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A Global Perspective Is Key to Maximizing Revenues, Profits

by Ed Watkins, Contributing Editor |

Seven trending hotel news stories that will have an impact on your hotel Revenue Strategy.

1. PUT THE FOCUS ON PROFITABILITY, NOT REVENUES

Every so often it’s important to take a 30,000-foot-level look at revenue management. The true goal of the discipline, says the author, is not to maximize revenues; it’s to maximize profits. And to do so requires a global perspective on sources and potentials of business.

He concludes from a global profitability perspective, the most valued hotel guest segment is group, more than leisure guests or corporate individual travel customers. He says group business typically has the lowest cost of acquisition, produces the most ancillary revenues and pays their invoices by check.

Full story at HospitalityNet.

2. CHANGES IN OTA COMMISSION ACCOUNTING IS A BIG DEAL

If you’re not an accountant, this story might be a little difficult to follow. And if you’re in revenue management or hotel marketing, you might wonder why you should even care. But new changes in how hotels must account for online travel agency commissions could have effects on your budget goals, reporting procedures and—here’s the important one—your salaries and bonuses.

In a nutshell, starting January 1, hotels must record OTA bookings as gross revenues, which (again this is a simplification) will have an effect on how booking commissions, credit card fees, franchise fees and sales taxes are accounted for. It’s important for operators to review OTA agreements and accounting procedures to ascertain how this will affect their operations.

Full story at Hotel News Now.

A global revenue management perspective, plus 7 trending #revenuestrategy stories Click To Tweet

3. COMMUNICATIONS, COLLABORATION ARE TOP RM SKILLS

A lot of hotel owners and operators really don’t know what revenue management is all about and, therefore, don’t know how to hire revenue management professionals. As the author says, if you hire someone to create a patchwork of revenue- and data-related systems, you’re going to most likely end up with an unsecure structure that no one knows how to optimize except for the person who built it.

Instead, it’s important to hire individuals who know how to communicate and how to collaborate. And while a good understanding of statistics is needed, it’s just as critical candidates understand hotel operations and marketing, because undoubtedly they’re going to be thrown into both.

Full story at Duetto Research.

4. REVENUE MANAGERS ARE UNDERPAID

Hotel company executives, property owners and GMs sometimes complain they can’t find sufficiently qualified revenue professionals at all levels — from corporate posts to property level positions. The reason might be that RMs are underpaid, according to a new report. Some nuggets from the report:

  • Median base pay for property-level revenue managers is $104,000;
  • For revenue management executives overseeing company initiatives the median total cash compensation is $267,010;
  • There is a 36% base pay differential between multi-unit and property level revenue managers.

Full story at Hotels Magazine.

5. MORE TRAVEL MANAGERS SANCTION USE OF AIRBNB

An increasing number of corporate travel managers allow their employees to use shared accommodations services such as Airbnb. According to a new survey, of companies with policies in place, 68% allow employees to use shared accommodation services and 78% allow employees to use ride-sharing services like Uber and Lyft. Less than one-fourth of companies prohibit travelers from using Airbnb and other similar services.

Perhaps even more revelatory, policies at 12% of companies surveyed require travelers to use shared accommodations when possible.

Full story at Chrome River.

6. A CLOSER LOOK AT LEISURE TRAVELERS: YOUNG, AFFLUENT

Hoteliers love leisure travelers. They’re on vacation, so they’re in a good mood and willing to pay more for lodging, food and more. During a recent webinar, data experts took a closer look at the demographics of leisure business. Here are 3 takeaways:

  1. The core group of leisure travelers tends to be young (those between 18 and 24 are most likely to travel) and affluent (typical income: $75,000/year).
  2. They consider travel to be a priority in their discretionary spending, and they’re intense users of technology.
  3. Nearly 80% of heavy travelers are loyal to specific airlines and hotel companies.

Full story at Hotel News Now.

7. AFFLUENT CHINESE PREFER TRAVEL OVER DIAMONDS

Pity the poor diamond industry (not) as it frets over the penchant of affluent Chinese consumers to travel rather than accumulate luxury goods such as jewels. While diamond sales in China declined 4.8% last year, more than 135 million Chinese traveled in 2016, and their spending rose 12% to $261 billion.

This trend has spooked the diamond industry so much that one of the big players, DeBeers, is considering getting into the travel business, possibly arranging tours to African destinations where diamonds are mined.

Full story at Skift. 

Stay up on hotel Revenue Strategy news and discuss industry tech trends in the Hotel Revenue Strategy Leaders Group on LinkedIn.

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Ed Watkins, Contributing Editor

Ed Watkins, Contributing Editor

Contributing editor at Duetto
Ed has been covering the hotel industry for more than 40 years. He was editor-in-chief of Lodging Hospitality from 1980 to 2012. He then joined Hotel News Now as an Editor at Large, until his retirement at the end of 2014. Ed still contributes to several publications and is a member of the advisory boards for the hotels schools at Michigan State and Penn State.
Ed Watkins, Contributing Editor
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Ed Watkins, Contributing Editor

Ed has been covering the hotel industry for more than 40 years. He was editor-in-chief of Lodging Hospitality from 1980 to 2012. He then joined Hotel News Now as an Editor at Large, until his retirement at the end of 2014. Ed still contributes to several publications and is a member of the advisory boards for the hotels schools at Michigan State and Penn State.