By Hunter Webster, CHDM, Senior Vice President of Revenue Strategy, Interstate Hotels & Resorts, and a member of HSMAI’s Revenue Optimization Advisory Board
With a potential economic downturn looming in 2020, it is important for hospitality professionals to prepare — particularly those working in revenue optimization. On a recent call for HSMAI’s Revenue Optimization Advisory Board (ROAB), I led a discussion about what steps we should be taking. Here are three takeaways from our conversation:
1. The importance of projections: “Growth estimates for next year are much lower than what we’ve been experiencing over the past few years,” one ROAB member said. “We really want to be prudent in how we’re going to approach our pricing and our inventory methods and the channels that we are going after.”
Several members said that they have been having these discussions with their owners and other business personnel to make sure that everyone is on the same page and can work together to find a profitable solution. “So far the discussion has been productive and good,” one member said.
One member is thinking about a downturn by creating two versions of the 2020 budget — one for if things stay positive and one for if they don’t go as well. “In some cases, we’re presenting both versions of the budget to owners,” the member said, “and in other cases we’re just holding onto that contingency and just trying keeping it in our pocket.
2. Talking to vendor partners: Another conversation that members agreed needs to be had is one with vendors, particularly OTAs, to secure additional marketing opportunities. “We’re looking at all of our vendor contracts,” one ROAB member said, “and we’re seeing where it’s plausible to do a multiyear deal to lock in pricing with some nominal escalator now as opposed to waiting for them to feel the pressure and increasing their prices.”
3. The people problem: While many revenue optimization professionals have been through an economic downturn before and are being cautious going into the next one, many others are facing their first. “We have a lot of young revenue folks in the field today who have never been through any kind of demand softening, because they’ve come into the business when things have been going well,” one ROAB member said. “We need to make sure that everyone knows, especially the younger ones who haven’t been to this before, to not panic and start going crazy with different tactics.”
Another member said: “I think it will be different this time, as it is always different. Every downturn is a little bit different. We’ve got the tools, we’ve got the training, we’ve got resources, we just need to figure out how to market that without creating a panic.”