Kathy Maher, senior vice president, global sales and revenue management, for Parsipanny, N.J.-based Wyndham Hotel Group, which has 7,660 properties around the world.
Jill Nunes, president of revenue management, North America, for Stamford, Conn.-based Starwood Hotels & Resorts Worldwide, with a global portfolio of over 1,300 hotels, 55 percent of which are in North America.
Jamie Pena, vice president, revenue strategy and global distribution, for Dallas-based Omni Hotels & Resorts, with a portfolio of 60 properties in North America and Mexico.
There's a high-stakes financial poker game going on in the hospitality industry, and it's being played by hotel revenue managers. The aim is for hotels to optimize their revenue and profit margins while developing strategic and competitive sales goals that will keep them, if not ahead of their leading competitors in any given destination, at least on an even playing field.
The role of hotel revenue management has changed considerably over the past 10 years. What once took the guise of a front-office reservation manager who scrutinized short-term booking patterns on a daily basis has since morphed into a much more analytical and strategic function, thanks to the emergence of sophisticated tracking technology.
No longer do revenue managers bury themselves in Excel spreadsheets to assess group and transient business on the books while using the sales team's insider intelligence to determine what might be coming perhaps two to six months out. Today they rely on big data as a strategic asset that drives their decision-making process as they assess requests for proposal across multiple lead-generating platforms.
To better understand this process, M&C asked several revenue managers how they evaluate group business, where the role of sales fits in the process and why RFPs are being held to a higher standard today, even if they come from repeat clients with a long-standing and proven brand loyalty.
The revenue manager's role has changed and is now strategically aligned with hotel sales. What drove that transition?
Kathy Maher: For our part, last December we decided to sharpen our focus on group business. Wyndham is one of the few hotel companies that decided to make the transition of combining revenue management with sales, and we decided I should take over sales, because I have a sales background.
Early on, I was trained in rates, dates and space, with "space" meaning "location." These three traditionally are divided between the customer and the hotel. For example, if the customer says, "I need to be in Orlando on New Year's Eve," they already have picked the space and the date, so we get to dictate the rate. Or the customer might say, "I want to pay $77 per night for an event of X number of people." We say, "OK, based on those details here is the location we can offer you, on these dates of our choosing." That's a collaboration. If the hotel and the planner can be transparent and work as a team, we all stand to be successful.
In terms of data, today it is much richer, and we can look across the whole industry, which means we can build in demand curves for groups, something we never had before.
Jill Nunes: The world of big data and analytics is changing our world. We now have sophisticated revenue management systems that predict demand, so we can make more informed decisions for the future, and that has moved us into a more strategic position. We are now even more accountable to hotel ownership groups to deliver upon their budgeted expectations and to clearly articulate and execute on sales strategies. Our time is usually spent working with our sales teams, but, yes, if the need arises, we'll gladly meet with a client, because we like to interact and get out from behind our computers, too.
What does a beautiful RFP look like when it crosses your desk?
Jamie Pena: For one thing, it has total meeting spend outlined. I want to know if you are going to play golf, have spa treatments, eat in our restaurants, shop in our retail outlets, order room service and whether you have any flexibility in terms of dates.
Many planners are afraid to say they have flexibility, because they don't want to imply they can go a bunch of different ways. But the truth is, anyone who is willing to be flexible will get the best deal. We can, and will, do great things for them, simply because they worked with us and helped us out. For example, you might want to be at our Houston property, but if you are willing to move to Dallas, which would be a better fit for us, we will give you a great deal.
Maher: Imagine you walked into a dealership to buy a car and all you said was, "I want a white one." Well, that's not enough information for the dealer to go on. But if you said, "I want a brand new Volvo sedan, and this is what I am prepared to spend," that's something the salesperson can work with.
Similarly, if a planner wants specifics back from us for their RFP, then they need to tell us what they want, and they need to be flexible. Mere bullet points on an RFP don't work. We need real information we can work with, otherwise they are going to get a lot of "Sorry, we can't help you."
We've all heard of the "ugly-baby RFP." What does one of those look like?
Maher: If an RFP comes over a time where there is a huge transient demand, for say a festival or sporting event, and it includes no demand for meeting space, at first sight it's definitely an ugly RFP. However, if it comes over a time frame when we don't have much transient demand, then we are probably going to want to make sure that our meeting space goes to a group that can also deliver on rooms, because rooms are much more profitable to hotels. There really is no bad business, just business that is sometimes poorly placed.
Pena: It's one with absolutely no information, except a request for dates, space and rates. We don't like to disqualify a customer, but when we see an RFP that has gone out to 300 hotels in 15 cities, that is just the worst, because it means we are going to be putting all of our time into crunching numbers, knowing there is only a sliver of hope that we are going to get that business. It is extremely frustrating to us.
The Big Data Edge
Last April, Washington, D.C.-based Knowland (knowland.com), which provides hotels with meetings data and analytics, launched a new product to help hotel revenue managers better see the big picture of the group market in real time, in any destination and against any historical year. To see how this new tool, Insight Enterprise Market Analytics, will impact the future of hotel revenue management, M&C was treated to a one-on-one online demonstration of just how big data works in assessing assessing any RFP from all channels that deliver them.
"What used to be missing from revenue management and sales for groups was having enough data tools that didn't just address your hotel's own trends, but a larger picture," says Jim VanDevender, chief marketing officer for Knowland and a former associate for ConferenceDirect. "Now, we have the data tools that allow us to look at historical booking patterns, forecasts, where the demand comes from in each quarter and how we are stacking up against our competitors."
For the demo, we chose Houston and compared the first three weeks of 2015 to the same period in 2014. Up came all the hotels, by brand, operating in the city, as well as the amount of group business each had booked. Those bookings were then divided by market -- corporate, association, government, etc. -- good indicators of what business is coming to town in any given period.
Next, we looked at the groups that made the bookings. The data allowed us to see them by event name and person who made the booking. From there, we dug further to see if this was a return visit to the hotel or, more broadly, to Houston. It's an extremely revealing tool, because it allows the revenue manager to see an actual pattern without having to ask the local destination marketing organization for details or even to draw upon in-house data.
This insight goes much deeper when it comes to forecasting and forming a sales strategy. "A revenue manager looking at that data can say, 'Why am I being outperformed by my competitor? Did we miss out on these RFPs? Did they walk away from us, or us from them?'•" says VanDevender. "These are all opportunities that allow the revenue manager to put strategies in place to drive market change, like rate and marketing and outreach."
The data gets even greater and more transparent, the deeper one digs. It breaks down group business by market segment, so the revenue manager can see exactly what subset of corporate groups, the prime rate driver of group business, was booking. Was it finance, oil and gas, pharmaceutical or maybe technology?
"For a long time, revenue management was a lot of guesswork and hunches," says VanDevender. "Today, the level of data that revenue managers have at their fingertips allows them to create and define precise selling strategies, create revenue goals and maximize the RFP process down to a single percentage point. And the developing technology will provide even more transparent data."
Does the planner's relationship with a hotel's director of sales hold any clout in the RFP process?
Nunes: It might help highlight historical, industry or special considerations that were not captured on the RFP, which can help add context to our decision. But when that happens, it's really important that the director of sales and marketing and the director of revenue management come together to achieve a goal for that repeat client. That's when we turn to our catering and sales systems for insight on the client's previous programs to provide us with details to help aid our decision.
How do you assess a new-business RFP that has no historical data to support it?
Maher: If you say that you are going to put on a new training meeting that has never happened before, that would make me shudder a bit. But if you explained in your RFP that your company was having this new initiative for 300 salespeople who all need to be trained on a new product you will be selling, and it will be in two waves of 150 each, then you might not have history, but you do have a compelling business case.
Tell us what you know. Tell us you have done your homework, polled your audience, tested the market and you are solid in your projections for your event. Being transparent with us on the event is going to get you our attention.
Pena: Know your target audience, your demographic and your program. My salespeople know what their destination and what their hotel can achieve, and we expect the same of planners. So, always share what you know in the RFP, including the objective of the event, because if I were a planner, the RFP response I get back from the hotel will help me judge how they are going to help my event be successful.
Does an RFP stand a better chance of getting in the door of a new property?
Pena: That really depends. Our new Nashville hotel was a slam-dunk for us; we had so much demand expressed early on, it practically sold itself. Now, we are getting ready to open a hotel in Frisco, Texas, and we are looking to get some base business on the books. That means we are willing to be flexible in developing our hotel as an attraction, as well as this emerging destination. Because we want to build on our position in that new market, we would definitely give some great deals to groups.
Nunes: New properties usually tend to have more availability, but it doesn't always guarantee they'll have the space. Meeting planners will have the most success focusing on destinations during shoulder or holiday times where there is greater flexibility on price and booking patterns.