Total revenue management remains a challenge for complex hospitality businesses with multiple revenue streams. Owners and operators have several metrics (profit per square metre, profit per employee, etc.) for maximising revenue and profit within individual departments such as rooms, F&B, and spa.
Things get trickier when designing an overarching strategy that fully understands how these departments relate to one another. Are hotel guests or external customers, for instance, the biggest spenders in the restaurant?
Businesses with membership schemes may have a structural advantage in this regard, said Lennert de Jong, president hospitality at Planet, because they can more easily capture data.
“Soho House wants to know what each member spends, not just when they stay, but also when they walk into a bar, and so on. We developed a method for Soho House members to tap into a payment terminal and they can really find out what people are utilizing, what they are not utilizing, what they’re eating, what they’re not eating, and they can optimize the experience,“ he said.
“I think that’s one of the biggest challenges we have. How do we unlock this data from different outlets? But it’s right in front of us. Through payments, you can really find out what people are up to.”
Data capture
How can hotels capture data about customers who are not staying overnight? Jens Munch, CEO, Pace Revenue, suggested: “What if we ask everybody in the restaurant for a room number? Or we have some form of payment token or something else that ties them to a customer database? There may be some amount of pain for the customer, but does the benefit of the data outweigh that? Because a few months down the line we can sit down and have a conversation: ‘It looks like F&B is driving accommodation, or vice versa and for the first time we know it’s 25 per cent or 75 per cent. That’s valuable.”
A successful overarching total revenue strategy creates additional complexity and needs to be led by an experienced revenue manager or chief data officer with senior responsibility.
A “multi-dimensional displacement challenge,” is created, said Munch, and the revenue manager should be able to say to the reservations manager: ‘I would rather you did not take that low value group booking next month, which is going to displace higher value demand from public channels.’”
However, skilled revenue managers are hard to find. Bani Haddad, managing director of Aleph Hospitality, a hotel operator in Africa and the Middle East, said it was “almost impossible” to hire a revenue manager.
Aleph’s approach to profit optimisation has been to make each head of department directly responsible for their P&L, provide incentives and report to the executive team.
“We took over a number of hotels and we realised that many of the heads of departments had no clue where their revenues were coming from or what their expenses were,” he said.
Haddad added that the availability of technology and user knowledge varied greatly from one country to the other. “What we would love to see is some system that can collate information from the PMS, POS, and CRS and give a simple solution, because we shouldn’t forget that the people operating the hotels daily probably don’t have the skills that we are discussing,” he commented.
Judith Cartwright, founder and managing director, Black Coral Consulting said building a total profit optimisation culture at property and corporate level is crucial. Taking away the “fear factor” and getting chefs to share data, for example, had been one of the biggest challenges she had encountered.
All those quoted in the article appeared on stage at the International Hospitality Investment Forum held in Berlin between May 15 and 17, in a session called – Beyond RevPAR: Total Revenue Management Strategies