Three new revenue management pillars for hoteliers post-pandemic
COVID-19 has had a dramatic effect on the hospitality industry. As the crisis began to unfold, it brought travel to a near standstill. Now as the crisis begins to stabilize in certain countries, regions, and cities, the industry must prepare for the rebound.
In these challenging times, hoteliers who continue to rely too much on on-the-books (OTB) data without weighing pre-booking and upper-funnel data more heavily in their forecast models may risk the company’s long-term survival. This is why revenue managers and hoteliers must embrace the new normal. We need state-of-the-art forecast methods plus new tools and data to rethink how to bring revenue to hotels.
The principles of revenue management at its core have been “knocked down”.
In the current climate, historical data are less relevant. Hoteliers now need solutions to more accurately forecast volatile demand. They face the daunting task of reimagining their commercial strategy to navigate the new normal, a challenging business environment where competition for lower demand in uncertain conditions will intensify.
As we move into various phases of recovery, we need to rebuild this process from the bottom up. Any new approach will require a wide variety of inputs and insights to help gauge the earliest indicators of demand. We get there by looking at pre-booking data to better pinpoint the return of travellers.
In the pre-COVID-19 world, revenue managers knew their place and role within their compset. Now they are attempting to understand their market as a whole and the changes it will bring to their property and compset — all as they identify their role and responsibilities moving forward.
Post-COVID-19 will show a separation between revenue managers who embrace change, act with agility and adapt to the newest technologies from those who fear change and new methodologies to hit KPIs and revenue goals. The landscape has brought new unknowns, and also new considerations for hoteliers who question: what happens next?
Dynamic compset: The future of static compset.
COVID-19 has created challenges in maintaining a hotel’s compset: what once was a “perfect compset” is no longer relevant. The “static” compset as we know it is now only partly open or competing for the same limited demand — regardless of their chain scale or star rating.
Adapting a compset easily and dynamically will be important: it empowers the revenue manager to compare the right hotels at the right time, at all times.
Trusted advanced technology (such as AI) now suggests compsets based on market shifts, demand, relevance and somewhat unpredictable events. It allows hoteliers to always compare to their true competition — which should also include alternative accommodations.
Weigh forward-looking data more heavily than historical data.
The hard truth is that we don’t know exactly when travel will return to pre-crisis levels. However, there are signs that we may interpret as precursors to recovery. Currently, these are mostly inaccessible for the hospitality industry. Before the crisis, hoteliers used OTB data as forward looking — although the booking had already been made — and there was little influence remaining on what once was an opportunity to attract a booking.
As travel does return, it will be different. COVID-19 has created a new reality, making year-over-year comparisons and OTB data much less reliable as indicators of demand. Hoteliers need new sources of data that allow them to easily monitor longer lead-time data and prompt data-driven decision making.
Post-COVID-19, we will see a new and greater need for forward-looking data so hoteliers can anticipate demand, better predict market shifts and align their pricing with the future reality — making changes in the present to increase demand in the future.
Top of the funnel search data, for greater forecasting models.
In the next few months, revenue managers will need to review their 2020 plan and prepare for 2021 without any outlook or historical data. In these challenging and volatile conditions, what can they use as the basis for their budget? Turning to OTB data merely paints a picture of what business has not dropped out or has already converted. Getting ahead of that, ensuring that early interest converts, is the opportunity to explore now.
Top-of-funnel data will revolutionise the industry and provide hoteliers with the capability to better predict true demand — before a decision has been made, before it is on the books (as intent to travel, which hotels can work to convert).
Understanding true demand trends and when to expect these lookers will turn into bookers builds confidence. It allows revenue managers to create more realistic forecasts — no longer based on historical year-over-year comparisons or on the books as an indicator of demand only. The future of revenue forecasting is not just OTB… it’s intent to travel that anticipates demand ahead of the curve and brings an extra variable to factor into your budget and forecast.
HEDNA Hotel Analytics Working Group
The Hotel Analytics Working Group raises awareness of the opportunities data analysis brings to optimize cost and conversion and thereby empower hoteliers to collect, store, analyze and action their data to make intelligent decisions about their distribution strategies. The group is currently Co-chaired by Matthew Goulden, Triometric, Connie Marianacci, Accor and Nitin Bajah, NTTData. Click here to find out more and how to join as a HEDNA member.
- Written by Gino Engels, Co-founder and Chief Commercial Officer at OTA Insight
- Edited by Laurie Pumper, Communication Director, HEDNA