Top 5 Challenges We Hear from Revenue Managers in 2018
One of the great things about our company is the thousands of significant conversations we have with Revenue Managers from all types of hotel organizations around the world.
Themes emerge from these connections. They tell a story about how the hotel industry is maneuvering through the peak of one of the greatest RevPar growth cycles ever.
5. Profits Over Revenue
Operating profits drive returns. As revenue growth slows in the late stages of this historic cycle, strategies to boost profitability matter even more. “…[we] want to see RevPar growth of 2-3 percent this year…but [we] think cash flow will improve by 8-10 percent over 2017, “ said a SVP of Revenue Management for a mid-size chain in the U.S.
4. Airbnb Effect
No one is overreacting to the potential disruptive effect of short-term rentals. This is aided by industry research from companies like Smith Travel that essentially shows how the influx of new short-term rental supply does not impact hotel RevPar growth. However, not all the 100 million plus stays from 4 million units on Airbnb can be purely incremental. As one of our partners said so well – “you just get a sense that this is going to reach out and bite us one day…we just don’t know how and when.”
3. China over BRICs
With forecast revenue in 2018 of over $150 billion from 130 million trips, the Chinese outbound market is a massive opportunity. Far greater than the BRICs was or will be. As one of our heads of Revenue Management for a European hotel chain told us “…we all know China is this massive opportunity. But we have not even scratched the surface on what to do about it. [I] worry that the chains or distributors that do will leave those that don’t far behind in the years to come.”
2. Marketing Disconnect
It’s well known that Revenue Management and Marketing must greatly improve how they work together. Particularly as distribution complexity increases and customer mix changes. “A channel and a customer are not the same thing…yet [we] build our day-by-day budgets segment-by-segment completely ignoring who the customers are doing the bookings. This is a recipe for failure,” said a head of Revenue Strategy for a hotel organization in the U.S.
1. Better data, not more data
Revenue Managers are tired of paying more for the same reports – namely rate shopping and business intelligence. They want to find a way to discontinue some of the information they get and pay less for the reports they want to keep. At the same time they seek new demand signals. According to a Revenue Manager at a large independent hotel in the U.S. “…two things I don’t get more of every year is time and money. No more time to understand more reports. And no more money to pay for the same stuff…whoever gives [us] better information for the same or less money wins [our] business today.”