Positive Profit Performance Through Revenue Culture

profit performance

Strong business cultures improve operational efficiency, asset value & talent retention

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There are rising interests from hotel owners to seek a holistic revenue management strategy that takes into account bottom-line results and shifts to a profit performance strategy.

As hotels concern themselves more with rising reservation acquisition costs and the need to competitively differentiate through loyalty programs, unique stay experiences and personalized offers, a sound revenue strategy is even more prevalent.

In order for hotel operators to entice potential franchisee investors, they need to provide strong earnings results each quarter that demonstrate their ability to enact a disciplined and agile revenue strategy that increases net income.

Revenue strategy involves more than technology that generates pricing decisions. It’s a business culture that must be instilled across an entire estate to help improve operational efficiency, increase asset value and attract and retain top industry talent.

When a revenue management strategy becomes systemic and second nature, these practices can be put in place for other revenue streams to optimize all business and revenue a hotel generates, which leads to stronger quarterly earnings and more interested investors.

In a recent company release on their Q1 results, Extended Stay America (ESA) highlighted an 8.9% increase in net income over Q1 last year Click to Tweet | IDeaS Twitter. In an article earlier this quarter, CEO of Extended Stay America Gerry Lopez was quoted stating, “The revenue management system and discipline we have installed over the last year and a half now have allowed us to be very nimble.”

He continued to explain that, despite the general opposition in the industry to OTAs, their revenue management culture and technology has allowed them to strategically leverage OTAs to “fill in the blanks,” viewing them as not only a distribution channel, but also a marketing channel.

It is this type of comprehensive effort and critical focus on improving a hotel’s bottom line that has given Extended Stay America the confidence to expand and extend the reach of their brand through franchise opportunities with interested investors. Lopez says, “People are eager, and to be honest, more (investors) have approached us than we have approached.”

When brands are able to demonstrate a clear aptitude in delivering ongoing results through a fortified revenue management culture, they are able to increase asset value (for reference, ESA’s stock price is up over 10% year-to-date) and attract additional investors.

As the largest US extended stay provider in the mid-scale segment, and with over 600 hotels in its portfolio, Extended Stay America has done an excellent job creating a culture able to capitalize on the demand in the extended stay segment. By better understanding their opportunity to monetize their product, they are able to better meet the needs of their guests.

Hotel competition is fierce — and it only continues to grow and evolve with changing business models and sharing economy entrants. To attract investors, achieve profitability goals and maintain strong talent, hoteliers must think about the people, processes and technology needed to elevate their profit performance and stay competitive in an ever-changing industry.

Blake Madril

Blake Madril

Revenue Technology Strategist at IDeaS Revenue Solutions

Blake Madril joined IDeaS in 2014 with over 10 years of experience in hospitality operations, marketing, sales, technology and revenue management. In his most recent role with IDeaS Blake is responsible for global initiatives that support the market strategy and messaging for IDeaS’ extensive suite of revenue management solutions and services ultimately aimed at helping hotel executives maximize profitability for their hotels. He is a strong advocate for the discipline of revenue management and the convergence of hotel data solutions and job functions to bring the best experience possible for both hotels and their guests.

Prior to IDeaS Blake held positions at properties and hotel management companies that ranged from front office operations to sales and catering and multi-property revenue management. He has worked with global hotel brands and affiliations such as Hilton Worldwide, Intercontinental Hotels Group, Wyndham Hotels & Resorts, Preferred Hotels & Resorts and Global Hotel Alliance, as well as luxury independent properties and limited service inns.

Blake holds a diploma in Business Administration from California State University, Fullerton and is currently based out of the IDeaS headquarters in Minneapolis, MN where he is a frequent blogger and evangelist for the optimization of total profitability for hotels and resorts.

An avid enthusiast of all things '90s and sitcoms, Blake recently took home 2nd place in a Saved by the Bell trivia contest. Words spoken right after accepting his trophy: "I'm so excited."
Blake Madril