Joe Tidwell is a big basketball fan. So this past March, when the NCAA women’s regional finals came to his hometown of Spokane, WA, the director of revenue strategy at Red Lion Hotels Corporation (RLHC) had to be there.
As Tidwell watched Duke battle Maryland, he knew the Blue Devils were staying at a nearby Red Lion hotel. He knew that if they lost, the players and coaches—as well as many of their fans—would be checking out and heading home. If they won, they’d stick around a couple more days and play one more game.
Duke ended up on the losing end, and Tidwell knew that meant soon-to-be-vacated rooms at his hotel. So as the arena cleared out, Tidwell pulled out his phone and changed rates for the following few days.
It was a no-brainer. Did the on-the-fly move make RLHC millions of dollars in revenue? Probably not. But it helped Tidwell optimize his demand, a practice in which RLHC had been lacking until recent technology innovations pushed the West Coast midscale hotel company into a new era.
RLHC’s transition over the past 18 months has been remarkable. In 2013, shareholders were calling for a sale of the company as revenue growth had stalledBut since hiring Greg Mount as president and CEO in early 2014, the company has reshaped its executive team, refreshed logos and become RLHC, rolled out new prototypes, introduced a new, 3-star lifestyle brand and acquired brands GuestHouse International and Settle Inn.
Thanks to newly appointed EVP and Chief Marketing Officer Bill Linehan, innovation has been at forefront of RLHC’s turnaround. Linehan knew that leading-edge technology, e-commerce and digital marketing solutions would be critical in pushing RLHC forward. In the summer of 2014, just a few months into their transition, the company announced RevPak, a technology platform that brings together “best-in-class” third-party technologies to handle reservations, distribution, customer relations, CRM, marketing, revenue management and other disciplines.
Instead of building the platform from the ground up, RLHC executives looked beyond the industry’s typical do-it-yourself approach. The company didn’t have the time or the budget to attack each of these technologies internally. Plus, a best-in-breed approach would give them agility and room for future growth.
“There’s a beauty within RevPak because if one system is not working or not playing well in the sandbox, that’s a component that we can remove and replace,” Linehan says. “I don’t have core competency in all 12 or all 14 of these systems, but I do have a competency of understanding what it’s supposed to do for us and a competency in understanding what else we would like for it to do for us.”
A look at RevPak
So what exactly does RevPak do for RLHC and why has it driven such a monumental transformation of the company?
First, it helps break down silos that existed within RLHC’s organization prior to Linehan’s arrival. Jason Thielbahr, who’s been with company for six years, says the different departments within the company’s corporate office work together now more than ever.
“We used to have digital marketing on one side that was driving initiatives, and that felt a lot more like OTA management. And then we had marketing that was driving their own media engagements and branding initiatives. Then you had revenue management that was essentially cleaning up after everybody and making sure that we hit our forecasts,” Thielbahr describes. “We really needed to align under the same umbrella because it all comes down to demand generation and we need to manage the demand accordingly. Having RevPak be the umbrella of all demand management and customer engagements allows us to be more nimble.
“In this environment, in these market conditions, if you aren’t nimble, you’re done,” Thielbahr continues. “Old Red Lion was in that condition. New RLHC is able to react to the market in front of them far more proactively.”
RevPak also provides a single, 360-degree view of RLHC’s customers, delivering dynamic and personalized promotions. Linehan describes it as a “revenue distribution system” or “guest delivery system.”
“How do we get a guest from being a look to a book to the hotel and what happens all the way throughout that process? Ultimately we want a single view of the guest’s perspective and we want to have a running chronology of that,” he says.
And since RevPak is cloud-based, it opens up the availability of integrations for any system. For example, Duetto provides the revenue management spoke to the wheel. Seamless integrations provide an intuitive operating experience, and users may think they’re operating one system, but behind the scenes there are a dozen or more partners working simultaneously for RLHC.
Lastly, RevPak has helped RLHC attract some of today’s top hospitality talent—revenue managers, for instance, who are curious about the leaps and bounds RLHC has made.
“They want to come in and use an innovative platform to go after new strategies to drive their careers and that of their portfolios,” Thielbahr says. “So that is a tangible benefit: to be able to improve and retain top talent.”
Results are in
But, as the saying goes, Rome wasn’t built in a day. Building RevPak meant bridging strategic alliances, recognizing how all the different pieces fit into the puzzle and getting them to work together. Integration went beyond open APIs; teams were brought in and encouraged to work together and customize their technologies to fit RLHC’s needs.
“I was in one of our partner’s offices, and we were in the boardroom using both of the whiteboards and we had listed out what our vision was of this fully integrated system before we even named it RevPak,” Linehan recalls. “When he walked into the room afterwards he was just staring at it, and we all took pictures of it so that we would be able to go back and really massage it a little bit more. He said, ‘You know, this is a five-year planning cycle and you’re talking about doing this in six months.’ Everyone laughed and said it won’t happen, that we had to plan on at least a year.
“We did it in six months.”
The results have been tremendous. RevPak has earned plenty of media attention, more hoteliers are looking to become RLHC franchisees, onboarding has become easier and revenue trends have done a 180. RLHC has shown nine consecutive quarters of RevPAR growth, including 13.7% year-over-year RevPAR growth in the second quarter of 2015, according to the company’s most recent financial earnings report.
“Our most recent results are a testament to our RevPak guest management system,” Mount said after the Q1 2015 close, “and its ability to drive increased bookings and average daily rates through strategic ecommerce and digital marketing as well as our focus on best-in-class hotel operations.”
Linehan also attributes much of the company’s success to RevPak.
“We’ve also reduced operating costs by negotiating good terms with all the components within RevPak and in some cases adjusting our margins with the OTAs,” he says. “So not only are we seeing growth from the top line, we’re also seeing improvements at the bottom line.”
- Don’t leave innovation to the intermediaries
- A Beginner’s Guide to Hotel Revenue Management
- The cloud, SaaS, and why the hotel industry is stuck in the past
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