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The increasing role of revenue management in delivering success in the hotel sector | Article

The hotel landscape in the UK and Ireland has undergone huge changes over the course of the last decade, with shifts in consumer habits and increased supply making the sector almost unrecognisable. Even before the transformational impact that COVID-19 has had over the course of this this year, and indeed continues to have on the hotel industry, the advent of third-party booking platforms, pricing comparison websites, growing supply of rooms, and an uncertain macro-economic environment has resulted in the sector arguably experiencing the most change in the past two years than I have ever witnessed before.

And yet, amidst this wide-scale transformation, our goal in terms of revenue management remains broadly the same as it always was – optimising performance when it comes to rooms, meetings, and events. How I, and others with a similar role, go about doing that is, of course, constantly changing and developing, not least in the midst of a global pandemic. But finding a way to boost revenue across the hotel group in both encouraging and challenging times is the core of what we do.

Three ways in which efficient revenue management has never been more important:

Firstly, given the environment that we currently find ourselves in, ensuring that the wider business remains agile and adaptable when it comes to pricing is vital. The year-on-year KPIs that we and our peers across the hotel sector have tended to base our forecasts on are effectively gone, and so revenue management as a discipline has a key role to play in forging a path forward in the midst of this uncertainty. While some element of ‘wait and see’ must be employed when the short and medium-term future is so unclear, spotting and taking advantage of the opportunities as they arise is a key aspect of our role. For instance, while city centre hotel locations have understandably seen a fall in demand during the lockdown period, as restrictions became slightly more relaxed we saw a rapid short-term rise within seaside and holiday locations, as guests across the UK and Ireland forwent international travel in favour of staycations. This trend is likely to change again as we move through autumn and winter, with fewer people perhaps keen to head for a break by the seaside. But if, for example, we begin to see more flows into city centres again, and perhaps a slight pickup in corporate travel, then that is another place where revenue management’s insight and expertise will need to be at the forefront.

Secondly, despite the pandemic, the shift towards third-party booking platforms is something that industry analysts see continuing unabated. As cost effectiveness remains ahead of brand loyalty when it comes to consumer booking habits, working closely with those platforms is important for most major hotel groups; and in fact over the last few months an even greater ratio of hotel bookings have been coming through those channels. Cultivating positive, mutually beneficial relationships with those platforms, as opposed to viewing them purely as competitors, has always been the approach that we have pursued. And given the current circumstances, that attitude has served us well. It allowed us to innovate in terms of working closely with long-term partners to drive business as we transitioned out of the full lockdown period, and also provided the option of partnering with platforms that we have not traditionally worked with to make what we can of a difficult situation. Again, the role of revenue management in developing those relationships, and considering where best to focus the business’s efforts, has been hugely important.

And finally, the changes that revenue management has undergone as a discipline over the last couple of years are also likely to affect how the role is considered in the future. No longer are revenue management professionals hiding behind spreadsheets, but are instead expected to be strategic leaders of the business, and that has arguably never been more important than right now. Technology also plays a huge part in the role of the modern-day revenue manager. With hundreds of decisions to make daily on pricing, strategy and yielding, tools such as IDeaS are critical in ensuring that we are optimising our demand effectively. We have used IDeaS for over 10 years, and it has become a pivotal part of both our decision-making process and overall business intelligence. More recently, we have invested in our channel manager solution, with our entire UK & Ireland estate partnering with SiteMinder, an industry recognised leader in this field. With our distribution channels become increasingly diverse it is important that we have a solution that allows for quick, effective and stable distribution of our rates and availability along with seamless delivery of bookings from the third party partners we work with.

With hotel General Managers and senior business leaders forced to focus on the operational side of the business, flexible short-term forecasting, and the ability to harness data and technology to inform the business approach going forward has seen revenue management positioned right at the centre of  delivering success, with those professionals acting as commercial leaders rather than just a supporting function.

Ultimately, I foresee a war for talent, where the most successful hotel groups look to recruit and nurture those individuals in revenue management that are able to engage effectively with stakeholders across the business, and bring more to the table than simply pricing. The onset of the global pandemic, and revenue management’s role in driving the response to it, has only further increased perception of revenue management as a crucial strategic function across the hotel industry.


By Stuart Yeates, head of Revenue, Distribution and Pricing – Jurys Inn and Leonardo Hotels UK & Ireland

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