Consulting Services answers recent client questions about hotel revenue management
Neil Corr, IDeaS senior advisor, asks, “Could personalization be the panacea for the future of hotel pricing? How can revenue leaders evaluate their current approach in readiness?”
There’s been a groundswell of debate rumbling in revenue management circles for some time now about further innovations in price optimization—it’s a conversation that never stays still!
Discussions crystallised recently at HSMAI’s Revenue Optimization Conference, in Amsterdam, where the buzz was all about how pricing could go to the next level. Great examples were provided trending in social media and e-commerce, in forensic diagnosis of consumer demand and the opportunity to better match with products.
The IDeaS Consulting Services team works every day with clients looking to enhance their revenue management capabilities. We are increasingly encouraged by the growing alignment between digital marketing and revenue teams, in working toward greater agility with pricing, to improve not just revenue and profit, but the all-important customer journey.
Spending time in the dynamic environment of hotels and corporate offices, here are some of the repeatable phrases we hear all the time from revenue and marketing leaders who want pricing to be:
“Bespoke and unique.”
“Competitive with OTAs.”
“Aligned with exceptional service.”
“Profit and asset driven.”
“Able to monetize the guest journey.”
“Dynamic in other revenue streams.”
This is exciting, of course, but the pragmatism of revenue leaders normally kicks in at this point—not to curb the enthusiasm of the marketers—to consider the impact on how this can be accommodated in current PMS, RMS, RDS and so on. So, we hear the cautionary:
“Configuration is challenging.”
“Different rate plans on different channels.”
“My pricing hierarchies are important.”
“I’m not sure about the best price-value positioning of all my room classes and products.”
“Our hotels are complicated! What about per person, all inclusive, component rooms, etc.”
“How do I apply this to non-guest-room pricing?”
Now, not every hotel will be able to address these points in the short- or medium-term with successful results. The first step is to at least have them identified as aspirational objectives.
The second step is to evaluate just how effective are we with the myriad of internal and external data sources and integrations we already have at our disposal to innovate in pricing. These should be a key part of the journey toward the utopia of personalization.
So, before we get too carried away—take time to assess where we are now. For example, developments with analytical market segmentation enable more optimal product definition, a nice precursor possibly to personalization.
We can take this a step further and consider, “What is my optimal market and consumer pricing approach? Are we fully optimizing and integrating?”
- Rate-shopping by room class
- Market demand data (e.g., Demand360 by Travelclick)
- Benchmarking intelligence (e.g., STR)
- Travel intelligence data (e.g., nSight)
- Reputation data
Taking it a step further still, a pricing approach which directly qualifies the impact of channel acquisition cost, considering:
- Cost of sale analysis and reporting
- Channel forecasting visibility
- Ability to yield certain channels
- Source of business monitoring
- Profit optimized pricing, focussed on net RevPAR and GopPAR
As we can see, there may still be some work to do with “IDeaL” and optimal pricing just yet, before we can focus on personalization. The two strategies can be approached in tandem of course, but as one delegate was overheard at HSMAI in Amsterdam by yours truly: “Maybe we should start with personalization of products, before we personalize pricing.”
Hey, don’t leave now—the fun is just beginning. Here are more industry insights making the rounds this week:
- Emerging Technology in Travel: The brilliant travel geeks of Sabre have released their Emerging Technology in Travel Report 2018 distilling their last year of research and exploration into three themes—automation, authenticity and blockchain—to help businesses make strategic decisions for 2018 and beyond.
- Hotel Loyalty: Bridging the Misconceptions Dividing Operators and Guests: A Scout is trustworthy, loyal–what does it mean to be a “loyal customer” in 2018? Are loyalty programs still relevant? Oracle Hospitality addresses these questions and more in their blog.
- What’s Really Happening at TripAdvisor? 3 Questions We Can’t Answer…: The Fuel folks ask a few tough questions about the site that casts a large shadow over the industry. The result: more questions.
- 5 Ways Hotel Groups Save Time with Centralized Marketing: As the saying goes, time is money. As a hotel group, this is only multiplied, especially when it comes to marketing to your guests. Revinate Marketing equips you with all the tools and expertise you need to become more efficient, productive, and results-driven.
- Total Revenue Forecasting Is Coming…Rome - July 13, 2021
- Can Hotel Revenue Management Ever Satisfy a Finance Leader’s Forecast & Budget Demands? - September 16, 2020
- Bed & Brexit – Can Futurecasting Help Hoteliers Accommodate the UK’s Bumpy Departure? - December 5, 2018