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Controlling distribution costs, organizational changes and the importance of data-based decisions were all hot topics up for discussion at the recent Virtual Revenue Strategy Forum, which took place on May 19, 2021 and was attended by more than 900 attendees.
Caryl Helsel, Founder & CEO of hospitality advisory firm Dragonfly Strategists, moderated a panel discussion on ‘Navigating Uncertainty to Profitability’.
Panelists Priya Chandnani, VP of Revenue Management, Benchmark Hospitality, and David Rochefort, President, Graduate Hotels engaged in a frank discussion on how both hotel companies had navigated COVID and the impact it had on their revenue results and operations.
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Caryl Helsel started by asking the panelists how they had been controlling distribution costs.
Priya Chandnani of Benchmark Hospitality admitted that they had been very cautious of distribution costs at the start of the pandemic.
“Driving direct business has been key for us in keeping those distribution costs low,” she said, adding that Benchmark had continued to invest in marketing throughout the pandemic. “That served us really well as we opened hotels back up. It really helped to keep those distribution costs low,” Chandnani said.
Graduate Hotels also leaned into direct business. “We wanted to control that customer relationship in a time of uncertainty, to communicate about our Graduate Cares program, and we saw a significant shift in direct bookings. Owning our database as a brand created significant savings from a distribution standpoint,” Graduate’s Rochefort explained.
Graduate Hotels used the pandemic as a time to take stock. “Our company is seven years old and we already have 30 hotels. We’ve seen tremendous growth in the past seven years. The pandemic enabled us to hit pause and think what would we do and what would we restructure,” said Rochefort.
“Revenue Management was the most sacred of functions in our company in the past year. We saw a lot of competitors cutting down their team but we wanted to make sure we were ready, that the engine was idling and not turned off. We use Duetto as our revenue management system. We centralized operations, knowing we could cover more hotels from a centralized point and thoughtfully add hotels back in as the needs arise.”
At Benchmark Hospitality, revenue was also seen as a core functionality. The company did not lose a single member of its revenue team.
“We have always been centralized in our approach. Although we have a few hotels where we do have on property DORMs, as we are very cautious of not all one size fits all in our hotels,” said Chandnani.
“One thing we did take as an opportunity was just cleaning house – auditing across all our systems. And we have been relying heavily on automation as well,” she added.
Benchmark Hospitality put machine learning very much in the center of its strategy as it worked out a way to make sense of the new demand trends, teaching Duetto to adjust to market changes.
“Duetto picked up really quickly and adjusted to the new demand trends. This helped us to continue to make decisions through data and not emotion,” Chandnani told the audience.
Duetto also played a central role in the revenue strategy at Graduate Hotels. Half of the owner/operator’s hotels were ‘in ramp’ anyway as they were new and had no historical data.
“We had no historical data so we used predictive analytics. We saw shifts from channels and demand patterns. Duetto was really core in us having a better understanding of what was really happening in the world in real-time and allowed our team and organization to really adapt.”
For Benchmark, revenue has always been focused on total profitability.
“It was almost like going back to our foundation,” said Chandnani. “How it has flipped is that we are paying close attention outside of rooms revenue: golf, spa, etc. It’s been a fantastic exercise working with the team to develop some of those modules. As an industry, this was a great reset to look at total profitability and look at cost of acquisition.”
For Graduate, being able to act immediately was vital. “The first 90-120 days of the pandemic were very difficult. As an owner/operator brand we are able to control everything. We shut every hotel down about 2-3 weeks ahead of our competition and saved millions. We are lucky to have every hotel open and operating right now,” said Rochefort.
“We really believe our marketing: secondary, tertiary, drive-to leisure - these markets will outperform the rest of the country in the next 12 months. We are very positive and have a real belief in hospitality, our concept, and our brand,” he added.
“A lot of our portfolio is outpacing 2019. We are focused on peak weekends, big football games, focused on the school year and a lot of that is rate driven, which is great to see. The big unknown is midweek and what does that look like? What does corporate travel look like? But weekends are outperforming two years ago,” Rochefort explained.
And it was a similar story from Benchmark: “We’re seeing similar trends to Graduate. Exceeding pace compared to 2019. We are doing better in rate, especially over the summertime and Q3. This is going to be the best summer for us ever. I do think that all sights are on Q3 and Q4 as summer ramps down we will see a shift in our mix. And it is important we react to that sooner rather than later.
Want to listen to this panel discussion as well as presentations from citizenM, Amazon Web Services and The Economic Outlook Group, LLC? You can still subscribe to watch the Virtual Revenue Strategy Forum conference On Demand at a time convenient with you. Visit https://www.duettocloud.com/rsf21
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