By Jean Francois Mourier, REVPAR GURU
As the 2011 Holiday Season has ended, many hoteliers are putting another year of robust revenues on their holiday wish list, in which they continue to rebound from the wayward economy.
Thankfully, numerous data sources point to even better times ahead. However optimistic the predictions may be though, it takes more than a “letter to Santa” to keep hoteliers in the black.
To gain more insights into the expectations, opportunities, and trends for the year ahead, I sat down with Heiko Dobrikow, the General Manager of The Riverside Hotel, a 214-room independent property in Fort Lauderdale, Florida.
Hotels have seen occupancy numbers rebound 5.3%, jumping to 59.8% this year (predicted) from 54.5% in 2009. Looking ahead to 2012, what are some strategies that revenue managers should pursue in order to get those numbers up?
My number one strategy for hotel managers is for them to find new business. An excellent way to achieve this is through pursuing and cultivating a strong online travel agency (OTA) relationship. OTAs are an ever-growing arsenal. I remember when the Riverside Hotel was on around 100 or 120 OTAs. Today we are featured on more than 500. My second strategy is for hoteliers to gain a better understanding and focus on the narrowing booking window, especially as it relates to leisure travel. Revenue management systems, capable of adjusting prices based on instant demand are highly effective. Another growth strategy comes down to two words: International travel. It behooves us to go after markets that are growing, the low-hanging fruit. Lastly, regarding attracting international travel, it never hurts to take a more traditional route and hire staff fluent in multiple languages and familiar with a country’s local customs and culture increase the perception of hotel sincerity and genuineness to attract and hold to new guests.
The past year saw a lot of heavy discounting, as deal sites like Groupon and LivingSocial seemed to be everywhere. What do you feel will be the discounting climate in 2012? Will there be a continuation in this strategy, or will the predictions for a profitable 2012 drive hoteliers away from that?
I believe the strategy of flash sales will continue and will grow in the coming year, the difference will be in the manner in which discounting and flash sales are used, switching to strategic placement and not mass bill boarding of deals. Speaking specifically for the South Florida market, September is often a lower hotel occupancy month, sometimes as low as 50%. However, effective use of discount promotions can raise occupancy sharply. The Riverside Hotel, for instance, saw its year over year September occupancy grow 21%. It’s also important revenue managers balance flash sales with package deals, as package deals usually do not detract from overall revenue. Other promotions like WiFi and even a free drink upon arrival all help to drive customer satisfaction, turning a once deals-based customer into a regular guest. As the 2012 global economic outlook remains cautious at best, discounts and deals will remain a major part of the revenue equation.
As we approach the end of 2011, some hoteliers believe OTAs, through payment fees and mass broadcasting of multiple hotel listings, unfairly sap potential customers from other places to stay. Do OTAs help or hurt your average hotels’ bottom line and ability to attract guests? Where do you feel OTAs will go in 2012?
I truly believe that OTAs help hotels, as the exposure you get is so much more massive if you manage it successfully. The trick is revenue managers must use their technology to truly analyze the type of business coming in. Rates need to be manipulated fairly, but at the same time, money can’t be left out on the table either. In other words, too low a room rate can be just as disastrous as an overpriced stay.
That being said, OTAs are not a lifeline to occupancy and revenue success. While OTAs help fill occupancy gaps, the long term goal is to use OTAs in a way that helps turn guests into “regulars” and not just daily deal hunters. One way to do this is to carefully track the OTA traveler data coming in to your hotel. For instance, consider offering deals to returning customers if they book directly from your site the second time. Being creative when it comes to attracting guests is critical and OTAs are an excellent component and their impact is likely to grow.
What is on the horizon for revenue management in 2012? How will technology (both consumer and hotel) play a role in 2012?
Technology is king and revenue managers need to tune in. I truly believe it’ll be the forefront of travel, as it’s all about customer engagement. Social media is an excellent format to drive referrals and free exposure. Smartphone mobile applications will continue to explode in the coming years, with more costumers switching to a book-it yourself model, due to the rapidly changing and portable nature of our technology. As more travelers are using their Smartphones to book their travel stays at the airport, on the plane, or upon arrival, the booking window will continue to shrink.
What do you feel will be the greatest challenges facing the hotel industry in 2012?
Without question, it is the continuing global economic uncertainty. Questions like “What’s going to happen in Europe, in Latin America, and elsewhere,” continue to weigh heavily on economists and revenue managers alike. Even though one market may be promising today, there’s no guarantee that they will continue to be fruitful. Another 2012 challenge will be in the continued downsizing of business group travel. It used to be that group business trips would be as large as 300-500 guests. Now these groups are using technology like virtual conferencing instead or sending smaller groups. But the last challenge for revenue managers is how to better handle the increasingly leisure traveler last-minute travel plans, as planning is no longer six months to a year ahead, but as little as 14-90 days.
Finally, returning to our article’s holiday-appropriate title, what are your goals and wants for the holidays into 2012 for the hotel industry?
I see continued growth for international markets as key to a hotels’ ‘wants’, in the coming year. Expanding relationships -of all types -is central to growing ones business and having a balanced OTA strategy that turns one-time discount visitors into guest regulars is key. Revenue managers and hotel staffs in general must keep abreast of social media trends, interacting with their guests, and better understanding their new buying habits. Considering the downsizing of group business travel, hoteliers need to be especially attuned to regional corporate meetings and domestic niche markets.
About REVPAR GURU
Jean Francois Mourier is CEO and Founder of REVPAR GURU, a company that provides automated revenue and rate optimization solutions. REVPAR GURU’s real-time pricing solution combined with automated online distribution helps hotels maximize occupancy and increase their profits. The company’s Dynamic Pricing Engine, an integrated revenue optimization and pricing solution, adds unprecedented power and real-time adaptability to the pricing process, leaving revenue managers more time to run their hotels, make better decisions and do what they do more efficiently. You can reach Jean Francois through www.revparguru.com or by calling +1.786.478.3500 .
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