Collaboration is key to keeping profits up in a dynamic market

NATIONAL REPORT—With the market always changing, it is extremely important to have a successful strategy for keeping your profits up—no matter the state it is in. An important part of that strategy is to make sure that sales & marketing and revenue management are working together.

Sagar Patel, The Witness Group

“The collaboration between sales and revenue management is a necessity for the hotel to optimize the right mix of business and, thus, profitability,” said Sagar Patel, CIO, The Witness Group. “At the end of the day, the hotel industry epitomizes supply and demand on a daily basis, which is why you can sell a room for $79 one night and $400 on another if there is a special event.”

Filling supply based on the demand is critical to winning market share and optimizing profitability. “Without the sales team and revenue management working together, the optimal mix of business (corporate rooms, retail rooms, group rooms) might not be achieved, which will result in money being left on the table,” Patel said. “As such, it is crucial for the teams to work hand in hand to ensure they are booking the ‘right’ business for the particular day or season. If this synergy is achieved, it will show in the results of the STR report and, ultimately, the bottom line.”

The collaboration between these two areas needs to start at the budget planning process. “[They need to work together when] identifying the segments/demand generators, rates for each segment and the overall revenue strategy for the hotel,” said Tammy Gillis, CEO/founder, Gillis Consulting. “The sales function helps build base business, allowing the revenue teams to increase rates across the various retail channels. The more information both teams have about the market, client booking patterns, booking pace and the competition, the better both teams will be in executing their strategy on behalf of the hotel. If these teams work in a silo, they only have half of the information.”

Tammy Gillis, Gillis Consulting

Ewa Kempa, VP of revenue management, Dellisart, agreed, adding that each team brings information that can help achieve goals. “Sales will provide the local knowledge of the market, the faces behind each account, trends, future events and the competition,” she said. “An open forum to share opinions during weekly conference calls keeps sales focused, challenged and offers opportunities to share experiences and create solutions. The revenue manager should help you with the research on local company info. To have fair expectations, DOS should have a budget revenue number of each month for their market segment like group, transient corporate, consortia, and a revenue manager should be accountable for OTA channel production, rack, packages. If you don’t have a budget, just look at historical data by segment and at least give them last year’s numbers, plus a certain percentage of growth expected.”

But not all hotels—perhaps those that are smaller or in smaller markets—have dedicated sales or revenue management teams. “This should not be an excuse to omit these key functions from the day-to-day operations of the hotel,” said Patel. “If this is the case, leverage scale within the management company that can leverage sales and revenue management efforts across a number of hotels, so the burden of the salary expense does not fall on a smaller hotel alone.”

If there is no scale within the management company, then it is time to outsource these services, either to specialized companies or the brand. “There are several revenue management and sales support companies that provide these services to hotels, which are far cheaper than having your own dedicated staff,” he said. “Most of the brands have basic revenue management and sales coordination services for a fee.”

Ewa Kempa, Dellisart

Even with these services, said Patel, it is important to remember that simply retaining them is not enough, and this service must be actively managed by the general manager of the hotel. “It may be too much for the general manager to fully commit to doing operations, revenue management and sales, but they should be involved in all meetings and discussions to bring all of these components together, which…is crucial to the success of the hotel,” he said.

For Kempa, it is incumbent upon the general manager or owner to give sales-specific guidelines on rates, and recommends giving them selling guidelines like seasonal pricing. “After that, it’s usually a smooth transition,” she said. “In the role of revenue management, we can always find short-term ways to improve your occupancy, or boost your contribution through other channels to overcome the shortage in group or corporate transient. If you are without a salesperson, your revenue manager should be able to assist you with responding to RFPs, utilizing commission-based sales tool like Hotel Planner. You can also use low-annual-fee systems like BidClerk to find bigger leads if you happen to run a limited-service or extended-stay property.”

Creating a sales-focused culture and leveraging your frontline teams to drive loyalty and identify leads will help you be less reactive when it comes to sales, according to Gillis. “Identify sales-related tasks for the front desk and night audit on low occupancy nights,” she said. “They can be going through the arrivals reports, identifying guests that booked through OTAs and researching what companies they are with, asking guests at check-in what company they are with and would they be interested in setting up a corporate rate, or doing Google searches using a competitor’s phone number and address to identify groups staying at their hotels.” HB

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