If the events of 2020 made one thing clear, It’s that revenue management must now focus on broader data sets than just in-house on-the-books (OTB), historical and simple comp set data.
However, to gather and analyze more information you need to invest more time. That’s easier said than done, especially if your property is part of the 87% of hotels that have let go of or furloughed employees.
Don’t discount the idea right away though. The upcoming recovery phase will be highly competitive and hotels that can gather, evaluate and execute on relevant data, quickly will effectively have a deciding advantage.
The best way to do that even if you’re facing resource constraints is to automate manual processes, embrace new tech tools and focus on, forward-looking data in your revenue management tactics.
Using data as part of your revenue management tactics during and after crisis recovery
The hotel industry has faced several drastic interruptions, in the past decades. The attacks of 9/11, the SARS outbreak in 2003, and the eruption of Eyjafjallajökull, the volcano in Iceland in 2010 come to mind. They each had an immediate negative impact on the travel and hospitality industry in specific countries or regions. However, the sector always bounced back, usually with a V- or U-shaped recovery that began quickly after the crisis. As a result, historical data remained reliable for predicting future demand.
With the Covid-19 pandemic, things are quite different, the crisis has lasted longer and impacted more countries around the world, more severely than all previous downturns. While some industry experts were predicting (or hoping for) another V-shaped recovery, it has become clear that an extended L-shaped recovery phase will be the reality this time.
Travel restrictions, as well as on-and-off lockdowns, have lasted the better part of a year now. This has starved many hotels of business and put them in a dire financial position. Given this, it’s not surprising that the recovery phase will be extremely competitive.
The added challenge during this crisis is that trends like virtual events and working from home have had a massive impact on how the world works and does business. From tech giants to SMEs, many companies began betting on remote work more than ever before and plan on keeping it that way. Even when things go ‘back to normal’ this brings up many questions about how corporate segments, or the MICE industry will fare during and even after the recovery phase. In the past, hoteliers were able to look at historical data to forecast when and how their demand would pick up again. But this time, the crisis and the challenges it caused are unprecedented. Consequently, there’s nothing to compare it to, and our historical data leaves us in the dark.
Quality of revenue management data in the past vs. the future
Apart from the obvious and very public effect, the pandemic had on the hospitality industry (think mass-furloughs, layoffs, and property closures), there’s been a huge shift behind the scenes as well. Outsiders won’t notice it but it’s keeping revenue managers on their toes. The talk is on how to best collect, collate and analyze hotel, competitor, and market data.
For years, revenue managers and their analysts have been manually gathering and compiling information in cumbersome Excel spreadsheets. Apart from being prone to crashing due to their size, these sheets also become outdated as soon as demand shifts, and competitors update their rates. On top of this, these sheets are often hard to analyze and don’t make day-to-day decision-making much easier, even though they contain a lot of valuable revenue management data. However, that wasn’t a huge problem for experienced revenue professionals in the past, they could rely on their knowledge of the market to fill in the gaps left by their Excel reports.
Today that’s changed though. The post-Covid recovery phase will look different from previous bounce-backs. Historical data and knowledge of your market are no longer worth as much as they were before the pandemic. A new solution is needed.
Leveraging data for a successful recovery phase
Instead of relying on general compset information, OTB, and historical data like in the past, broader and more dynamic data is needed now. This means using live and, if possible, forward-looking data to analyze price elasticity, make rate and distribution decisions, and forecast accurately during the recovery phase. This is the only way to seize emerging opportunities before your competition does.
Examining inbound search volume by source market
To detect the earliest signs of demand shifts in 2021 and beyond. Start by looking at live developments in flight, and booking search volume, this will give you an idea of how demand for your destination grows over time. It will also reveal which dates will be in high demand down the road. Knowing this before bookings come in, gives you a chance to adjust rates well in advance. That way you avoid filling up at lower rates and get more reservations at an optimized price.
Explore search trends further to see, where people are most actively researching your country, region or city, this will give you a valuable edge. When planning marketing initiatives, now you can target top source markets with relevant ads which will make your marketing dollars go further and get you better results.
Understanding future travel patterns
Once you know where potential future travelers, are based and which dates they’re researching. Length of stay (LOS) queries are the next interesting topic to check, you get bonus points for further breaking down this data by source market. Knowing how long guests want to stay on average helps you create value-packed offers you can promote in your location-specific ads, on top of targeting promising source markets and optimizing rates of future high-compression dates. You can generate even more business with attractive offers that perfectly suit your target audience’s desires.
“With little pace and pick-up visibility, hoteliers and revenue managers currently using standard or traditional tools and methods are struggling to determine an accurate forecast, but by starting with top-of-funnel data and then building a strategy around capturing those guests, optimizing promotions and measuring conversion, hoteliers can ensure they’re capturing their fair share of whatever demand might be coming into the market today, as well as the surge in demand when it arrives in 2021,” says Gino Engels, founder of OTA Insight.
As you can see, live, forward-looking data gives you the most detailed and well-rounded overview of travel intent and future demand volume to base your pricing decisions and forecasts on. However, as their names imply, these data sets are highly time-sensitive. Unfortunately, they’re also time-consuming and difficult to collect if you do so manually. Since time is an even scarcer good for the many hotels who have had to downsize their teams, there’s only one viable solution: embracing advanced tech solutions and automation.
Advanced tech tools to support improved decision-making
In the past years, hotel tech has seen a surge in development and innovation. New tools allow hoteliers to optimize nearly every aspect of their operation. The revenue department is no exception, upgraded business and market intelligence tools, as well as advanced revenue management systems (RMS), have supported revenue professionals in many ways, even before the pandemic. But with timing and access to forward-looking data, being of the essence, these tools take on whole new importance.
Hotels that can gather, evaluate and execute relevant data live will have a deciding advantage during, and after the recovery phase. The best way to do this is to leverage tools that automate manual processes, like data collection and collation. That way, even small teams can focus fully on forming and testing commercial strategies.
A forward-looking rate shopping and market intelligence tool with on-demand reporting should be part of every revenue professional’s arsenal. It provides an understanding of your market and competitors that you need to maintain your positioning now and in the future. A comprehensive benchmarking tool will show you future group versus transient occupancy levels in your compset. Knowing these details will allow you to stay ahead of your competitors. Finally, a fully automated RMS will slash the time spent on pricing and forecasting, by taking live demand shifts and market developments into account it gives accurate rate suggestions in real time and ensures your property takes advantage of every revenue opportunity.
While the past year has undoubtedly been difficult for hoteliers around the world, the global vaccine roll-out gives hope for a recovery in 2021. What’s more, today there are many tools hoteliers can leverage to upgrade their processes and emerge from these hard times, better than ever before.