Don’t stop Revenue Management now
HOW THE DAILY ROUTINE ADAPTS IN COVID LOCKDOWN TIMES
AND HOW YOUR BREAKFAST DIET CHANGES FROM COFFEE AND CROISSANT TO COFFEE AND DATA
Times are tough, cancellations come over, pick up is stuck and uncertainty reigns. It is the time to change our habits not only in terms of social life but on our daily activities as well: time to do things differently and get ready for the rebound, no matter when that will happen.
Hotels are closed but future awaits, let’s make the best of this suspended time and let’s plan. We need to keep ourselves focused and our Hotels on track, we need to dust off our drawers those activities that we left on hold because other priorities were taking over.
Here are my (personal) suggestions on how to rearrange a day in the life of a Revenue Manager and make good use of all your home-time during the COVID19 lockdown:
Keep yourself informed
Allocate at least 60 minutes-reading of industry news, per day. Big data and industry statistics: a lot of companies are free-sharing publications, trends by country, comparing the current epidemic cycle with past similar events and analyzing how China is slowly recovering. This is rich information that can help the Hotel industry to estimate when the rebound will happen and seize the right moment to implement the recovery plan.
Analyze and Track
Most Hotels are closed nowadays or are recording exceptional low occupancies. Whether the scenario, make sure you track all your lost revenues (rooms and total revenue) and record all cancellations under a specific code. Cancellations and pick up need to be monitored and tracked to draw the new booking pace and see how it will evolve. Use your benchmarking tools to analyze future data: how is the future on the books demand for your hotel vs destination vs compset moving, for what months in the future are requests still coming over, when are researches on the website or Google analytics happening. Look at other industries that affect travel demand to your property: airline companies, railway companies, cruises. How are their travel itineraries changing and for which stay months are they running promotions?
Life after COVID will show an impact in the segmentation mix, at least at the beginning. Studies reveal that the local leisure market will probably be the first one to rebound while international travel will depend on emergency status per country. The negatively affected segments will likely initially be group travel (social distance) and corporate travel (companies’ cut on costs and shift to virtual meetings). If your traditional segment mix is heavily dependent on only a few segments, this is the right moment to find your plan B — how to diversify your segment mix and target the right segmentation at the rebound. You will probably need to think outside the box and be creative in your offers and packaging, invest in marketing and tactical to seize the right segment, analyze your core markets and plan specific geo targets.
The price drop is the only way when value ends, don’t give up on value!
The suggestion is always not to panic and drop rates as this will lead to a price war that will have only bad consequences and negatively affect both your property and the market. It will take years to go back to pre-crisis rates — I suggest this Cornell publication from 2004, contemporary more than ever. Act smart and work per-segment-per-channel: remove restrictions if they have no reasons to stay anymore, allow flexibility on re-bookings and cancellations, be creative and package the rates up to create value. Work with opaque rates and extend your booking horizon to 2021, now. Respect the win-win rule when creating promotions: as per normal times, tactical activities should create additional revenue and demand by positively economically affecting both your Hotel and the customer. Never either…or. Revise your flexible vs restricted rates % gap. Encourage early bookers. Plan your revenue strategy per month: start now and revise when necessary, always keeping a close eye to the forecast.
Keep your friends close, but your enemies closer
OTAs, Wholesalers and all intermediaries are being affected by the crisis as much as you are. Each one of them is approaching the crisis differently when it comes to refunds and rates — Hotels trust in OTAs and intermediaries is faltering in some cases, making this the right moment to reconsider the channel mix and plan your strategy moving forward. You might decide to concentrate most of the marketing investments on your direct channels or to open new channels of distribution to place your eggs in different baskets for the greatest visibility you might need.
I suggest you don’t make any rash decisions based on the rage of the moment. Keep a cool head: assess your own and your competitors’ distribution mix, analyze your site and benchmark with other sites, map the channels where the compset is selling and evaluate your current and future distribution strategy, factoring into your considerations not only volumes and rate but on top of everything: the real incremental revenue that every channel is bringing (is it a shift or demand that you wouldn’t probably get otherwise?), the geo source per channel (where are the guests coming from?) and total revenue (extra spend per channel, with a holistic approach to revenue management beyond rooms only). Keep an eye on profitability (cost) vs revenue generated.
Focus on ancillary revenue and think outside the box
During crisis times, every single dollar counts — that was I was constantly told long ago, during the 2007–2008 crisis when I was working for chains. Airlines have been driving up to 50% of their revenue from ancillary spend; if we haven’t done so yet, let’s take inspiration from it now. Adjust your room type differentials to offer compelling upsell rates, add value to the upselling (eg. F&B credit), package your rates, think about a cross-selling strategy for your outlets, create synergies with your partners (local guides, tours, activities) to deliver value and experience and drive demand for both the Hotel and the destination. Focus on sustainability: will maybe attribute-based selling turn into sustainable-based selling? How much of the customer’s demand will shift towards sustainable hotels and properties that promote eco-friendly initiatives after COVID?
Staycation is a popular term these days: promote a vacation at a Hotel close to home. As we said, local leisure travel will probably be the first one to rebound but that won’t be enough for some Hotels and destinations to survive. Open your mind to new possibilities: how can you stimulate local demand for day-using your services for instance. Day use, day spa, restaurant, open lobbies and bar initiatives. Open vouchers for experiences or tastings, small events and happenings to promote cultural activities that can be hosted in Hotels’ public spaces for a small number of attendees. Transform the idea of your Hotel into something different, like a local cultural or social club.
The future is closer than you think
In normal times that wouldn’t be your main concern yet but right now, 2021 is right behind the corner. Besides setting your strategy ready for the 2020 rebound, make sure you already set your rates and implement an actionable strategy for the year to come. Map your events and make your hotel bookable already. The early bird catches the worm and giving your guests the possibility to book already will be a competitive advantage.
Even if your hotel is closed right now and demand is stuck, your daily morning routine can be full of activities and ideas you should be working on now, to plan and be ready when the time to re-start will come.
Write down your strategy but do it in pencil.
Get ready to change, modify and adapt. Remain positive.
We are all in this together and we will make it through. But forecasting and strategy will not work if there is no planning. In our industry, we have history, data, resilience, creativity and mindset. Our world has changed but our abilities remain:
“I can be changed by what happens to me. But I refuse to be reduced by it” — Maya Angelou
Some useful resources to keep yourself updated on the COVID evolution and impact on our industry: