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Neil L. Salerno, CHME, CHA

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"What the Heck is Hotel Revenue Management, Anyway?"


It Takes Attitude, More Than An Economic Turnaround, For Hotels To Recover From The Recession

By: Neil Salerno – Hotel Marketing Coach


For many hotels, their recession has been over for quite some time now. These hoteliers realized that recovery from a bad economy is a matter of attitude, more than reality, and that it takes pro-activity to succeed in a bad economy. Determination, strong marketing, and hard work pulled these hotels back into the black, while other hoteliers are still waiting for something magical to happen with the economy.


We all know that the recession is all too real, but I do believe that there are two kinds of hoteliers; those who make things happen and those who wait for things to happen. I am full of admiration for the many hoteliers who are taking a pro-active approach to the challenges presented by the poor economy. These hoteliers resisted the hand-wringing and woe-is-me mind-set, so favored by others, and got tougher when the going got tough.


Marketing Hotels Requires More Than Just The Internet


Contrary to the beliefs of several other Internet Specialists, I have always felt that a balanced marketing attack goes a lot further than simply concentrating on the Internet. I've read several articles encouraging hoteliers to re-direct the bulk of their marketing dollars to online marketing, but as strongly as I believe in Internet marketing, I also believe that the Internet should support, not replace, direct sales and marketing efforts.


In great numbers, pro-active hoteliers re-discovered revenue management during the recession. Revenue management is a tool, developed by American Airlines in the 80's, during a time of financial stress, while facing a strong competitive marketplace. Since then, hoteliers have molded and tweaked revenue management techniques to build sales and profit for hotels.


They learned that travelers select and book hotels based upon location and perceived value and that simply reducing rates is a losing proposition. Practicing revenue or yield management allows hotels to maximize RevPar and bottom-line profit during a time when every penny counts.


In the last two years, several franchises made a renewed commitment to provide revenue management services and assistance to their franchisees and many individual hotels hired knowledgeable revenue managers to optimize sales and profit. They learned that revenue management is even more important when revenues are down.


Many smaller independent hotels discovered revenue management for the first time. They learned that they could use the same principles of good revenue management to create higher perceived value and sell more rooms, profitably. They also learned that the practice of RM gave them a better insight into their local markets and provided them with a dominant edge over their competition.


Pro-Active Hoteliers Became More Sales Oriented


Pro-Active hoteliers learned that the best sales people are their former guests. These hoteliers learned how to use travel social media, like TripAdvisor, to spread-the-word to thousands of travelers interested in their destination. Rather than complain about TripAdvisor, they learned how to use it to promote their hotel and to provide credible third-party endorsements of their facilities and service.


During this recession, many hoteliers re-discovered the old axiom "The more people you contact, the more business you will book". Sales people hit many roadblocks during the last couple of years; the "AIG effect", tightened budgets, and all the rest. but pro-active sales people dug-in their heels and doubled or tripled their contact relationships; steps which will pay huge dividends as the economy improves.


They also learned that travelers choose their destination, first and a place to stay, second. These hoteliers learned that it is profitable to create partnerships with local attractions and other major room night generators which share their need to attract visitors.


During the height of the recession, hoteliers learned to do more with less. We've seen multi-tasking become a necessity to get everything done with fewer human resources. In a way, this has created a synergy of tasks and new ideas as people performed their new responsibilities.


We've Come a Long Way With Internet Marketing, Too


Pro-active hoteliers learned that Internet marketing is a great tool to support their hotel sales and marketing program. During this recession more hoteliers began to use their proprietary website to promote their destination and their hotel through displays of packaging on their site, increasing their ability to attract site visitors.


They learned to work with their webmasters to establish marketing programs and link-building strategies, further increasing site domination and exposure. Many hoteliers had their sites re-designed to better cope with changes in technology and to better serve search engines. They learned that their website has to attract visitors through search as well as to sell visitors to visit their destination and their hotel.


Many hoteliers woke up to the fact that their website is not simply an online brochure and that it has to be constantly tweaked and adjusted to the analytics of the site; content is still king.


A healthy pro-active attitude can overcome many obstacles and accomplish great things in economies, good and bad. It takes attitude, hard work, and good decisions.


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