Technology Prospectus 2022: Flex your revenue management

25 November 2021 by

Businesses with revenue management software were able to respond rapidly and effectively to hospitality market changes during the pandemic, as Elly Earls reports

Revenue managers rely heavily on two things: data and instinct. Yet both have been impossible to trust over the past 18 months. Historic data, insight tools and algorithms lost almost all their weight, while the past markers of success that revenue managers would usually have called on to predict future patterns simply weren't there any more.

Different properties were affected in different ways and at different points. The initial national lockdown still allowed for business travel and opened the opportunity to support the NHS and key workers with discounted rates. That meant many city centre properties could remain open while regional, leisure-focused venues had to shut down.

But in the long run, it is the corporate-led city-based hotels that have suffered most. Remote-working policies, the rise in video-conferencing and the shift from physical to virtual events means that many business travellers no longer need to get on a train or plane as frequently as they used to. A rise in demand for coastal and rural stays has also impacted the leisure market for city centre properties.

What's more, demand has shifted in favour of properties with self-catering and more socially distanced options. That's something that may not have previously been in a hotel's competitive set or even on its radar.

"Many hotels had to start again, almost as if they were opening a new property in a new market," says Rachel Parker, business development manager at Profitroom, which provides online booking systems, marketing automation, search engine optimisation and websites for hotels. "They had to offer something more in tune with a new market. And with both national and regional lockdowns to factor in, the landscape could change almost overnight, leaving hoteliers to handle mass cancellations, throwing everything into disarray.

"Even without this, cancellations have become more prominent, with people having to isolate. New holiday markets have opened up under the green light system, causing people to alter plans. For revenue managers, agility in the face of rapid change has been key."

This has certainly been the case at boutique hotel group Surya Hotels. Revenue director Paul Lingard-Kay explains: "We are fortunate in that we have never fully closed. We took the decision at the start of the pandemic to stay open but, that said, the past 18 months have certainly been different. Like everyone, we have had to adapt across our 13-strong portfolio and within our head office function."

Once the group made the decision to keep its hotels open, its focus was on reducing price to capture as much of the market as possible. However, demand was higher than expected, because in many cases a Surya hotel was the only hotel open in the area.

"As a result we had to quickly reinstate and reapply many of our revenue management strategies, so having the flexibility and agility to respond quickly to changing market demands was critical," says Lingard-Kay. The group uses IDeaS revenue management software, which is fully integrated with Guestline's property management system Rezlynx. Changes were a lot more straightforward to put into effect because of that integration, says Lingard-Kay.

Paul Lingard-Kay
Paul Lingard-Kay

Total revenue management

According to Parker, one of the positives to have come from the pandemic is that revenue managers have put more emphasis on being creative and collaborating with other departments to reimagine their spaces on site and keep their audiences engaged online.

"It created a more holistic approach," she says. "With margins so tight, hotels simply couldn't afford for one aspect of their offering to underperform against another. Everything was constantly reviewed and tweaked. Departments worked together and created innovative ways to use their spaces, stock and staff during the pandemic: veg boxes being delivered, gourmet dinner boxes with wine pairings, and bars turned into co-working spaces."

At Surya Hotels, a total revenue management approach, rather than a focus just on accommodation, has always been key to operations. But this strategy became even more important during the pandemic because of the need to diversify and change the offer.

"All our functions including F&B, reservations and housekeeping had to adapt. Because we are a smaller, more agile business, this was arguably easier for us to achieve than perhaps some of the larger groups," Lingard-Kay says.

"It has been so important for revenue management to collaborate with other disciplines. As a small company, without that collaboration and the ability to take on the responsibility of, and work with, additional functions such as sales, marketing and distribution, we would not have had the success we have had."

Integrated systems

Lingard-Kay says he and his team wouldn't have been able to navigate the pandemic so effectively without a revenue management system that integrated with its property management system (PMS) and other functions.

"Ensuring we had a full 360-degree view of not only our operations and demands but also our revenue management meant we were able to re-engineer and reinvest and bring other people on board to continue to drive our offer forward, even against the backdrop of the pandemic," he explains. "Not only can we continue to operate, but we have the flexibility and capability to trial new approaches. Likewise, it means we can set up and manage our revenue strategy centrally and build a unified approach to revenue management across the group."

He believes working with a standalone revenue management system would have limited Surya as a group. With its current set-up, however, it can amend the revenue management for any hotel, which is then automatically uploaded to the PMS in real time.

Guestline Insights
Guestline Insights

"Rather than manually and laboriously replicating restrictions or minimum lengths of stay, it is already there for the reservations team to see and work with. Having that live, real-time visibility has proven extremely beneficial," he says. "What the last 18 months have shown us from a revenue management perspective is it has an important role to play, but that role becomes even more powerful when integrated with other hotel functions, particularly when you are working to realise your own ambitions for growth in revenue and bookings in what has been an extremely challenging market."

The most advanced revenue management systems can also integrate with guest review sites. Guestline's strategic account and revenue manager Bethany Ryan says that can pay real dividends in terms of managing and harvesting guest data. And the ability to offer guests the option to book meals or spa treatments online with integrated reservation systems can all help upsell and generate more revenue.

She adds: "Revenue management software has previously only been accessible to larger hotels and chains due to its high price. However, access to data is now more widely available, so the ability to provide revenue management systems to a wider range of hotels is happily becoming more achievable.As they become more affordable, small- and medium-sized hotels can now take advantage too, allowing them to compete and respond far more competitively with larger hotels."

Updating pricing strategy

The hospitality market is still dealing with a lot of uncertainty. It remains hard to rely on historical data and future forecasts. But, according to Parker, there is one thing we can be sure of. "The appetite is there," she says. "We can be certain that if we react quickly to government announcements and have our website, booking engine and offering optimised to maximise conversion, then once demand picks up after the traditionally quieter winter period through to January, operators can focus on enhancing average daily rate, length of stay and total revenue per available room."

She recommends monitoring demand through ‘lookers' rather than ‘bookers'. For example, Profitroom has a ‘demand analysis' feature that allows hoteliers to see when people are searching for particular dates. "This is really empowering as it enables you to modify your strategy ahead of your competitors and beat them to the punch," she explains.

She also stresses that revenue management software relies on human input and suggests modifying reporting to compare 2021 with 2019 rather than 2020 for a fairer picture of your business. "You can also update your pricing rules to the new market we find ourselves in – for example, by automatically reducing your advance purchase rate discount when you are over a certain occupancy level."

Ryan agrees. "Pricing hotel rooms right is important if you want to succeed in this competitive industry. Whether it is your off-season bookings or expanding your offerings to newer markets, pricing plays a vital role. In a period of such significant change, revenue management software can also play a crucial role in helping hoteliers strike the right balance between fixed and dynamic pricing strategies."

Lingard-Kay says the revenue management system Surya Hotels has in place has given him and his team the time and the scope to be able to react to shifts in demand, which is how the hospitality market has been characterised over the past 18 months. And while Surya still isn't in a position to commit to long term-plans and strategies, it expects to take a more strategic approach from 2022.

Meanwhile, Parker predicts the industry will continue moving towards more automated ways of working, allowing revenue managers to save more time. "Not only have hotels had to evolve and display agility, so have auxiliary suppliers," she says. "Tech providers have sought to innovate to suit new requirements. This has seen new solutions spring up, such as contactless check-in and myriad apps, as well as entirely new providers appearing in the market. Tech, by necessity, develops at a rapid pace, and we see this continuing despite the pandemic hopefully slowing down."

Accuracy on auto

Revenue forecasting for Radisson Hotel Group's EMEA portfolio had become a major obstacle to the hotel chain achieving its goal of greater organisation-wide efficiencies and its vision of making total revenue forecasting possible.

"It is quite difficult to manually collect data and be sure you have the right data every day to create accurate forecasts," says Hélène Guillemoto, Radisson Hotel Group's director of revenue management projects in EMEA. "We wanted to have something fully automated to reduce the significant amount of time spent on forecasting every week by each revenue manager."

"RevPlan allows us to be nimbler than we ever could be with manual spreadsheets, and the tool integrates very well with IDeaS G3 RMS," says Matthieu Lafaurie, Radisson Hotel Group's head of the Club and revenue projects.

It has also freed up considerable time for revenue managers. Gianni Di Fede, Radisson Hotel Group's senior vice president of revenue management, BI and distribution in EMEA, explains: "We now only have to focus on the exceptions and calibrate as necessary. This gives us more time for strategy, and more time for strategy means more profitability."

Tech ticklist

Rachel Parker at Profitroom looks at what hoteliers should be doing on the tech front.

Autumn and winter is an ideal time of year to review your tech stack and partners. Find the technology that can allow your strategy to succeed rather than build your strategy around the tech limitations you already have.

Look at your full user journey online – from meta and Google ads to your direct website, online booking engine and pre- and post-stay communication with guests. Is it all as automated and efficient as it can be? More than 80% of people who find you via an online travel agent will look at your website, which provides you with the perfect opportunity to convert them into a direct booking. Make sure it's as easy and enticing as possible.

Open and load your room availability and rates so that they have a longer lead time. Often hotels have a maximum 365-day window for booking, but demand following the pandemic is now pushing reservations out to more than a year in advance.

Review your competitive set. This may have changed in the past 18 months with the rise of serviced apartments and self-catering options, so reviewing who you are up against is essential if you're to get yourself ahead.

Packages are something we've seen paying dividends. Think creatively to incorporate new things into your offering – be that local attractions or other parts of the hotel. Pre-Covid there was already an increase in experience-led travellers looking for activities and memorable moments with added value over discounted offers. This has become even more popular in the past 18 months, so you should be offering at least five, if not more, packages including on- and off-site activities.

Sponsor's comment: IDeaS

I
I

IDeaS, a SAS company, is the world's leading provider of revenue management software and services. With over 30 years of expertise, IDeaS delivers revenue science to more than 16,000 clients in 144 countries. Combining industry knowledge with innovative, data analytics technology, IDeaS creates sophisticated yet simple ways to empower revenue leaders with precise, automated decisions they can trust.

Results delivered. Revenue transformed. Discover greater profitability at ideas.com.

The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.

close

Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking