Revenue Management Tips to Capture More Demand

27th Jul 2014

NB: This is an article written By : Harvey Chipkin –  freelancer and contributor in Hotel News Now

Revenue managers have begun casting their nets ahead of the busy fall travel season. And while the approaches might vary, the end result is the same: capture more demand.

A handful of revenue managers shared some of their strategies for success during a meeting of the New York Chapter of the Hospitality Sales & Marketing Association International, held at Google’s offices.
Tactics discussed during a panel called “The traveler’s mindset: Capturing your share of the market for fall 2014” included:

1- Reevaluating traditional customer segments;

 2- Partnering with marketing teams to maximize demand;

 3- Avoiding discounting by emphasizing value;

 4- Targeting profit rather than rate;

 6- Testing new types of rate structures, including add-ons as the airlines do; and

7- Maximizing websites and mobile presence.

Distribution dilemmas
Navigating the ever-changing landscape of booking channels and deciding which ones to focus on remains a challenge for revenue managers, the panelists said.
“Do we have to reduce the number of entities selling our rooms? What value are wholesalers providing? If they’re just acting like (online travel agencies), why are we paying them twice the commission? Their business model is shrinking,” said Carolyn Fredey, market director of revenue management for Marriott International’s New York hotels.
Revenue managers must discern which platforms are eroding rate integrity and driving business away from, she said. The answer typically lies in cost of sale as opposed to rate.
Jason Price, executive VP of online marketing consultant HeBS Digital, made a pitch for dynamic rate marketing on sites like Google’s Hotel Finder and TripAdvisor. He defined “dynamic rate marketing” as a direct-response marketing category that allows real-time hotel inventory availability and pricing to be inserted in various marketing initiatives from display advertising to metasearch and email marketing.
That kind of pricing will shift share from OTAs, meet the needs of connected travelers and boost conversion and online bookings, Price said.
Michael Sondak, Google’s account executive for travel, discussing Google’s ongoing research called “The traveler’s road to decision,” said leisure travelers are now most likely to book via mobile websites while business travelers book mostly through apps. Phone calls to complete the bookings are important for both platforms.
Mobile travel sites have to do a better job, Sondak said. A poor mobile experience will force a traveler to go elsewhere and will have an overall negative impact on the brand because of complaints on social media and poor word of mouth.
Noting the growing importance of video to travel planners, Sondak said three in five leisure travelers and two in three business travelers watch YouTube (a Google subsidiary) videos for various reasons, including travel planning.
Reevaluating segments
Revenue managers must look beyond their traditional mix of segments, Fredey said.
“They must decide on their high-value segments and ask: ‘How are you performing in these segments, and how can you grow them?’ It’s important to meet with the marketing team,” she said, “and create plans and actions to grow high-value segments that are lagging.”
Sometimes that fresh perspective, Fredey said, requires asking fresh questions:

 – Who might buy for a Sunday arrival?

 – Will a lower rate change behavior and in which segment?

 – How can I target and price segments differently?

 – Are certain segments price inelastic?

Chasing 100% occupancy might not be the best solution, Fredey said.
“Is that kind of threshold healthy?” she asked. “If everybody knows they can buy business using (same-day booking app) Hotel Tonight, is that a good thing? I don’t think so.”
Strategies for success
The revenue managers offered several strategies for success.
A winning plan, Fredey said, might include:

 1- Investing in strategies to increase reach of high-value segments;

 2- Measuring return on investment as profit rather than revenue levels;

 3- Leading with savvy value-add offers to drive average rate; and

 4- Promoting suites.

For instance, the revenue management team at Morgans Hotel Group plans to promote unique packages tailored to different market segments.
“If we have guests who might stay for three nights or longer on weekends, we will reach out to them and offer a (food-and-beverage) credit. Or, at urban properties we might offer a parking package,” said Ryan Walker, director of ecommerce and mobile for the company.
At the same time, Morgans recently has begun testing items as add-ons that historically have been included in packages. Walker cited breakfast as a possible add-on once a booking has been made. He compared it to the airlines’ post-booking add-ons like seats with more legroom and priority boarding. Walker said it is too early to draw any definitive conclusions.
The boutique hotel chain is aiming to enhance on-site spending with more communication once guests have checked in, he added.
“We find our guests leaving the hotel and going to Starbucks when we might be able to capture that spending on property. We need to do more to follow them during their stays,” Walker said.
Additionally, hotel websites must be updated and relevant to ensure travelers have all the information they need to make a booking, said Lauren Rebholz, e-marketing & communications director at The New York Palace.
New on the hotel’s website are 3-D floor plans of the suites and videos of the suites for media use.
The Palace, Rebholz said, has made additional enhancements to its website including: geo-targeting, with customized marketing ads on the home page based on the country the guest is accessing from; digital banner ads triggered by location and spend behavior; translations of selected Web pages into seven new languages; and customized Web pages for certain international markets.

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