Jason Zvatora, Chief Revenue Officer, Next Story Group
Revenue management is dead. Its next iteration was revenue optimization but that too has been superseded by revenue strategy, and then commercial strategy. The name of the game now is aligned strategy. And it is a high-stakes game that can add to the top and bottom line, and deliver growth. It is what keeps revenue professionals in the hospitality industry up at night because it holds the key to the trifecta that we are after: increased Revenue Per Available Room (RevPAR), beating the competition and enhanced profitability.
All of this germinated from a me-too move on the part of the hospitality industry, which borrowed from the airline industry’s shift towards capacity controlled differentiated fare products to minimize empty seats. Hoteliers keen on boosting profitability were quick to apply that line of thinking to their own products – rooms.
From basic spreadsheets to manage demand, inventory and pricing, the Revenue function in hospitality quickly grew to encompass data-driven decisions to optimize different market segments. It also spawned a plethora of revenue management and business intelligence systems that automate aspects of the discipline and assist teams in gaining a competitive advantage.
Data, benchmarks and technology-driven tools have grown significantly over the years to help us better understand how our hotel assets are performing.
More recently, the focus shifted to forward-looking insights that can impact the future of our business. At the same time, we are concerned with controlling distribution and the cost of distribution. Not all reservations are created equal. There is the question of static versus dynamic rates, non-rooms revenue considerations and the cost of acquisition. It is a complex balancing act and the goal is to get the right room to the right guest at the right price at the right time, through the right channel at the right cost of distribution, with maximum ancillary revenue spend and the highest profitability, all whilst maintaining guest satisfaction and building customer loyalty.
It is a tall order. To stay on top of things and drive efficiency, we at Next Story Group have implemented a revenue management system called Duetto. This cloud-based software enables our area team and on-property teams to monitor, report and analyze several data sources. It allows us to look beyond competitor pricing and on-the-books data and gives us the opportunity to keep tabs on many more data sources, including visitors to our brand websites and even airline and passenger information, which collectively help us gauge forecasted demand more accurately.
Technological tools like this platform not only deliver operational efficiencies but also free up the time and mental bandwidth of our highly-skilled teams who can then focus their energy on developing strategies and driving the system, aligning revenue, commercial, public relations, and sales and marketing, and fully optimising all revenue and spaces, to deliver the business results that we want.
In our industry, the need to embrace technology in order to drive performance, and stop leaving revenue on the table, is a given. I am confident that the road to success and profitability will include more and more support from technology, especially machine learning and artificial intelligence. An AI-driven technological innovation that can help us better understand, measure, and influence the cost of acquisition would deliver tremendous utility to our industry. If you have the solution, my team and I are all ears.