A team sport
hen it comes to online, Indians are lookers not bookers. Whether it is online or via mobile applications, Indians approaching your hotels continue to only do so to find out what deals are on offer. They aren’t there to book. That isn’t to say that they are not tech savvy and that we can be laidback about allowing access us via various channels. They are savvy and are researching just as much as their international counterpart but tend to make the actual booking by ringing the hotel.
Revenue management is a team sport – you can’t fly solo. Today we’re seeing a paradigm shift on the role of revenue management not only in India but all over Asia. More and more hospitality groups are beginning to question the practice of revenue managers reporting to sales heads, preferring them to report to operational heads instead. What’s more, now it is coming down to dual capability – sales heads need to understand revenue management and revenue managers need to understand sales. This is being seen as increasingly important. There is zero conflict of interest if you look at it from the point of view that both want to maximise revenues. There is, however, a gap in understanding and in agreement on the best way to go about it. Theoretically, if both had equal knowledge there could be complete agreement all the time – only mitigated by one’s appetite for risk versus reward. However, there does not seem to be a visible initiative going on to make equal knowledge possible. It just seems to come together in some groups and not in others. This may go back to style and background of
These days no hotel business can successfully run without analytics. Without analytics they have zero view into the future. Actual data cannot be replaced by assumptions and hunches.
There has been a drastic shortening of the booking curve – the time between booking and checking into the hotel. Today we even see cases of prospective guests in the vicinity or actually in the hotel lobby while researching deals and packages available before making a booking. Since the advent of the internet the booking curves have been shrinking. This is further compounded when markets are working in an over-supply or enough supply environment. This means that business and leisure travellers are booking closer to the arrival date through multiple channels. This has to see a change in the way we manage room rates. This also means that despite the fact that guests won’t book online, mobile technology assumes great significance. There are lots of statistics around but two of the most compelling that are publically available are, according to Priceline, which says, “58% of customers with mobile devices made their booking within 20 miles of the hotel where they ended up staying. More impressively, 35% of those polled were within one mile when they clicked on the ‘reserve this room’ button.” This amplified shortened booking curve characteristic means that pricing decisions have to be real time and there is now less and less room for error – too high means turn away – too low means money left on the table.
GDS is here to stay and is still the highest ADR channel. Everyone said it would be redundant following the explosion of OTAs – not true.
Pricing is complicated, multidimensional and bad pricing can ruin a market, so work hard to get it right and act on what you know, not what you think.
India has certainly caught on to the importance of revenue management. We are delighted to hear the level of sophistication being practiced in revenue management and distribution at the high-end of the market including international chains and also the Taj, the Oberoi and the ITC.
There is quite a large gap when you move to the mid-market where the current high growth is. It is encouraging that owners in India, even in the mid-market segment are starting to be very savvy in terms of managing the revenue emerging from their investments. As a supplier, this traction from owners has been a clear indicator of the significance being given to the role.
Distribution is being tidied up. There are lots of OTAs out there and as more international hospitality chains come into India, they will bring with them international tools, technology and best practices which will challenge the way things have traditionally been done in the Indian market. So revenue managers must be open to change and adopt new practices and technology.