Be ready for anything—and don’t panic.
How’s your 2020 forecast looking? The average hotelier is saying, “Meh…I’ve seen better.” Yes, the global economic outlook for the coming year is slightly sketchy. The dreaded “R” word has even been floated in some circles (hint: rhymes with “free session”), but let’s not get ahead of ourselves. While slowing GDP growth is expected, the hospitality and travel industry is not likely to experience anything like the slowdown of ten years ago.
In fact, I believe the industry has entered a golden age, with worldwide traveler numbers set to nearly double over the coming decade. So, while the short-term outlook may be iffy, the long-term is looking good.
Your best bet is to keep calm and keep on keeping on. These things are cyclical. What goes down must come up, er, well—point is, we’re not dealing with an investment debacle of overleveraging in the housing industry and an imbalanced, unchecked financial system this time around.
And lessons from that catastrophe have taught us a thing or two about managing revenue in a tough economy. Plus, technology has come a long way in the past decade. We now have a far greater ability to manage, monitor, and stay ahead of downward trends.
Regardless of economic conditions—in fact, especially so if conditions deteriorate—it is critical to understand how to effectively manage revenue at hotel properties. That’s why IDeaS has pulled together a library of assets—from industry articles to podcasts—to aid you in your 2020 planning efforts.
Keep reading to discover other ways to think about managing the revenue process in uncertain times:
It’s time to have a plan, even if it will never be implemented. As you are dealing with increased uncertainty, it is critical to start to map out and stress test best-to-worst case scenarios and the activities to deal/counter each. Activities should be multi-functional and cover varying “what if” scenarios. (e.g., What if corporate demand drops by 5/10/20 percent? What if group bookings fail to materialize? What if weekend demand declines by 25 percent?). You might never need your plan, but better to be prepared then to panic.
Be ready with creative alternative revenues. Include in your plan activities to protect existing revenue sources, find alternative revenue sources and create new ones. If weekday demand declines significantly, what alternative revenues can make up some of the lost demand (e.g., locally sourced business, crew business, etc.)? How much revenue can you protect by locking in contracts for longer periods of time? Are your post booking pre/at arrival upsell activities optimized? Be sure to take a long-term view. Discounting takes a long time to rectify once demand rebounds, as does giving too much business to potentially more expensive third-party channels.
Fine-tune and closely monitor your revenue system. A modern and automated revenue management system will alert you to changes in your demand forecast well before you would be able to spot them manually. Once that happens, carefully evaluate if these changes indicate a long-term trend or are just a one-off event and not an indicator of an overall slowdown. Use data from multiple sources (including conversations with your key corporate customers) to validate changes in demand.
Don’t panic! Slowdowns happen frequently and business always bounces back. Don’t implement anything you might regret later. Rather, take a long-term view of what is best for your business not just for the next year, but for the next two to five. Remember the overall outlook is and will remain positive for the industry, even if the road gets a little bumpy in 2020.
We can’t predict what will happen next year. But we can prepare for what could happen. With an automated RMS solution, hotels are better positioned to adapt to all possible outcomes and leverage their data to create a single source of truth. The best way to prepare for future uncertainty is by being certain about your own business strategies under any condition.