Revenue leaders in 2020 are transitioning from assuming demand patterns based on historical data to analysing new, top-of-funnel data sets with deeper insights into traveler intent.
“Throw your forecast out the window,” they said.
“What good is revenue management when there’s no revenue to manage?” we’ve heard.
Since the global travel lockdown in March, hotel revenue management has been under attack. Rumblings throughout the industry point to frustration over a lack of visibility into future demand and pricing systems incapable of handling this unique environment.
We’d love to tell you those accusations are completely false… but there is some truth to them. As we navigate the current landscape, the number of variables impacting travel is making it incredibly difficult for hoteliers to accurately predict and stimulate demand.
That’s not to say we see the end of revenue management as a discipline coming anytime soon. Instead, we see an incredible shift – one that began slowly over the past few years and now is accelerating rapidly. Hoteliers in 2020 are scrambling to transition from assuming demand patterns based on historical data to predicting future demand based on real forward-looking insights.
Historical data is largely irrelevant today, simply because hoteliers haven’t seen anything like the COVID pandemic in history. But as new pockets of demand emerge and hotels segment their guests even further, revenue managers are even more crucial than they were prior to COVID. And they’re now relying on new, top-of-funnel data sets with deeper insights into traveler intent to make informed decisions.
Build a Forward-Looking Revenue Strategy
Currently, travelers that are venturing out are booking within days of arrival, making it nearly impossible for Revenue Managers to use on-the-books data to make decisions. Revenue managers are pouring through new data sets trying to get some sort of read on potential demand.
So, instead of being reactive, revenue managers are getting proactive. They’re looking higher up in the traveler funnel, attempting to understand traveler behavior before the guest has booked a room. On-the-books data has become much less important than higher-funnel data sets like search patterns and flight bookings that provide insights into traveler intent.
Instead of waiting until guests have booked a room and using the data from your PMS to inform forecast and pricing strategies, hoteliers can now rely on search data, flight arrival data, and even weather patterns to better understand consumer behavior. Once you better understand “traveler intent,” you can then build correlations to your own demand patterns and get better insight into whether you’re capturing your fair share of market demand. This data can and should be used to shape your marketing promotions.
Search data provides a wealth of information. With it, hoteliers can see what destinations travelers are considering, what dates they’re hoping to travel, and how long they’re looking to stay. Revenue managers can see which hotels in their market are being searched the most and then determine how they stack up in terms of price and guest experience. Search data also helps hotels understand how they compete with alternative accommodations in their market. Knowing that more travelers are searching for an Airbnb near your hotel l will give you great insight into how to position your property and target those travelers.
Hoteliers have long struggled to understand more about the guest journey before booking, particularly in the research and dreaming phases. Now, top-of-funnel data is finally available to give a clearer picture of unconstrained demand. This is revolutionising the way revenue departments use data to make operations, sales and marketing decisions today.
With staff reductions forcing revenue, marketing and sales teams to collaborate and work more closely than ever before, common data sets should help align goals and objectives. With these new sets of data to analyze, hoteliers for the first time can begin to understand exactly what potential guests want and serve them the appropriate promotions and offers.
Now revenue managers can inform their strategies by understanding the potential demand for their hotel: what the most popular dates for travel are; how long guests are looking to stay, on average; and much more. You can then compare these numbers to your competitors inside and outside of your market and your traditional comp set.
This top-of-funnel data helps hoteliers better understand how they’re positioned across all the various booking channels as compared to the lodging businesses they compete with, whether those are traditional hotels or alternative accommodations.
In the end, with very little pace and pickup visibility, hoteliers today are struggling to nail down a remotely accurate forecast. By starting with top-of-funnel data and then building a strategy around capturing those guests, tweaking promotions and measuring conversion, hoteliers can ensure they’re capturing a fair share of whatever demand might be coming into the market today, as well as preparing for a demand spike when it inevitably comes.