Recently, as a pilot, I found myself completely disoriented as we entered adverse weather and lost all visibility outside our aircraft. My initial instinct was to fly by the seat of my pants and try to keep the aircraft straight and level. But I knew that when you lose visibility your body can play tricks on you and you can get into a disoriented state. I needed to look down at the instruments onboard and trust fully in them to give me the information necessary to fly straight and level and on course. Once I did this, I gained situational awareness, was able to analyze the environment, and was able to navigate safely to the destination airport with the assistance of the navigation systems onboard.
Thinking ahead to 2022 we are in a similar situation. We find ourselves in the clouds not knowing exactly where the industry will head. By now this is nothing new as we have been in the clouds for some time now. We’ve seen breaks in the clouds from time to time and enjoyed some reprieve but we also realize the vulnerability of the situation we are in.
Given the current situation of uncertainty, there are a few things that will assist you as you navigate into the new year and think about the direction needed to optimize revenue and profitability.
Your owner or banker may ask the question: “So, how’s the business going?” You may answer “Fantastic!” but then the next question may be, well how do you know?” This is an important question to ask and cuts to the heart of whether your management team has “situational awareness.”
So, what are those “key” metrics that drive success within your organization. The answer will be different depending on your objectives, markets, and the current situation you are in. The approach needs to be a balanced approach that takes into account key stakeholders and the overall objective. For example, owners/investors will be focused on EBITDA, ROI, etc. Accountants and revenue teams will be focused on net profits, margins, etc. Revenue teams will also be focused on market share indices, conversion, ROAS, sales goals, etc. Other areas need attention on overall guest experience, employee satisfaction, etc. High performing organizations typically have a few shared goals for the whole enterprise, and then functional and subgroups develop specific key metrics that clearly map to the overall goals.
Ensure all systems and KPI’s are working optimally:
Setting systems on autopilot without monitoring is dangerous and likely will result in less-than-optimal results for your organization. I’ve talked to many revenue managers over the last couple years and most will attest to the need to monitor their revenue systems closely because of the volatile state we are in. They did not trust them fully. The same is true with monitoring and adjusting your KPI’s. What you thought at the beginning of the year would be a good goal may fall short of achieving your fullest potential. Monitoring several measures and trends are important to understand your current situation, which then allows you to adjust strategy and be agile in this ever-changing environment.
Challenge yourself to learn something new and learn from others:
Of those that I consider successful over the last two years there is a common theme. They continue to challenge themselves by learning something new, and they are not afraid to reach out to others to understand best practices. This ensures you maintain perspective.
I teach the HSMAI Revenue Optimization Essentials Course. It is refreshing to teach the class because I see individuals from operations, sales, marketing, and revenue management all in the class together with a desire to understand more about how they can become an effective leader in the area of revenue optimization. They also gain viewpoints from their peers that will impact how they view their commercial strategies.
2022 has some promising signs and I continue to believe this year will be a pivotal year in the overall recovery for the industry. The more we are aware the better we, as an industry, can respond and optimize. I truly hope all of you will have a successful 2022.
About Tim Wiersma
Principle, Revenue Generation llc. With more than two decades of experience in the hospitality industry, Tim Wiersma is recognized as a leader in revenue management. His company specializes in property and portfolio revenue management, sales, marketing, distressed-asset turnaround, and asset assessment; his company consistently delivers results for properties around the world.
Before Revenue Generation, Tim was a vice president with Host Hotels and Resorts, a Fortune 500 company and the largest premiere real estate hospitality company in the world. He has also held a vice president position at TPG Hospitality, a private equity firm with over 60 full-service hotels representing all major markets and brands, and he was vice president of Red Roof Group where he oversaw the Revenue Strategy of over 650 economy hotels. He has held other corporate-level positions with Starwood Hotels and Resorts and Canadian Hotel Income Properties and has been a key advisor for Marriott International in sales and revenue management.
He is an active member of HSMAI (Hospitality Sales and Marketing Association International). He is currently serving on the Revenue Optimization Advisory Board and is a past chair. He is also teaching the HSMAI Revenue Optimization Essentials course on a regular basis.