Michelle Wohl is the VP of Marketing at Revinate. Based in San Francisco, Michelle has worked in technology marketing since graduating from Cornell University.

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The Changing Face of Revenue Management

I was recently asked to speak on a panel about the future of distribution. Just a couple of years ago it would’ve been crazy to find a marketing VP from an online reputation management company on that panel but times have changed.  Today, many traditional aspects of marketing have moved to revenue managers who are tasked with determining the right channel and price to sell inventory. But there are other trends that are changing the face of revenue management.

Online reviews and social media are becoming increasingly important to selling rooms. Revenue Managers have long looked to STR data for quantitative metrics to help determine pricing but today they’re beginning to look at including qualitative metrics in their pricing strategy. They are asking themselves, “Are my customers happy? Are they loyal? Do they tell their friends and networks about the experiences they have at our hotels. What are people saying about our competitors.” Whereas these metrics used to be hard to quantify, today they are easily measured and readily available in ORM (online reputation management) services such as Revinate.

Today, consumers are spending more and more of their time on social sites such as Facebook and TripAdvisor. A large part of what they’re doing on these networks is sharing user-generated content in the form of reviews, photos, videos and comments. Because the goal of revenue management is to maximize revenue many hoteliers are actively working on their social media strategy knowing that if they can engage and capture guests on their own Facebook page or through Twitter and have them book directly, the acquisition cost is lower than through an OTA. These efforts are validated by a recent Bain & Company report that shows that customers that engage with brands on social media are more loyal and spend up to 40% more than other customers.

Many brands and properties are now including booking engines on Facebook pages. While bookings through Facebook aren’t yet significant, revenue managers are pushing for the applications to provide consumers with the tools they need to check rates when they’re thinking about booking, on their preferred channel. I have no doubt that this channel will become more and more important as consumers become more comfortable booking on social channels and expect to be able to check rates and book regardless of platform.

When it comes to their own Web sites, more and more hotels and brands are bringing reviews and social content to their sites in an effort to keep people from jumping to other channels to validate hotel choices with other consumers, where they might become distracted or choose to book with an OTA. Review widgets, such as Revinate’s Social Buzz, are now common companions to booking engines and we expect to see more and more hoteliers use review widgets in 2012.

And of course OTAs are all now including reviews so people can read what others thought about their hotel experience before confirming the booking. And even more interesting is the trend of social engagement on review sites. Close to 90% of Revinate customers (hoteliers and restaurateurs) are now publicly responding to reviews on TripAdvisor and OTAs. Why is this becoming so prevalent? We know from a recent TripAdvisor/Forrester study that when a hotel publicly responds to reviews, it has the opportunity to reassure a prospect and even win new business.

Flash Sales and Social Buying sites are also changing the landscape of distribution, though it’s unclear whether they are here to stay – at least in hospitality. Part of the reason why Groupon and Living Social were so successful out of the gates is because of the social, sharing aspect of the deals. Friends were able to quickly share information about deals on Facebook and drive more people to the offer. While there has been a lot of discussion lately about whether this channel helps or hurts the industry, I can tell you from the online review side that we do see hotels suffer when they bring in the wrong customer for their hotels. Similar to opaque channel customers, price sensitive customers that book a great rate on a flash sale might not factor additional costs for parking and internet, for example, into their plans and feel nickel-and-dimed upon check-out. Their reviews often complain about ‘hidden costs’ and the high price of food and drinks.

Finally, you can’t talk about distribution today without discussing mobile. Armed with smart phones, consumers expect to be able to do anything on their phones that they can do on computers, and more, given location-based services. 2012 is likely to see both a decrease in booking window as well as a rise in ‘just in time’ travel services, such as Hotel Tonight. These mobile services can be great ways to sell extra inventory for tonight, while maintaining rate parity and your good reputation, since your discount isn’t visible for the world to see.

When I think about the goals of revenue management, one thing hits me like a brick. There is so much room for social to play a huge role. If I look at how hotel marketing has largely moved from the hotel marketing team to guests via social networks and online reviews, the same thing is primed to happen with distribution. Top Guest has started to get people thinking about how can you use social media to enable your customers to promote your hotel and others are likely thinking about closing the loop with bookings. Along these lines, savvy revenue managers will begin to figure out how to “outsource” inventory distribution and booking generation to consumers, who now have more ways, and social incentive, to share tips and recommendations with their networks of connections. More is definitely to come.


5 Responses to “The Changing Face of Revenue Management”

  1. Robert Gilmour

    This statement “Because the goal of revenue management is to maximize revenue many hoteliers are actively working on their social media strategy knowing that if they can engage and capture guests on their own Facebook page or through Twitter and have them book directly, the acquisition cost is lower than through an OTA. ” – takes no account of the cost of the social media activity.
    This is a major issue I have with social media, many think its free and its anything but. We really need to compare apples with apples here. One thing about the OTA costs is its absolutely transparent, and all the OTA marketing effort is included in the commission %

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  2. hotels in munnar

    Good post..!!Thanks for sharing..!!

    Reply
  3. Boby

    Hello, Daniel. Great article, thank you. For a botuqiue property such as ours, the Galiano Oceanfront Inn and Spa, it is indeed difficult to monitor the social media sites constantly: it is I, as owner, that does it. Tripadvisor is a significant one and we have had wonderful reviews and the infrequent less than happy one, to which I always try to respond (perhaps in more detail than the norm). One guest told me he reads all the reviews when choosing a property, but focuses on the less than perfect ones. He chose our resort, because of the way the owner answered the feedback. I could not have received better reinforcement than we much engage our customers.

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  4. cokelat

    Great article! I work with magnniag online reputations for a major hotel franchise and this information is spot on. The one thing I would add is for hotels to keep their responses to negative feedback simple. Don’t get into too much detail about what occurred as that can actually make the situation seem worse. A simple “we’re sorry that happened, come back and see us and we’ll make it right” is usually is the best way to go.

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  5. Kate

    While I see the issues that some pireertops may have with Flash Sale/Daily Deal sites as related to the revenue generated, I believe there is a middle ground for most pireertops. The largest of these sites (Groupon & Living Social) will insist on a larger discount and a higher revenue share with the main focus being a great client deal and their own bottom line. The hotel is a very distant third. They can take this hard-line approach because of their name brand recognition in the marketplace. Smaller sites (in terms of subscriber base) like Eversave, have a different approach: 1. Work WITH the property to ensure not only profitability on any sales realized via a smaller discount and lower revenue share.2. Pay our partners much more quickly than our competitors.3. Offer up discussion boards on all offers and allow partner access to these boards.4. The ability, due to our client acquisition background, to offer up additional re-marketing and client engagement in the partners name.There is certainly a place for Flash Sale/Daily Deal sites in the current hotel market, but it is up to the hotel to research what their best options may be based on their goals. Our profitability and repeat business from hotel partners speaks volumes about our willingness to work to help create a winning deal for any property. Paul O’MearaSr. Account Executive, TravelEversave.compomeara@eversave,.com

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