Hotel Commercial Strategies to Prioritize in 2024
Heading into a somewhat unpredictable travel environment in 2024, aligning your hotel commercial strategy across key departments and stakeholders should be a top focus for hotel leadership.
Start with a more holistic approach to revenue management, looking at all the revenue-generating areas across your hotel, and then pay particular attention to flowthrough, or how each of those revenue streams translate into profit.
Below, several great educational articles provide real-life tips for elevating your Hotel Commercial Strategy in 2024. Want to talk it over in person? MDO will be at International Luxury Hotel Association ’s INSPIRE Conference from December 11-13 at the Eden Roc Resort in Miami – Schedule some time to chat!
Start by Aligning Commercial Departments
In Hotel-Online , revenue consultant Lynn Zwibak, CRME addresses the challenges hotels face when commercial teams operate independently in siloed departments. Zwibak highlights common scenarios where the marketing and sales teams, despite their individual successes, fail to align with revenue management strategies, leading to missed forecasts and budget shortfalls. She emphasizes the need for a unified Commercial Strategy Team that understands revenue management concepts and the overall hotel strategy.
Zwibak provides examples, such as marketing campaigns designed without considering revenue management goals, leading to the displacement of higher-rated room sales. Similarly, she explores conflicts between sales and revenue management incentives, where hitting revenue targets without considering the seasonality and impact on room rates can negatively affect the hotel's overall performance.
IDeaS: Tech Adoption, Profit Top 2024 Trends
Citing a recent survey of hotel commercial leaders, IDeaS Revenue Solutions says the focus of hospitality leaders in the coming year is on profit optimization rather than just revenue. Their recent report highlights the impact of rising operating costs, inflation, and increased labor expenses on investors' share of revenue, leading to a shift towards prioritizing profit. Additionally, the survey anticipates that technology, including generative AI, will continue to reshape hotel operations in 2024. The adoption of cloud-based data platforms and the integration of technology systems for a holistic view of guests' total profit potential will be key, with generative AI being utilized in customer service call centers to improve operational efficiency and guest satisfaction.
IDeaS suggests that AI's future capabilities will include personalized recommendations for guests, quick generation of customized content and campaigns based on guest data, and automated staff scheduling.
5 Trends Shaping Commercial Strategy in 2024
Recommended by LinkedIn
A key hotel commercial strategy trend in 2024 involves an increasing reliance on data-driven decision-making, with hotels leveraging big data and analytics to optimize pricing strategies, personalize marketing efforts, and enhance guest experiences, according to this Otelier blog by Jason Freed . Freed highlights five trends that are shaping hotel commercial strategy, including leveraging data for smarter decisions, implementing AI for innovation, adopting better metrics for measuring performance, extending revenue management strategies to other departments, and understanding how data strengthens the luxury segment.
Freed emphasizes the industry's response to changing consumer behaviors, technological advancements, and global economic conditions, showcasing how hotels are incorporating new performance metrics and integrating artificial intelligence to analyze deeper data sets for informed decisions.
Understanding Revenue's Role in Chargebacks
In Hospitality Net , Tom Brown of Mews explores the complexities of chargebacks for hoteliers and provides insights on navigating these challenges. Brown explains that chargebacks, initiated by a customer's bank when disputing a charge, differ from refunds, emphasizing the potential threat to revenue and profitability for businesses. He outlines the various parties involved in the chargeback cycle, including the cardholder, card issuer, card network, acquirer, and the merchant or service provider.
Common causes of chargebacks in the hospitality sector range from cardholders failing to recognize charges to disputes over service quality, cancellations, or unauthorized card use. Brown highlights the importance of understanding chargeback reason codes to identify root causes and increase the likelihood of winning a case.
RM Strategies to Resuscitate Group Business
In another thought-provoker from IDeaS Revenue Solutions , Neil Corr says that despite the unpredictability of traveler booking decisions and increased costs, consumers plan to spend more on travel in 2024, making group bookings a crucial aspect for hotels to address. Corr emphasizes that the challenge lies not in room availability but in the evolving nature of group business, requiring modern data analytics and revenue management strategies for accurate forecasting.
Corr highlights the significant role of technology in establishing new group booking forecasts, especially considering the longer booking cycle of group travel. Emerging trends in traveler behavior, such as shortened lead times for smaller groups, necessitate the adoption of new technology for quick and robust evaluations of potential business.
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Revenue Management for Non-Revenue Managers | Commercial Strategy | University Professor | Hospitality Enthusiast | #rm4all
11moThank you, MDO, for including me in your publication. I have many more examples where those came from!