Two Truths and a Lie About the Recovery

Order a reprint of this story
Close (X)

ORDER A REPRINT

To reprint an article or any part of an article from Hospitality Upgrade please email geneva@hospitalityupgrade.com. Fee is $250 per reprint. One-time reprint. Fee may be waived under certain circumstances.

SEND EMAIL

August 13, 2021
Revenue Management
Kelly McGuire

This time last year, I was writing an article for the Summer 2020 issue called “Revenue Management’s Finest Hour?” My first line was “I’m writing this article fully aware that it’s as likely to be as different of a world two months from now, as it was two months ago.”

This statement remains true a year later, but the big difference is that it’s likely to be a much better world in two months in terms of prospects for the hospitality industry (at least in the US). We’re in a much better position to predict what that world will look like and what we need to do to take advantage of opportunities the market will bring. This is all good news, but revenue management still needs to take a crucial and active role if hotels are to realize their full potential. It could still be revenue management’s finest hour if they continue to rise to the challenge.

In July 2020, I encouraged revenue managers to:

• Break down silos
• Focus on communication
• Be strategic
• Fully leverage data and technology
• Build strong owner and asset manager relationships
• Start executing total revenue management initiatives

As we look back over the last year, I could call myself a genius for identifying exactly the skills that would be necessary to manage through the pandemic (and I do, of course). But in reality, the pandemic just intensified conditions that were already present – and will continue – for revenue management. Your skills were challenged a year ago. I hope you honed them, because you need to kick into high gear now. In the spirit of the upcoming in-person event season, as we dust off our face-to-face networking skills, here are two truths and a lie about the recovery for revenue managers

WE STILL NEED TO DO MORE WITH LESS.
You guessed it, truth! Brands are committing to maintain lower levels of corporate staffing. Owners are putting pressure on management companies to keep costs down so they can maintain desperately needed cash flow. On top of this, there appears to be a labor shortage at the property level. You need to hang onto efficiencies developed during the pandemic. But you’ll be able to make strategic tweaks as budgets loosen and allow you to bring on additional resources. This is where your technology and data skills and the trusted relationships you built with owners and asset managers will benefit you. Strategic investment in technology and resources will help keep revenue managers efficient by reducing non-value-added tasks. Advocate for your owners and asset managers to make these investments by highlighting how they’ll benefit the organization moving forward. 

1. AUTOMATE:
Any manual, repetitive tasks – pulling data, generating reports or emails, performing routine system updates, rate loading and image tagging – are great candidates for automation through technology. Some solutions call for only a little knowledge of VBA or Excel. Others could involve a more complicated investment using techniques like Robotic Process Automation, which may require a partner to execute. Either way, a little up-front investment could free up hours for revenue managers to focus on revenue.

2. DELEGATE:
A lot of extra tasks got piled on revenue management in 2020 – everything from reservation management to cleaning rooms. These should be removed from revenue management’s scope of responsibility as soon as possible. Look carefully at any other tasks that would be good candidates for delegation. For example, revenue management may know the systems best, but that doesn’t mean they’re the right people to maintain them. Yes, adding an analyst or reservation agent to cover these tasks could add overhead. But keeping the revenue manager focused on revenue generation should more than make up for the added labor cost.

2021 WILL LOOK JUST LIKE 2019 
LIE!!! I think this is quite clear to everyone. The mix is different, maybe permanently. Consumer behavior is different, maybe permanently. Operating models are different, maybe permanently. So why do we keep comparing ourselves to 2019? I get it. We need a frame of reference that doesn’t make us look like we’re crushing it. We may have to finally let go of this Year Over Year/Same Time Last Year obsession and develop metrics that track our ability to take full advantage of current market opportunities.

Here’s where the use of data and technology and your strategic skills will come in. Given that we’re still operating in unprecedented circumstances, now is the time to evaluate your data to determine if you need to change or replace some of it. Forward-looking data will still be valuable as an indicator, as opposed to historical trends and patterns. Consumer behavior has changed, so channel volumes, search patterns and booking trends are likely different as well.
Be sure your analytical systems (revenue management in particular) are well tuned to the current environment. You’ve likely been making adjustments all along to adapt to pandemic conditions.

Review those shifts to ensure they’re valid moving forward. Ask your vendor partner how the system is handling booking pace and demand patterns to make sure it’s aligned with the trends you’re observing. As things get busier, you’ll need decision support from your analytical solutions, so make sure you can rely on them. And then do rely on them. Stop wasting time overriding prices and start understanding market trends and building strategies. Use this data and technology to look at the business in a different way. Rethink your approach frequently as you learn how the market reacts. 

IT'S GOING TO BE A BUMPY RIDE
Sadly, this is true. We’ll have an unprecedented surge in leisure demand this summer. Major markets are opening back up to full capacity. That’s all good news. It will help industry start to build back what we’ve lost. Signs are good that events will return sooner than expected. And while the exact nature is unclear, business travel should return as markets open up. But that’s here in the US. We all know there’s uncertainty in the global market. Once the dust settles after the summer travel surge and “close to normal” returns, it’ll look different than pre-pandemic normal. 

What does this mean? We’re back to revenue management’s need for strategic thinking. Build a strategy that can withstand some bumpy roads ahead. This is also time to continue close collaboration with your sales and marketing colleagues, not rebuild silos. Everyone will have to bring their best data to the table. Together the commercial teams should plan scenarios for the next three, six, nine and 12 months. Ask questions like:
  • What if corporate doesn’t come back fast?
  • What if it suddenly does? 
  • Will this leisure surge continue? 
  • How are international markets recovering?
  • Can we backfill that business in the short and medium terms? 
Think about the KPIs you’ll use to track your efforts and set thresholds or decision points that clearly indicate when it’s time to pivot and when it’s time to stay on course.

This can continue to be revenue management’s finest hour if we face the truths about what the recovery will look like. Just because it’s getting more predictable doesn’t mean it won’t still be volatile. The agility, flexibility and creativity we all learned during the pandemic, as well as the skills we honed, will help us deal with whatever the next few years throw at us.
 
Kelly McGuire is the Managing Principal, Hospitality division with ZS Associates.

©2021 Hospitality Upgrade
This work may not be reprinted, redistributed or repurposed without written consent.
For permission requests, call 678.802.5302 or email info@hospitalityupgrade.com.

 






Related Articles
want to read more articles like this?

want to read more articles like this?

Sign up to receive our twice-a-month Watercooler and Siegel Sez Newsletters and never miss another article or news story.