When the lift is broken, we take the stairs. For hotel revenue managers working during the pandemic, the automatic outputs from their revenue management systems (RMS) proved to be of little use so they reverted to making their own calculations and forecasts using Excel spreadsheets.
Speaking during a panel discussion at the International Hospitality Investment Forum (IHIF) 2022, Konstantinos Santikos, managing director, Santikos Collection, said: “At the beginning of the pandemic, every RMS tool could not be a benchmark for any of the hotels. The same thing applied last year when we saw the rebound or semi rebound of the city properties. We had to go back to Excel, only looking at our own data, like, the past 20 days or past seven days.”
Joe Pettigrew, chief commercial officer, Hotel Asset Management, Starwood Capital, observed that revenue managers who were less reliant on the RMS in any case and took a more entrepreneurial approach to market capture and revenue optimisation were best placed to adapt to the new situation.
Leading indicators of market recovery - data from sources such as Google Analytics, STR Global, OTA Insight, Sojern etc. - became the most important information to gather, but Pettigrew said he lacked a system to consolidate this data from multiple sources, hence the return to spreadsheets.
He said: “We had to work very hard with Excel and we came up with some really good models in the last two years that I think could be turned into a product at some point.”
Rainer M. Willa, CEO of HotelPartner Yield Management, said that it was very sad that Pettigrew had not heard of his company and its services: “Our philosophy has always been that basing forecasts on historical data is wrong. For many years our focus has been on the demand in the market and the pace and booking patterns you have in your own hotel.”
If, generally-speaking, RMS are less helpful than they were pre-Covid, what is the way forward?
Panelists said it would be very beneficial if revenue managers could step up into more of a commercial director role and become the gatekeepers of a total profit optimisation strategy across the business.
Pettigrew said: “We’ve had a number of revenue managers who, again, were not too dependent on systems but just had more of an entrepreneurial spirit and we’ve been able to elevate those people to be more influential. And once you give them more responsibility, they’ll start scrutinising everything, including labour. So now we have revenue managers managing housekeeping.”
Judith Cartwright, founder and managing director, Black Coral Consulting, said: “The head of revenue management is the interface between the various departments, is liaising with sales and marketing, operations and the general manager and needs to have the same voice at the table. Then, you are able to build a total revenue optimisation culture with the right candidate in place.”
Finding a revenue manager with the required analytical skills who is also a strong, outgoing communicator is the challenge. Cartwright underlined that effective communication was essential especially between revenue managers and sales and marketing teams.
There is very little point in promoting a five-night package in a resort where the main charter flights arrive and depart on a weekly basis, she said, but these are the kinds of costly mistakes that can happen because of poor communication.
Hotels that use detailed metrics such as TREVPAR (total revenue per available room), revenue per square metre, or revenue per cubed metre, are in a stronger position to optimise their profitability.
Cartwright observed that revenue managers can and should play a role during the development stage of a hotel too. Often, she said, the yield from a single bedroom is higher than from a suite because pricing per square metre is not considered as a benchmark when hotels are designed.