An uncertain future: revenue management challenges for 2017

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Ally Dombey of Revenue by Design looks at the challenges facing hotel revenue managers in what is looking like another year full of uncertainties.

Last year presented its own set of challenges for the hotelier, some anticipated, some less so - and 2017 does not look to be any more predictable. While we can't influence many of the external factors that may impact our business, there are some key priorities for the revenue manager's function to ensure we are well prepared for what this year may bring us.

• Pricing
We're seeing a lot of confusion in pricing for hotels who are trying to manage book direct strategies: Brexit, the value of Sterling and most recently, issues regarding the promotion of dynamic pricing where the ASA has upheld complaints about the lack of availability of promoted pricing. Pricing is set to become a minefield in 2017. Hotels must focus on getting their house in order to effectively manage long term pricing objectives alongside the tactical opportunities that arise.

• Relationships between owners and the operational team
Often owners may have objectives for a property related to a sale, or financing opportunity that the operational team are not aware of. This can be a cause of frustration and confusion. If the operational team has set a revenue management strategy that clashes with the owner's future thinking. Revenue managers need to understand what an owner needs from the property - are they looking to sell in the near future and going for a higher multiple, or looking for a management company to operate the business? Each of these strategies requires a different revenue management approach. Internal communication of top line objectives is key.

• Improving top and bottom line revenues
The revenue function can no longer rest buried in the reservations department. Last year's focus on book direct resulted in a lot of discounting, often to customers who may have booked anyway. In 2017 we need to get smarter at managing distribution costs, taking a deep dive into the profitability of products, and also working really hard to integrate guest data into the revenue function.

• Getting closer to the guest
Understanding the guest is the a primary function of hospitality; at some point we lost the focus and became inventory managers, expecting a guest to chase down the best rate. That's ludicrous, and guests will force that change by walking elsewhere and using alternative accommodation if we don't get a grip on better CRM.

• Communicating across multiple channels
Mobile represents a huge opportunity for hotels, and increases the complexity of customer communications. We are still seeing hotels totally bogged down by technology that simply doesn't perform. How is a hotel meant to manage the complexity of multichannel communications when the revenue manager spends the majority of his or her time servicing interface failures between one technology supplier and another? Hotels that invest in good technology and a decent budget for digital in 2017 will be the winners.

One thing is certain - the hotel industry is facing many challenges. While some are no doubt threatening our traditional business models, others are presenting new exciting opportunities. As hoteliers, we need to commit to understanding these and identify where our focus should be to ensure we are making the most of these exciting developments.

To help you navigate this changing landscape, register for 'Seize Opportunity in Disruption' on 21st February 2017,  a one day business-transforming conference, where industry leaders from Booking.com, Google, Voyat,  Duetto among others will share their thoughts as to how innovation and developments in the industry can positively impact your business. Visit www.opportunity2017.co.uk  to find out more or contact Michelle Casey at michelle@revenuebydesign.co.uk or call on 07718 650 349

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