Today’s U.S. hotel construction pipeline is gradually picking up pace, but properties that are preparing to open this year have no choice but to hit the ground running. There is no room for error when the level of competition is as high as it is today. Additionally with the level of technology available to business owners today, there is no excuse for failing to prepare during the opening process.
With the industry looking for ways to shed the uncertainty of the past few years, implementing revenue management technology and techniques has become a necessary component of competition within hospitality. This is particularly true as hotels have witnessed the return of their pricing power, with some major markets recording double-digit gains in rate and occupancy.
Hotels need six months of preparation before opening to plan, prepare and act on an effective revenue strategy, if not longer. Here is what an effective revenue strategy might look like:
Six months: The vision
At this stage, hotels feel a great deal of pressure to understand the future property’s full potential and how it can be attained. Hoteliers’ main goal here should be to fully visualize their highest potential revenue during opening and begin to develop a plan to produce and sustain those results. This is where the revenue management system (RMS) comes in, as it is the best available tool to help hoteliers connect the right products with the right traveler at the right time, and certainly through the most optimal channels.
Decisions made during this time period can positively and negatively impact your hotel’s asset valuation over the course of its lifetime. Comprehensive data analysis tools are available to help operators understand their position and leverage within a local market. It’s important to put all six months of preopening time to work and track important variables as you inch closer to opening.
Five months: Track sentiment
The closer a hotel gets to opening, the more it should know about its place in the community. Operators should begin to track traveler sentiment regarding the property—a process that is much easier for branded hotels due to available comparisons. The key, however, is to understand short- and long-term shifts in traveler sentiment the closer you get to an opening.
Hotels should also track online impressions of the hotel. This can include everything from the number of visitors to the hotel’s website to the level of interactivity taking place on the hotel’s social media accounts. How a business fosters its online presence can be the difference between driving repeat business and the future of your revenue strategy. This is more easily accomplished in hotels that have few barriers between individual departments, allowing reputation management data to inform decisions made by the RMS.
Four months: Build forecasts
Historical data is a valuable tool when generating forecasts for future business; however, it’s just as valuable to take many small snapshots of a market’s minute fluctuations in order to generate accurate short-term expectations. Advances in data analytics have helped improve operators’ ability to set expectations based on smaller snapshots of a market, especially if a hotel’s internal systems are able to freely share data with the RMS.
Pricing remains a challenge at this stage, as a hotel’s initial room rate can set the pace for its success and reputation in a local area following its opening. It’s important for operators to have realistic expectations about a hotel’s inaugural rate, but also not allow mistaken assumptions to prevent operators from truly maximizing their potential rates. The best option for hoteliers during the opening process is to rely on rate forecasts to guide their decision-making. Advanced RMS technology can react quickly to spikes in demand, adjusting rates in response to a variety of factors.
Three months: Test for failure
By now hotels are nearing the point of no return, and it’s important to make sure the myriad systems your hotel is employing will be able to meet the demands of day-to-day operations. Technology exists to help hotels do more with less, but if the technology is not properly set up it could create a nightmare scenario where a hotel’s successful opening is derailed by untested systems.
Hoteliers must work with their technology partners to put every system through a rigorous stress test prior to opening their doors. A hotel’s IT infrastructure should be fully operational prior to beginning the six-month march to opening, and now is the time to make sure all teams have full access to the tools they need in advance.
Hoteliers should be looking for vulnerabilities not only in their hotel’s physical infrastructure but its forecasting and pricing strategy as well. It’s a good idea to build positive habits around revenue and data analysis prior to opening to ensure your hotel is maximizing its potential revenue.
Two months: Train
The great challenge facing the industry today is labor. Training for hotel workers must begin early and it must be reinforced multiple times throughout the early days of a hotel’s opening. Hotels must also consider the time it takes to onboard employees using the new tools adopted during the pandemic, from communications apps to the different services feeding information to the property management system (PMS), as well as the RMS.
It’s important for hotels to remember the value and utility technology provides, but it is no replacement for passion and training. A hunger for learning and improvement is necessary to thrive in the early days of a hotel’s opening, and this is true for revenue management leaders as well. It’s important to always reevaluate new revenue optimization strategies and refresh oneself on the ins and outs of each tool prior to opening.
One Month: Sharpen short-term forecasts
By now, hotels should have had six to 12 months of experience tracking the shifts in a new property’s host market, but now it’s time to think short-term. Additionally, this is the moment to ramp up marketing efforts and dial in on the booking channels that remain the most valuable to the hotel.
Not all booking channels represent the same value to hotel operators. Direct bookings are the most profitable option for hoteliers available to guests, but hotels struggle to compete with the marketing budgets commanded by large online travel agencies. With one month left until opening, hotels must consider every possibility and strategize a way to get travelers to book at their property directly. This way, the hotel RMS can be used to lead guests to direct channels and provide the best value for all parties.
Perhaps the most important thing for hotels to achieve with one month left until opening is to find the identity that imbues the hotel staff with confidence, that way they can operate at the highest possible level, remember their training, use the tools they’ve been given and elevate the property during its finest hour. The best way to gain confidence is by preparing, and the hotel RMS is there to help operators prepare for anything.
Digna M. Kolar is director, industry consulting, IDeaS, where she leads a global team assisting hospitality companies of all sizes to build and enhance their total performance and price optimization capabilities.
