Data Continues to Drive Innovation in Hotel Revenue Management

What a wild ride it’s been for hotel revenue management leaders over the past three years. Fortunately, aside from an unforeseen major event, it looks like 2024 should bring some sense of normalization.

On the easier side of the business these days – the leisure segment – expect steady demand and small rate growth. Revenge travel is no longer a thing, and consumers are looking at trips with a more thoughtful approach, placing emphasis on overall value.

With that segment steady, revenue leaders should turn their attention in 2024 to group business – bringing those large groups back out on the road – and driving revenue in ancillary departments like Food & Beverage and Spa. 

In Hotel News Now, Harry Carr, senior VP of revenue over Davidson’s Pivot portfolio, put it most succinctly:

"We feel that the industry is stabilized but it is hard to say that the current conditions are the new normal. Business travel remains at 10% to 20% below 2019 levels. Inbound international travel still lags 15% below 2019 levels. Airline capacity has improved but prices remain high.

"Small groups business is back but large conferences are still inconsistent. We encourage our revenue leaders to stay hungry and stay humble because the market is still evolving.”

One challenge for revenue leaders that will roll into 2024 is continued pressure on profitability, both from rising operational costs and third-party distribution costs. Gilbert Arredondo, senior vice president of revenue strategy at Remington Hospitality, told Hotel News Now that driving more profitable channels and business across Remington's portfolio was his focus in 2023.

"We started looking at this year, even more than ever, different ways to drive revenue into the hotels, whether it be through raising parking prices, relooking at resort fees, relooking at food and beverage. It became about how we can drive incremental revenue to help offset rising costs," he said.

Technology Drives Revenue Strategy 

As the hospitality industry continues through a digital transformation, hotel commercial strategy is perhaps the area being most affected. For example, there is more data available to revenue leaders than ever before, enabling hotels to analyze market trends, guest behaviors, and competitor strategies with precision. The ability to make informed decisions based on data-driven insights has empowered revenue leaders to optimize pricing strategies, identify emerging trends, and respond rapidly to market fluctuations, according to Whitney Altizer, VP of Commercial Strategy at Newport Hospitality Group in Hospitality Net.

Altizer says the digital age has made understanding customer desires and needs more attainable through data analytics, allowing hotels to deliver personalized experiences and foster customer loyalty. A strong digital presence, including websites, social media platforms, and online booking systems, has become essential for engaging potential guests and adapting to changing market conditions, she says. 

In 2024, hotel revenue leaders will have even more tools at their disposal. Large chain hotels are already using sophisticated revenue management systems employing machine learning and automation to analyze historical and on-the-books data for forecasting future demand. Small and independent hotels are catching up through the use of revenue management and business intelligence software like Otelier, allowing them to maximize revenue through data-driven automation and analyze the results of pricing strategies in real time.

As revenue leaders shift their focus toward group business strategies, expecting a return of large-scale events in 2024, data will be critical. "We’ve been focused on capturing the right mix of data to develop and bolster a holistic roll up of forward-facing, market-centric revenue insights — using these data points to the advantage of our managed properties and our owners,” Heidi Cosio, Aimbridge Hospitality's senior VP of revenue strategy, told Hotel News Now.

Also in 2024, a wider adoption of artificial intelligence capabilities is expected to bring more functionality to revenue management and business intelligence systems, automating much of the process and improving forecast precision. While historically, revenue management relied on past trends for predictions, AI and machine learning now optimize pricing algorithms for maximum profitability. 

Chris Crowley, chief revenue officer at Duetto, told Hotel Management that AI is critical in organizing targeted marketing campaigns, enabling hotels to identify their target audience, craft tailored messages, and improve engagement. AI also helps extract relevant data from big data sources, model guest behavior, and optimize operational aspects, he said.

The impact of AI and machine learning on revenue management is significant, allowing for real-time offers to guests based on inventory, guest profiles, and buyer behaviors. The technology streamlines operational tasks, providing revenue managers with better insights into revenue and margin drivers.

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