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By Kaitlin Dunn, Writer, Hospitality Sales & Marketing Association International (HSMAI)
Demand pricing, brand support, and revenue management systems are among the biggest concerns of hospitality chief revenue officers (CROs) right now— and were prime topics of discussion during HSMAI’s virtual CRO Executive Roundtable on June 17 for revenue professionals from hotel management companies (HMCs).
Participants from companies including Chesapeake Hospitality, Commonwealth Hotels, Concord Hotels, CoralTree Hospitality, Highgate, Hotel Investment Services Inc., HRI Lodging, HVMG, Kessler Collection, Marcus Hotels, PHG, Prism Hotels and Resorts, Remington Hotels, Shaner Hotels, Stonebridge Companies, VRI Americas, and White Lodging shared their thoughts in both large and small groups. Here are key takeaways from their discussion:
ON REVENUE MANAGEMENT SYSTEMS:
The pandemic has changed the way revenue professionals utilize their revenue management systems (RMSs), which have more difficulty maximizing profit in such an unpredictable time. Here’s what participants said about their RMSs:
- “One of the struggles we’ve had is that everything is so automated nowadays with RMS. The systems themselves have really struggled to keep up. And then we struggle getting the brands to help us with trying to tell the system that we’re not going to have a 65-percent occupancy rate on Saturday, even though it thinks we will. It’s a time-consuming process.”
- “Even pre-pandemic, we were giving feedback on some of these systems that don’t add value based on length of stay. They don’t understand that 30 one-night stays do not equal the same value as one 30-night stay. And they did not update the systems to think that way through the pandemic. That’s been crucial, and it’s going to be crucial through a staffing shortage.”
- “The focus on the RMS systems has been the hardest thing for me. I’m glad others are feeling the way I’m feeling. I can’t influence demand fast enough, so I end up in override no matter what I do, because it’s just not working.”
ON STAFF SHORTAGES AND PRICING:
Staff shortages are leading some hotels to have fewer rooms to offer, because they can’t get them ready quickly enough between guests. This shortage in inventory has led to increased prices. Here’s what participants had to say about the fine line between demand pricing and price gouging, including how they’re handling staff shortages:
- “We’re doing well demand-wise, but we have to shut things down because we can’t get rooms ready fast enough for check-ins. It’s a balancing system. The whole conversation is around how high do we move up the prices. We’re looking to relocate someone this weekend, but it was going to cost $1,200 in Ocean City, Maryland. It’s crazy. It tilts on the edge of gouging the situation, which is depressing for me.”
- “For the first time in our history we aren’t seeing a lot of last-minute discounts, and in fact are seeing the opposite. Traditionally you could wait, but today if you don’t book early, it’s a very different story because the dynamics are so different. The question is, will they stay this way?”
- “Legally the definition of price gouging varies by state, but almost universally, it has to be during a state of emergency. I also think that if you look at what’s happening with rental car prices right now, and that’s not gouging, you can’t consider hotel prices to be gouging.”
- “It’s crazy to me that we’re doing things that you would never think about doing when the demand is there, like having minimum stays, and we’re selling every available room, but management is telling us to shut it down. And now they want us to quantify how it’s affecting the overall forecast numbers, despite inventory numbers changing multiple times a day. It’s like a giant puzzle.”
ON BRAND SUPPORT:
HMCs rely on the support of brands for many things, including revenue. Here’s what participants said about the level of support they feel they are currently receiving from brands:
- “One of the things that stood out to me is the difference in how the various brands did or did not adapt their strategy to a leisure-led recovery. Our company is not in a ton of leisure markets, so weekends have not been a strength. One particular brand did a great job of merchandising promotions and really offering value to capture the leisure segment. But another large brand said, ‘No, we’re not going to do that.’ So, we had to turn to third-party channels because that’s the best opportunity to merchandise.”
- “I’ve had two brands hire people to do some in-depth, deep-dive audits, and then want to get on the phone for an hour to tell us how to move forward. We got the audits back yesterday and invested one hour of our time and walked away really impressed. I really felt excited. It didn’t cost me anything, and they gave me something new to think about.”
- “Where I think brands have been slower is on the technology side. I’ve seen better progress on what I would call our independent systems that are off-the-shelf type products. But the brands seem to have trouble with that, because they pushed for an automated RMS, which is great, but then you run into things that it just can’t manage.”
ON WHAT TO WATCH:
As the industry continues to climb toward a full recovery, there are a few things that participants said are still major concerns. Here are some of the things that are on their minds:
- “The other factor that we have to keep an eye on is that over the pandemic, the number of consumers that tried a short-term rental for the first time was astronomical. Customer satisfaction with short-term rentals is averaging 4.3 out of 5. Customer satisfaction with hotels is 4.2 out of 5. And so, a lot of these people who were hesitant to try an Airbnb previously found it as a safer, more comfortable option. Of people who have stayed in both a hotel and a short-term rental, according to some studies, 60 percent now prefer a short-term rental. That’s only going to continue to grow.”
- “The other thing to watch, especially in major urban markets, is hotels reopening. Chicago, for example, just opened several big-box hotels, which added about 10,000 room nights of supply to a market that’s only running 45- to 50-percent occupancy. We need to bring that into the equation when opening up hotels.”