I talk a lot to hotel marketers, less so to revenue managers – although Ally Dombey leads some fab RM courses that I thoroughly recommend. Recently I’ve been thinking a lot about the way hotels manage their revenue and marketing functions, and wondering why these aren’t better aligned.
And more importantlyâ¦ do they need to be better aligned?
Many of the marketing events I’ve spoken at or attended through my work with CIM and TMIG get around one way or another to the thorny subject of âmarketing and sales alignmentâ, and I think hotels have similar challenges, just with different job titles.
Rightly or wrongly (please let me know!), this is what I can see:
Too much friction
In the wider commercial sector, the sales function often blames marketing for not generating enough good leads, and marketing criticises sales for not providing any feedback or customer insight. The fact is, for a business to be really successful these two teams need to work together.
Does the same friction exist in hotels, between RM and marketing?
When I recently attended a revenue management course myself, I was struck by how much similarity there is between the marketing, sales and revenue management functions. For hotels with even a basic approach to revenue management, lots of effort goes into identifying market segments, predicting demand based on external factors, and creating a BAR rate strategy – then executing across a range of direct and indirect sales channels. Essentially, offering the right products at the right time, to yield maximum revenue.
But while revenue managers are applying this data-driven approach to customer segmentation and demand management, marketing teams are still sending “e-blasts” to their entire database (or to very broad segments of it), without consideration of key factors like individual guestsâ price or time sensitivity.
Now, OTAs have come onto the scene and totally disrupted the status quo as far as marketing and revenue management are concerned. Hotel marketers can no longer compete on Google search for direct customer acquisition, and revenue managers have seen their margins slashed because of OTA commissions. GOPPAR is most definitely the new RevPAR!
If hotels are to remain profitable, marketing and RM need to develop a joint strategy.
Marketing and revenue management teams need to start working more closely together, with a shared set of revenue and margin goals. They need a shared understanding of their customers and guests, and a systematic approach to the development of targeted propositions across their website, distribution channels, e-marketing and offline marketing.
Marketing teams need to step up to the plate and embrace data, extending the RM segments to create marketing “personas” that reflect time sensitivity and pricing sensitivity. They need to review historical performance, and measure marketing’s contribution to revenue and profit. And revenue managers need to let marketers take a more proactive role in building a sense of “guest value”, through a focus on guest experience, longer-term guest loyalty and the benefits (to the guest) of booking direct.
Unless this happens I fear that hotels’ reliance on OTAs will increase, and with it their focus on profit margins will lead them in the direction that the airline industry has taken over the last decade. Hotel rooms will become a commodity competed on price, with everything a paid “extra”. Just look at Tune Hotels for evidence that this is starting to happen.
If weâre to see the sector flourish, we need to start working together more and focus on (greater) guest value.
What are your thoughts? Do you see the marketing and revenue management functions becoming more aligned in future?
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