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The right channel for revenue management

Mar 30, 2015  By 

The right channel for revenue management is the channel with the highest contribution, said Erik Weller, SVP of education for Itesso. “The highest net contribution channel is typically the hotel’s own website, but they have to compete with the likes of Expedia, which spends billions to compete with hotels,” he said. “OTAs may deliver high reservations but it’s at a high cost.”

To increase revenues, Weller suggests, hotels need to promote and serve products that OTAs cannot support, such as guest recognition, room upgrades and other unique, on-the-fly packaging that brands can accomplish.

“The Mandarin Oriental has a great silent guest appreciation program—they just know who you are,” he said. “You order a drink at the bar in one Mandarin hotel and at the next Mandarin hotel they know what your favorite drink is. That’s how hotels can take back ownership of the brands they sell. Technology can enable hotels to deliver on that promise.”

Joel Carver, CEO of the Carver Hotel Group, agrees that it’s no longer just revenue management—it is channel management and total-yield management. “Hotels need to maximize their yield—who’s the customer, what’s the price point and what’s the cost to acquire that customer,” he said. “Catering spaces, bars and restaurants and rooms all need to be utilized effectively.”

Carver believes hotels can increase revenue management by valuing every guest, especially in group sales, as casinos do, but hotels need to adapt this to the leisure consumer as well.

Ultimately, the best way to increase revenues is to crunch more data about what each guest is doing in the property, said Shayne Paddock, CIO of ZDirect. “Hotels need to know what guests are doing on premises and online, and track that spending to respond to their behavior,” he said. “They need to find the best time to upsell that guest and time the offer accordingly. They need to track the best channels for that guest and use the right channels that guest wants to use.”

“Big data and real-time analytics need to be optimized for the best and most intelligent upselling and ancillary results,” he added.

Where is revenue management going?

SkyTouch Technology has put a lot of thought into “what we think the market will do,” said SkyTouch’s Director of Product Management Charlie Green. “We do that vastly differently than it has been done in the past,” he said. “Within the past few years, we’ve taken advantage of transitioning so much data into the cloud and centralized systems, making data so easy to access.”

Mobile pricing will play an important part in revenue management in the next five years.
Mobile pricing will play an important part in revenue management in the next five years.

With that data, hotels can focus on revenue management on a transactional level, Green said. “We’ll know where that guest has stayed and what type of properties they traditionally stay at,” he continued. “The pricing decision will have so many more factors than anything that’s ever been done in the past.”

Green cautions that this is probably at least five to 10 years out. But mobile, which is driving so much growth in reservation revenue, will drive a shorter-term growth in revenue management.

“It’ll be interesting to see what mobile can do—how location and time can affect the mobile price,” he said. “How will last-minute deals entice a guest who is only five miles away from a certain hotel? Or is that guest local and just looking for a weekend getaway? Mobile will be a great tool in appealing to guests.”

Shayne Paddock, CIO of ZDirect, agreed that hotels will need to find the right channel to appeal to the customer, whether it is through mobile offers or social media.

RLHC’s new guest management system

Late last year, Red Lion Hotels Corp. (RLHC) officially installed its new RLHC RevPak guest management system at all its hotels. RevPak incorporates CRS, CRO, PMS, CRM, content management, Web operations, Internet marketing services, field marketing and new business intelligence to improve revenue management at its hotels.

“We brought all of these technologies and companies together like a virtual team to create best-in-class feature functionality,” said Bill Linehan, CMO of RLHC. “These components and vendors are winning too—it improves their feature set and allows them to get to the most relevant business requirements.”

Red Lion Hotel Corp.’s RevPak is an integrated platform of custom applications designed to provide a single view of all RLHC customers.
Red Lion Hotel Corp.’s RevPak is an integrated platform of custom applications designed to provide a single view of all RLHC customers.

RevPak is an integrated platform of custom applications designed to provide a single view of all RLHC customers. It applies customer’s requests, preferences and expectations throughout the hotel and allows multi-channel marketing based on customer behaviors.

The revenue management component has built-in custom configurations for dynamic pricing and dynamic inventory management. It uses other data that plug into CRM so that, when customers go to the RLHC website, they receive dynamic messaging customized for them, including rates, packages and even background images.

RLHC uses Micros Opera PMS, Windsurfer CRS, CustomerDirect call centers, Serenata’s CRM and Duetto’s automated revenue management. “In terms of cutting-edge solutions, RevPak allows RLHC to fully optimize revenue and manage distribution complexity,” said Patrick Bosworth, CEO of Duetto.

While RevPak technology is building customer satisfaction for RLHC, the company also is embracing OTAs as marketplaces. “OTAs have incredible depth of market and prowess, and when we can tap into that, we can have customer acquisition,” he said.

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