Spotlight on: Total revenue management

Rather, operators are more likely to be making long-term investments in response to our rapidly changing world, such as in electric vehicle charging bays or efficient booking portals for small meeting rooms.

"Connecting the various departments in a hotel has historically not been easy, and the spa team or the meetings and events team have tended to work in silos. Technology has not helped, with legacy operating systems that do not ‘talk' to each other," says Heather Byron, SVP services at customer experience consultancy Alliants.

But now, cloud-native property management systems can handle data and bookings from multiple departments all within the same system. Rather than each hotel department working in relative isolation, operators are using data and business intelligence to understand the synergies between their departments to optimise profits.

Implementing an overarching total revenue management strategy is complex and requires cloud technology and access to real-time data. It needs leadership from an experienced revenue manager or data analyst and buy-in, not just from heads of department, but all team members.

"It can be quite a task to instil a total revenue management culture, remove fear and get colleagues to share data," advises Byron. "Be careful of change burnout. Don't try and introduce too many changes all at once and make sure everyone understands the benefits."

Here are the stories from three multi-site operators who are taking steps towards total revenue management.

One team at Red Carnation Hotels

In 2020, Red Carnation centralised its commercial and revenue function to improve efficiencies and focus on delivering a revenue-generating guest experience across its portfolio of 18 properties.

"It's important to bring everyone together as one commercial team. There are so many factors that play into the commercial strategy that we must be aware of one another's perspectives," says Suzie Thompson, vice-president of commercial at Red Carnation.

The commercial team now aligns revenue more closely with sales, providing an increased understanding of trends, lead times and purchase behaviour.

"Using all the info we have, our revenue strategy is more flexible and agile," Thompson adds. She has also encouraged her team to see their six London properties as one single 600-room proposition.

"Having a different commercial approach to inventory gives us more opportunity," she says. "We are focusing on how to maximise the full estate."

Typically, Red Carnation was concentrating on average daily rate (ADR) as a performance benchmark. However, following a period of improved performance and strong traveller markets, the team realised there was little scope left to raise room rate without impacting guest expectations. Therefore, the team has turned its focus to maximising total revenue from guests as a way to offset increased costs.

"We had a record-breaking 2022, with ADR up 20% compared to 2019," says Thompson. "Now, with increased operating costs, we need to make considerably more revenue to make the same profit."

Insights provided by RM supplier IDeaS identify demand patterns, letting the commercial team create special offers at the right times for the right audiences, ensuring prices reflect the opportunity. "It's important that we use facts to double check our assumptions," says Thompson.

Managing multiple systems at Aimbridge Hospitality EMEA

"It's all about experience now," says Carol Dodds, SVP commercial, Aimbridge Hospitality EMEA, as she expertly summarises the three distinct cycles that UK hospitality has been through since Covid.

"2021 was all about reopening and fairly traumatic from a supply chain perspective, not just around goods and services, but attracting talent back, too. Then 2022 was extraordinary, as we benefited from the staycation boom. Now we're into another cycle. Many hotel budgets were built on the back of extraordinary rate growth during 2022. However, the staycation market has softened this year, and while corporate has started to recover, it is in a very different shape."

In the past 12 months many hospitality companies have been training an entirely new workforce, because so many people left the industry during the pandemic. The emphasis has been on finding people with the right competencies and attitude.

"It's about finding people with the personality to engage with guests and give them a reason to spend more time in the hotel," says Dodds. "To dine in the restaurant or add a spa treatment to their pamper session. Selling the total experience will, in turn, increase total sales."

Consumers are looking for experiences and this puts hotels up against serious competition from a range of venues. Therefore, Aimbridge is working with owners to look at the design of lobby areas and bars to attract more locals and create sociable environments.

In terms of meetings and events business, large events have still not fully recovered, but Aimbridge has identified an emerging market of companies that have cut down on full-time office space but still need places to hold small meetings.

"We need to make the booking process slick and efficient for small meetings in particular," says Dodds. "The speed of enquiry response is absolutely critical, especially as the makeup of our buyers is very different and their priorities have changed. All of our workloads have increased compared to three years ago, so we need to be on point with a relevant and timely response, in order to secure the business."

Aimbridge operates some destination spas and restaurants within its hotels, such as Jean-Christophe Novelli's restaurant within the AC Hotel by Marriott in Belfast, and Marco Pierre White's Steakhouse Bar & Grill within the Hotel Indigo in Durham.

In addition to the hotel websites, Aimbridge makes sure these venues have their own individual websites and contracts a hosting partner to take care of sales and packages.

As the operator of properties under multiple brands, Aimbridge deals with almost 40 different hotel operating systems. Just looking at revenue management systems alone, for instance, the Aimbridge Revenue Strategy Team has expertise in managing IDeaS G3 (Hilton), ezRMS (Accor), One Yield (Marriott) and IHG's proprietary system.

This is a complex space to navigate, and for this reason, Aimbridge has created its own overarching business intelligence tools that sit above the 80-plus hotels under management, in multiple countries and multiple currencies. These systems easily extract data which is then displayed in an easy-to-read dashboard format to provide insights to cross-brand teams to support them in developing and deploying revenue strategies and tactics.

Aimbridge employs four remote-working data analysts who crunch the data and report to the financial and commercial management teams. The emphasis is on the interpretation of guest sentiment (ReviewPro) and forward-looking data that can really make a difference to operations.

There are certainly unknowns that all hospitality operators are facing, Dodds reckons, and the cost-of-living crisis is one factor that is impacting revenue: "Spending patterns have changed, and we are now all still learning what that looks like."

Prices are reviewed constantly by Switch Hospitality at Park Regis Birmingham

The 253-bedroom Park Regis Birmingham is managed by Switch Hospitality, a Birmingham-based property management company. More than half (56%) of the hotel's revenue comes from meetings and events. This means that any revenue management decision – historically tailored to room sales – is increasingly scrutinised, says Stuart Gillespie, Switch's group commercial director.

"Previously, the focus for revenue management was to get the business in at the right rate, while driving occupancy at the same time – with profit and total revenue being someone else's specialism.

"Today, revenue managers must analyse how much the business is costing to ‘buy in', whether via an agent or through a certain channel, as well as considering the impact on other cost centres within the business."

At Park Regis, the pricing strategy review for meetings and events is the most important meeting of the week. Mid-week demand is always strong, says Gillespie, but when that space sits empty on a Monday and Friday, the impact on the hotel's financial performance is significant.

The commercial team must ensure that ‘shoulder day' business is priced accordingly to ensure the space can be used, while staying strong on high demand days to maximise returns. This strategy has paid dividends with Park Regis' overall meeting room usage up 14% almost entirely on shoulder days.

Food and beverage is another growth area, says Gillespie. In 2022, the hotel launched Indian restaurant Indus at Park Regis, which has enabled the hotel to provide Indian banqueting as part of its meetings and events offering. This has not only increased sales revenues but also F&B profitability, with dinner revenue for meetings and events up 30% following Indus' launch.

Gillespie says: "Our commercial team runs quarterly department-wide training sessions so that every employee can see the rationale behind our revenue management strategy and be empowered to actively implement best practice in their day-to-day roles. As an example, upselling at reception has seen a 24% increase in revenue year-on-year, through increases in room upgrades, afternoon tea bookings and dinner reservations at Indus."

Switch Hospitality expects to see 34% increase in total revenue at Park Regis this year.