Skift Take
Amateurs cut rates to fill hotel rooms. Pros take more sophisticated approaches, such as coordinating to stimulate demand from the most profitable customers.
Some hotel operators — MGM Resorts, RLH, Omni, Radisson, and Melia — have been fine-tuning their efforts at setting rates for rooms, upgrades, and other services. They've been leveraging a growing prowess at automation and cross-department teamwork to set prices for maximum profit.
A case in point: MGM Resorts International has aimed to add tens of millions to its bottom line this year from enhanced revenue management.
MGM Resorts intends to focus more on reserving space for its most profitable customers —namely, gamblers, convention-goers, and leisure travelers who book directly. It can do that by targeting promotions to people who are more willing to spend on food, drink, and upgrades.
The Human Problem
Other hotel groups are also retooling their revenue management approaches in ways that focus less on technology and more on how teams operate.
Reflecting an industrywide move, RLH, owner of the Red Lion brand, is breaking down the silos between revenue managers and sales and marketing leaders.
This year, RLH is reorganizing its structure. It wants its revenue managers and sales and marketing decision-makers to act more in tandem, such as by sharing data and analytical tools.
The historical problem is that teams can have conflicting goals, tools, and incentives, and they often don't share data.
Revenue managers tend to focus on price-setting. Sales and marketing teams typically look at stimulating demand, such as by running email marketing campaigns or advertising on search engines like Google.
In a change, many hotel owners are insisting on greater cooperation among the teams. For example, rather than cut room rates, a hotel could use outbound sales and marketing efforts to grow demand in other ways.
Radisson has worked this year to improve its revenue management effort. The Sweden-based hotel group has in the past year adopted a new third-party software system and centralized the decision-making for using it at offices in London, Stockholm, and Frankfurt.
Radisson's goal is to leverage expertise, ensure consistency, and take
