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As if the pandemic wasn’t painful enough to navigate, the war in Ukraine has turned our world back into chaos. And now, the price of crude oil is skyrocketing. Global events, often playing off one another, ripple down to the hospitality industry to no end. For commercial strategy teams specifically, the impact of change is to pause, model the impact, and then reassess go-forward strategies.
Not to be lost on the need to adjust revenue strategies in real-time is the act of understanding how your team - at all levels - will respond to change. Revenue optimization is not a single person and not a single system. It does not occur in a vacuum. Thus, just as critically, is your commercial team able to help you define and/or execute your next moves?
Even if you get a firm commitment to buy-in, however, the challenge doesn’t stop there. Workflow has fundamentally changed - even if your title has not. We keep hearing, “There’s more to do, but fewer people to do the work.” Housekeeping and other customer-facing roles are in short supply, but so are the people behind the scenes, crunching numbers and analyzing trends. During the pandemic, many revenue management, marketing, sales, and other commercial strategy contributors were furloughed. Some returned to their previous jobs, but many left the industry entirely or found other niches. The impact on hotel staff? Longer hours, more dependence on technology (definitely a good thing, but with the caveat that not every property is running modern RMS technology like Duetto), with less time to focus on strategy.
The hospitality industry is replete with countless motivated individuals who started in reservations or a front desk role, only to work their way up to sales, marketing, or other revenue-impacting roles. These team members acquire strategic insights and knowledge, but finding more of them to ably fill labor-starved positions has never been harder. It’s not realistic to expect someone out of high school, transitioning from customer service, or other roles to become sophisticated commercial strategy leaders overnight. Automation of course helps, but many properties have already invested in revenue automation and other tech that, at a minimum, still greatly benefits from human intervention periodically, such as when that unexpected event is announced.
We recently inquired with the hospitality labor management experts at HotelEffectiveness about this topic. Del Ross, Chief Revenue Officer, responded that "Strategic recruiting is about looking beyond the tasks that need to be performed. Market conditions are so dynamic that decision-making skills have become critical for every role. Quantitative jobs like Revenue Management, Sales Leadership, and Operations Planning require analytical competency far beyond what hotels used to seek. Most companies need to overhaul their recruiting and onboarding processes to reflect these changing needs."
Specifically, an industry that has always been dynamic, and then more dynamic with the confluence of online channels, cloud tech, and faster-twitch booking, now demands even more of its strategic roles. You don’t need a degree in economics to understand the implications macroeconomics has on travel, but it helps.
The conflict in Ukraine and international community response (financial sanctions, trade embargos, etc.) may not, on the surface, appear to directly impact certain regions, but there is always a ripple somewhere. Industry prognosticators are always scrutinizing macroeconomic trends to project potential outliers, risks, and opportunities. For example, year-over-year (YoY) changes in gross domestic product (GDP) and consumer price index (inflation) closely correlate to lodging industry demand and average daily rate (ADR) movements, respectively. This is a useful indicator for industry projections but does not incorporate micro-level metrics (e.g. market booking pace) to make it an accurate bellwether for revenue management forecasting purposes. This means you need trained, specific skill sets to translate external events into profitable decisions for your property, in any climate.
For students contemplating whether hospitality is a viable path forward from a work perspective, keep in mind that average daily rate (ADR) growth has rarely been higher than it is now. Even with all-time high petroleum, food, and lodging prices, people might reduce their number of trips (or cut back on spending in other areas) but they’ll still want to take trips. Likewise, most businesses that curtailed or eliminated travel need to return to some minimum level of face-to-face meetings; that trend should continue as, hopefully, the most potentially harmful elements of the pandemic start to appear in our collective rearview mirrors. This means that there is plenty of opportunity for budding economists, mathematicians, and others to contemplate working in a “fun” industry like hospitality. In many cases, ramp-up times from graduate or career-changer to productive employee may be highly accelerated, but this only means you’ll be delivering measurable value to the business - and delighting your colleagues - in a shorter time compared to other industries.
Likewise, don’t forget about the world of hospitality technology, which isn’t just staffed by programmers and quants. At Duetto, we’re proud of the high percentage of our business that is run by hospitality professionals, many of them ex-revenue managers who responded to a calling to help transform the industry through developing and delivering solutions that streamline and, in many cases, transform how hoteliers and others make pricing and inventory decisions.
Despite the challenging state of events globally, change is opening new opportunities on a level rarely seen in our generation. Now might just be a good time to reevaluate your options. There are dozens of openings at Duetto (link) and across the wider hospitality industry where you can put the study of the ‘dismal science’ into practice.
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