Effective Use of Big Data is Key to Hotel Revenue Strategy
Seven trending hotel news stories that will impact your hotel Revenue Strategy.
1. Avoiding the paralysis of Big Data
The breadth of data—both micro and macro—available to most revenue managers can be overwhelming, perhaps even leading to what the author calls paralysis. When faced with a challenge, she offers three steps to take to ‘liberate’ the data to solve the problem:
Determine the exact research question you need to answer before diving into your data.
Take an informed guess at the answer to your research question and determine potential paths and data points to reach a conclusion.
Restrict your sample size to the data you really need.
2. Personalization can spur innovative rate strategies
While the road ahead for the hotel industry might be bumpy, challenges create opportunities for hotel owners, GMs and revenue managers who are willing to innovate. The choice is clear: During these times of uncertainty success comes to those who innovate; those who don’t will be left behind, perhaps never to recover.
Personalization is the route many hotel companies are taking to differentiate them from the competition. Creating amenities, facilities and experiences that cater to the individual likes and interests of guests create opportunities for rate plans that match guest interests and rate expectations. When presented with a hotel experience that touches them directly, guests are less likely to be sensitive to price.
3. OTAs are eating hotel owners’ lunch
The author says hotel owners are in a state of angst, and one of the primary causes is the inability of hotel brand companies to protect their owners from the ravages of online travel agencies. He says, “The impact of OTA business, with its higher expense and detrimental effect to a hotel’s ability to sustain long-term guest loyalty, is hitting the bottom line.”
He further scolds brand companies for throwing up their hands to the power of OTAs, telling owners to “suck it up and see.” He also worries that operators of independent hotels rely too much on OTAs as their sales and marketing arms, a tactic that works in good times but not so much during a downturn or a supply-demand imbalance.
4. A roadmap to weaning off OTA reliance
Many hoteliers say they want to lessen their dependence on high-cost distribution from online travel agencies. The author provides seven simplistic steps to move in that direction:
Be sure your website always shows the lowest rate available.
Adjust rates seasonally as required.
Create personal relationships with guests to encourage return visits.
Offer exclusive incentives to guests who book directly.
Create online ad copy that pulls guests to you and away from OTAs.
Publish authentic reviews on your own website.
Use your website to educate potential guests on the value of booking direct.
5. Device switching hinders guest attribution
Do you know how your guests arrive at booking your hotel? According to new research, it’s hard for hotel marketers to get a handle on customer attribution, especially when potential bookers hop from device to device before making a decision and reserving a room.
The survey of travel marketing professionals found 54.3% can either track users to a limited degree (24.5%), just on their own domains (16%) or not at all (13.8%). More alarming is the stat that just 20.7% of marketers can track users across touchpoints but not across devices.
6. Revenue management is crucial in all hotel segments
In no matter what segment your hotel or company operates—luxury to hard budget—there is a revenue management strategy to fit your needs. It’s important, however, for operators in economy and midscale segments to embrace reasonable revenue management goals and then develop strategies to implement them.
Among insights offered in the article is the importance of securing and using data to make decisions. It’s also important to find what one source calls “your natural rank” in the competitive set and then aim your RM efforts to achieve that rank. A company like Red Lion Hotels, with properties across a spectrum of segments, combines strong technology with owner education to create a culture of strong revenue management.
7. Customer acquisition costs hurt hotel values
As GMs, revenue managers and owners increasingly focus on the cost of customer acquisition, the discussion typically centers on their effects on profits. The long-term repercussions are even more important; that is, the effect on hotel asset values. After all, developers build and owners primarily buy hotels for their long-term asset values.
The author applies some data to illustrate the issue. The bottom line is that increasing costs of customer acquisition has resulted in a whopping $9 billion erosion in hotel asset values. This discussion further highlights the importance of strong channel management and pricing strategies. Put another way, revenue managers are more important than ever.