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October 01, 2012

HSMAI

Tim Coleman

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If your property is cutting expenses, and who isn’t, you are probably very selective in all your spending. This is particularly true in employee training. For several years many hotels have gone without retooling their knowledge base, and they will suffer negative consequences over time.

This phenomenon is especially true in hotel revenue management. Since its infancy I have been deeply involved in the discipline and despite the strategic value of a longer-term viewpoint, most revenue management departments are overworked and short on time. Luckily, there are people trying to change this. Against that backdrop, in June of this year over 400 executives attended the HSMAI Revenue Management Conference in Baltimore. Those in attendance were rewarded with the best meeting in the 10-year history of the event.

As usual, the conference addressed lot of similar issues that vex revenue managers, but this year there was a clear focus on revenue generation and an entire conference track on innovations. Reflecting this change, the name of the confab has “morphed” from the Revenue Management Strategy Conference to the Revenue Optimization Conference (ROC). The outcome was surprisingly pleasant. Whereas the prior strategy conference concentrated on ways for revenue managers to increase dollars from the demand available, the new optimization conference provided a focus on revenue generation which includes working to uncover new revenues sources. To reflect this change of emphasis, many hotels report that they have revenue optimization departments.

Supporting the change, conference moderators, Cindy Estis Green and NYU Professor Laila Rach stressed that the U.S. hotel market is a slow growing, mature industry so revenue managers need to seek out new income sources. This new role is in addition to the traditional one of managing the peaks and valleys of demand. These forces have made the revenue optimization position much more challenging. Therefore, the conference has adapted by adding a broader range of topics.

The HSMAI convention is on the leading edge of RM Discipline changes; so, attendees are made aware of emerging trends. For example, we saw a breakout session on SOLOMO, which also turned out to be this year’s winner of my “lingo jargon” award. It is an abbreviated version of social, local and mobile, the three new trends that provide opportunities and problems for revenue management. The point was made that in addition to keeping track of an already complicated set of variables, hotel revenue executives must pay close attention to these three emerging channels of information and commerce.

Social sites (like Facebook and TripAdvisor) are becoming more relevant for revenue mangers for three reasons. First, they may emerge as a new source of business for hotels that may someday cannibalize your current distribution channels. Whether this is imminent is questionable, but there is a great deal of money being spent, and the age demographics point to tremendous growth. Secondly, a proper review of the postings about your property on these sites can give the revenue manager insight into where the value proposition lies and where rate structure needs to fit into the competitive landscape. A property may not need to match a local competitor’s rates if its reputation is very poor. Thirdly, and most importantly, these sites provide instant feedback about your marketing initiatives and service levels. If guests don’t like your property, no amount of analysis and rate setting is going to increase your RevPAR.

More commerce is now taking place in the local marketplace where online media is very powerful but the revenue impact is just starting to develop. Over 50 percent of the people looking up a local business will call or visit it. This is particularly true for food and beverage, less so for hotels. However, Hotel Tonight is a small but notable exception.

While mobile is still used more for search than booking, traffic grew by 400 percent this year. If this continues, there will be a merging of the laptop, iPad and smart phone technologies into one mobile marketplace. Some hotels are already reporting significant bookings from mobile in some niche markets.
This was just a sampling of the broad content offered this year. Although there are several revenue management conferences available each year, HSMAI, with its HITEC tie-in is an economical choice. The only negative aspect this year was that the extensive content required concurrent sessions, which made it impossible to attend some excellent presentations.

In honor of the late Steven Covey, if you have not “sharpened your RM saw” lately, you should plan to attend the 11th annual HSMAI Revenue Optimization Conference in Minneapolis, Minn., on June 25, 2013. In one day, you can be right back up to speed.

Plan to attend the 11th annual HSMAI Revenue Optimization Conference in Minneapolis, Minn., on June 25, 2013.