used all the data and technology to segment the business and determine what we were getting and what we were missing, and then created tactical programs to go over to improve things. And we turned the hotel around — we went from being unprofitable to profitable. Then I became a general manager and got moved to a different hotel outside of Newark airport and did the same thing. I really wanted to prove that this data and technology was not a fad or a trend.”

3. It’s called Kalibri Labs for a reason. “I’ve always tried to stay a few steps ahead on what is out there and what’s available — thinking of different ways to apply new technology to old problems and seeing how it can be leveraged to make a difference. I never want to get caught up in doing it the same way and thinking, ‘Oh, I’ve got this. I know how to do it. I’m going to keep doing it the same way I’ve been doing it.’ Which is one of the reasons when I started Kalibri Labs that I put the word ‘Labs’ in the name, because I wanted it to be clear that we’re going to be constantly doing R&D, and constantly changing and improving, and always pushing the envelope for ourselves.”

4. She loves hospitality because of the people — and the digital. “I’ve never felt like I had a job; I’ve always been part of the community. I think it’s much more compelling to feel part of the community than just doing a job in some random industry. I have at various times thought about leaving, but once I started Driving Revenue and then sold that to Pegasus, I knew that I would stay within hospitality, because at the time there was a big upswing in the digital space. All of these big tech companies like the online travel agents started emerging. I wanted to help the industry improve their ability to use data and technology, and I found myself being someone who could explain it to general managers or owners or asset managers. So, after selling Driving Revenue, I thought, ‘Okay, I’ll write some industry books and help the industry understand how distribution channels and technology and data are starting to become much more prevalent in hospitality.’”

5. She sees an upside to the pandemic. “The industry was fat and happy for a while. Business was good, and everybody figured, ‘Why should I change anything if we’re making a lot of money and it seems to be going well?’ But they were not as mindful of what was happening behind the scenes. All of these big tech platforms like Expedia, Booking.com, Google, potentially Amazon, Airbnb — they were entering the travel space and are potentially threatening the profitability of hotels because of how much value they want to take out of it. I think the pandemic forced everyone to pay attention to everything again as though it was a clean slate: ‘Wait a minute, we can’t necessarily operate the way we have been. There’s no autofill on my hotel anymore, so I have to understand the composition of demand.’ Back to my work at Hilton International where I was trying to tell people, ‘Hey, you really have to look at the segmentation of the business, you can’t just look at overall occupancy’ — I feel like I’m saying the same things again to everybody that I said when I started in the industry. We really have to understand this.”

Tourism Economics’ Adam Sacks offers a preview of his general session at HSMAI’s upcoming ROC Americas event — including why he thinks ‘the industry remains strong.’

By Kaitlin Dunn, Writer, Hospitality Sales & Marketing Association International (HSMAI)

As COVID cases are rising again, many hoteliers find themselves wondering once more how this will impact the industry. Adam Sacks, president of Tourism Economics, says there is reason to remain positive — even though the situation is darkening right now, the medium-term outlook for the hospitality industry remains strong. “We see in sentiment data that people have concerns and plans are beginning to weaken for later this year,” Sacks said. “But the reality is that the industry remains strong. Recovery on the business travel and group side may be delayed again by a few months to 2022, but it will come back. While travel may soften in the current environment, it is likely to only be a temporary softening.”

For more than two decades, Sacks has worked with destinations, industry associations, and companies around the world in the areas of opportunity and risk assessments, policy analysis, and economic impact. He is an authority on measuring the economic impact of visitor activity and has analyzed the impacts of cruising, gaming, timeshares, hotels, new attractions, and destination marketing. He’ll put his expert perspective to use during “The Outlook: Recovery and Beyond,” a general session at HSMAI’s ROC Americas event for revenue optimization professionals in Dallas on Sept. 29, where he’ll share Tourism Economics’ latest views on the economy, the mindset of travelers, and expectations for how and when travel will fully recover.

SLOW AND STEADY

Sacks recently discussed his upcoming presentation in an interview with HSMAI. “It’s still incredibly difficult to predict anything right now, but I would say that things have gotten easier to look at over the past six months,” he said. “If you go back eight months, we didn’t have three vaccines that are incredibly effective at preventing death and hospitalizations, and we didn’t have nearly 70 percent of the population vaccinated. It’s not eradication, but it is an encouraging development, and it gives us hope.”

Sacks has been looking at data throughout the pandemic, and despite the recent uptick in cases, his outlook has remained steady over the past few months — and isn’t likely to change too drastically in the near future. “This summer actually outperformed our forecasts, so it is encouraging to see pent-up demand for leisure travel exceed our expectations, even by a little” Sacks said. “We expected a slow return to business and group travel for the rest of the year, and we are holding to that. Any revisions between now and the end of September could be a tempering of the outlook for the remainder of the year, but I don’t think our overall predictions for 2022 will change.”

While Sacks’ predictions for the medium term are optimistic, that’s not to say the industry won’t see any negative impacts in the final quarter of the year due to the rise in cases. According to Sacks, recent surveys have shown that customers are feeling more reluctant to travel right now, which may or may not lead to more cancellations. “There’s still a lot of wait-and-see right now,” Sacks said. “This latest rise in cases has weakened group bookings in the fourth quarter, but the good news is that we haven’t seen an appreciable weakening in the actual data. STR is still pacing over the past few weeks at a similar level to 2019, and air travel is holding at 80 percent of 2019. That gives us some indication of where customers are right now.”

Sacks cautioned against looking at negative customer sentiment right now as a long-term trend. “These surveys are coming at a moment in time when things are worsening,” he said, “but in another month, we could be on the other side of the curve and the sentiment could turn quickly again.”

THE OLD NORMAL

In 2022, Sacks expects to see even more pent-up demand for leisure travel because people have gone without for so long, something that he has held to since the onset of the pandemic. When group and business travel will come back full force remains unknown, but Sacks is certain that it will come back.

“Some people are predicting that business travel will never recover beyond 50 percent of pre-pandemic levels,” he said. “But we think that’s a misguided point of view. The need for business travel, the benefits for corporate performance, and the importance of meeting in person will prevail, just as they have in past crises, when people were saying the same.”

The number-one thing that Sacks wants ROC attendees to come away from his session with is that the medium-term outlook for travel remains very good. “The new normal will look a lot like the old normal,” Sacks said. “The actual crisis itself has come and gone in waves, but through those waves, travel demand has been resilient. Things have improved since the worst of the crisis last January, and we will continue to recover.”

ROC Americas is part of HSMAI’s Commercial Strategy Week in Dallas on Sept. 27–30, 2021. Learn more.