Hotel owners and asset managers led the charge at RSS 2018 for revenue-focused leadership that would help them and the major brands whose flags they carry. A more holistic Revenue Strategy that maximizes profitability is within reach, RSS attendees said, but it requires greater collaboration among all stakeholders, as well as all departments of a property.
Highlights from RSS show that hoteliers recognize and emphasize the needs in the industry for greater alignment, leadership development and investment in technology.
Aligning the Hotel Industry for Revenue Strategy
The prevailing sentiment about Revenue Strategy, shared by asset managers as well as the brand operators and owners, was that it’s an all-hands approach, not relegated to one silo. Andrew Jordan, Chief Marketing Officer for Interstate Hotels & Resorts, said during a panel at RSS that responsibility for top-line goals shouldn’t reside only with revenue managers and analysts.
“Revenue Strategy is way too important to be left to the revenue strategists,” he said. “When I think about how our organizations are evolving, it seems like something that is not siloed at all. Not only is it about partnering with sales, marketing and e-commerce, but it’s also about partnering with ops first and foremost.”
Doing so requires hotels to align those departments on not only strategy, but also on incentives and goals, said Nolan Wrentmore, Vice President of Revenue Management for Aimbridge Hospitality.
“It’s about putting together a plan of what we all need to do to achieve a certain goal, whether it’s as simple as a budget or STR report results or Net RevPAR,” he said. “General managers are the ops leaders, and they need to be really involved. Everybody has to have that common understanding of what our goal is and how we’re going to achieve it.”
Jordan remarked that a property’s revenue strategists should be more involved than they typically are in the executive committee. Wrentmore completely agreed, adding that revenue leaders need the soft skills to effectively communicate a strategy to asset managers and owners.
“We get into situations where we like to explain what happened yesterday,” Wrentmore said. “We have to explain why our STR Report sucked last week or month — because nobody ever asks us about the good ones — but more importantly, what owners and asset managers want to know is what are we doing about it? What are we strategizing for the future, and when is it going to turn around? People who can explain that are the individuals you need in your leadership team and executive committees.”
Developing Revenue Leadership for Hotels
Thinking about this involvement in the hotel’s power structure gets hoteliers into thinking beyond revenue management or strategy toward what Bonnie Amato, Chief Revenue Officer of Fulcrum Hospitality, called “revenue leadership.”
“I actually don’t use the term Revenue Strategy anymore; my new conversation point is revenue leadership,” she said. “It’s about defining what’s the next step and leading to it.”
She added that when a hotel identifies a talented revenue manager, the most important investment to make in that person is leadership training. An expert in one particular revenue management system isn’t as useful to a hotel as somebody who can communicate clearly and lead different departments into action.
“The best leader should lead,” Amato said. “It doesn’t make the second person any less important, because one person can’t do it all.”
In fact, she said, it’s exceedingly rare to find somebody already possessing leadership acumen and command of a revenue management system: “That’s not necessarily a natural combination. So far, people have been brought up in one or the other silo and have a weakness in the other.”
Invest in Hotel Technology, Too
Ash Kapur, Senior Vice President and Chief Revenue Officer for Starwood Capital Group, also remarked in the opening panel of RSS that investing in people was as important as procuring new tools to empower them. However, he said, don’t short-change needed upgrades to technology and strategy over the long run.
For instance, if hotel companies made the needed upgrades to CRM systems, the owners and asset managers of their branded properties would be far better equipped to drive higher gross operating profits, driven by higher average daily rates, Kapur said.
“It’s not about how or where the guest came from; it’s about what I do with the guest once he’s inside my building,” Kapur said. “If I have all the tools that enable my staff to give them a brilliant experience, I know that the next time onwards, whatever channel they use, I will have the ability to increase rates, because I have a lot of guests returning and have better scores on social media and TripAdvisor.”
A brand can win the buy-in of owners and asset managers, Kapur said, even though all three groups have different criteria for judging an initiative’s success. Asset managers want higher gross operating profits, which correlate with higher fees for brands, while the owners need to maximize net operating income.
Just as communication remains important for the revenue leader trying to win over ownership, it’s also important for brands and asset managers to articulate the strategy to the group that ultimately owns the asset, Kapur said.
“What shouldn’t happen is piecemeal approaches or Band-Aids to fix what’s happening outside this technology,” he said. “It has to be a concise, well-articulated strategy, and the vision needs to be shared with the hotel ownership group, and then as hotel owners we’d endorse it.”
RELATED HOTEL REVENUE STRATEGY ARTICLES
- What NOT to Look for in a Revenue Manager
- Hotel Owners: DORMs Who Drive Profit are Cool
- How Should I Build and Organize My Revenue Team? (Video)