The hospitality industry is enjoying its longest expansion and healthiest growth in decades, yet there are some troubling trends beginning to surface that threaten profitability and overall performance.
One of these trends is that net room revenue - i.e., revenue that remains with the hotel after accounting for distribution costs (OTA commissions, traditional agency commissions and other distribution expenses) - has been declining steadily over the past several years.
For example, US hotels earned roughly $155.2 billion in guest‐paid revenue in 2017 but paid an estimated $25.2 billion to acquire guests in the form of OTA commissions and other distribution costs, retaining significantly lower net room revenue of $130 billion (Kalibri Labs). Revenue capture - i.e., net room revenue that remained with the hotels - declined from 84.9% in 2015 to an estimated 83.5% in 2018 (Kalibri Labs).
Traditionally, RM, S&M and CRM operate as separate teams with their own goals, technology tools, databases, vendors and more.
Revenue managers vs. marketing managers: RM has been the science of analyzing the property’s past, present and future performance data, comp set pricing, plus past and projected macroeconomic data, citywide convention and major events calendar, etc. Revenue managers rarely have the tools and data access to take into consideration CRM data, including guest RFM values, website user behavioral data and digital marketing data.
What should hoteliers do proactively to accelerate the change to an integrated revenue generation team? Here are just a few of the organizational, financial, technological and philosophical changes and action steps needed.
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