Winning Revenue Strategies to Capitalize on a Banner Travel Year

by Ed Watkins, Contributing Editor | January 05, 2018

Most forecasts and analyses say 2018 will be a boom year for global travel, including both business and leisure. The outlook for group travel in 2018 is murkier but probably stable.

A number of factors contribute to the optimism for 2018. A Goldman Sachs report forecasts 4% growth in global GDP this year, up from 3.7% last year. Growth is expected in most world economies, with China (+6.9%) and India (+6.3%) leading the way.

Recently enacted tax legislation in the U.S., as well as a political environment favoring fewer regulations on business, should lead to more optimism among corporate CEOs, which should spur additional business travel and perhaps more corporate meetings.

Likewise, increasing global prosperity will support strong leisure travel activity, especially from countries with emerging middle class populations, such as China and India.

And while the travel market continues to expand, its composition is also changing as younger travelers — millennials in particular — take center stage as the dominant demographic among business travelers. This group of road warriors — and those in other age groups who think like millennials — has specific wants and expectations from hotels.

Revenue managers and marketers need to develop dynamic, rational and actionable strategies to ensure their hotels receive more than their fair share of increased business.


A new survey from The GO Group confirms the notion of a banner year for travel and hotels. According to the research, 27% of respondents said they plan to travel more for business in 2018 than they did last year. A similar survey taken at the beginning of 2017 showed 15% of people planning more business travel.

Business travelers have different price expectations for hotel rooms depending on who’s paying the bill. Corporate travelers are less price-sensitive and often more driven by loyalty considerations. Entrepreneurs and others traveling on their own dime will often forego loyalty benefits in order to get the best rate.

Other corporate travelers are prone to booking rooms outside of their companies’ negotiated rate plans, again typically driven by loyalty considerations. A survey of business travelers in the UK showed that 70% of them booked outside of their corporate platforms at least once in the past year, and most of them turned to brand booking platforms.

For all these classes of business travelers, revenue managers need to have dynamic pricing strategies that appeal to their individual needs during various trip segments.

Many revenue managers, especially those working with sophisticated technologies, have a depth of knowledge about guests, especially business travelers, who might visit a location frequently. Such knowledge leads to the ability for RMs to personalize rate structures that will lead consumers directly to their sites and compel them to book.

Analytics can also provide revenue strategists with deeper profiles of first-time shoppers on properties’ direct channels, which can increase the chances the hotel can offer a personalized rate or package, even to an unknown guest. 


Some hotel sales professionals believe group business will increase somewhat in 2018, but the segment will be marked by shorter booking windows and basically flat rates.

On the other hand, a survey of meeting professionals showed positive sentiment toward an increased numbers of meetings, but they expect higher hotel rates. These meeting planners are more optimistic about the incentive travel subset of the meetings market. About half of those who plan incentive travel say their budgets will increase, with average per-person spend rising from $3,000 last year to $4,000 in 2018.

While booking group business has traditionally been a function of hotel, management company or brand company sales teams, online travel agencies are trying to make inroads to this segment of the hotel industry.

Late last year, Expedia introduced an automated booking engine hotels can attach to their website technology to book small and medium-sized meetings. Expedia’s pitch for the system to hotels is its ability to streamline the RFP process, which if true could be a boon to smaller hotels with limited sales staff. Such technology could have a place in the hotel business, but operators need to make sure they don’t lose control, especially of the rate management function, of this lucrative side of the business.

The scenario of flat rates and shorter booking windows could lead some revenue managers to become alarmed when they see group blocks not filing as quickly as they forecast.

And as hard as it is to accept, the best advice is not to panic in these situations by prematurely dumping inventory onto OTAs or other third-party platforms. Indications are that most groups fill their booking obligations, even if it is closer to arrival dates than RMs and GMs would prefer.

Also, some renegade meeting attendees book outside of the event block, so it’s important for meeting planners and hotels to work together to identify these outliers and to encourage and incentivize them to book their rooms through the negotiated channels.

Shifting dynamics in the group market require new levels of communications among hotel departments to maximize group revenues and profitability. Beyond that, hotels need to institute dynamic group room pricing rather than traditional static rates.

Further, RMs should consider a waterfall approach to contracted rates in which everyone must book within an agreed-upon cut-off date. 


One of the great constants in recent years in the hotel industry has been the strength of the leisure market. Americans, in particular, believe travel is a birthright, and many of them are willing to forego other purchases rather than to give up a family vacation or weekend getaway.

The survey from The GO Group revealed that 33% of consumers plan to travel more this year than last, a jump from 21% of respondents in 2017 who said they plan more leisure trips.

Despite the reliability of leisure, hotel marketers and revenue strategists need to understand how the market has changed. Research from AARP showed that milennials — and not the group’s core baby boomer constituency — will be the top leisure customers in 2018, spending an average of $6,800 on vacations this year, $400 more than boomers.

Even more importantly, 79% of millennials are likely to use most or all of their employer-provided days off, versus 68% of boomers. And many more millennials (75% versus 56% of boomers) expect to bring work with them on leisure trips. This information creates opportunities for hotels to craft “bleisure” rates and packages to cater to millennially-minded travelers who want to combine business and pleasure.

Unlike business travelers, leisure guests are much more likely to be deal hunters and, thus, are heavy users of metasearch and OTA sites to find that elusive “smoking” deal on a vacation room.

Revenue managers at properties that cater to even some leisure business must develop OTA and metasearch strategies that provide rates that will stop leisure lookers in their tracks and lead them to their properties — preferably direct.


Ed Watkins, Contributing Editor

Ed has been covering the hotel industry for more than 40 years. He was editor-in-chief of Lodging Hospitality from 1980 to 2012. He then joined Hotel News Now as an Editor at Large, until his retirement at the end of 2014. Ed still contributes to several publications and is a member of the advisory boards for the hotels schools at Michigan State and Penn State.

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