There are only two ways to grow revenue for a hotel. One is to attract more guests and customers, and the other is to sell more to each guest and customer. There are no other ways to make a hotel financially successful. Hotels need revenue to cover all costs and a reasonable profit.
Managing a hotel sounds easy, but most hotels struggle because the demand is not large enough for all hotels in the destination where the hotel is located. In addition, fierce competition makes it hard to manage a hotel to financial success. As a result, hotels must put a lot of work into attracting more guests and selling more to each guest. Therefore, every hotel needs a knowledgeable and skilled commercial team with distinct roles in marketing, sales, and revenue. Their job is to fill the guest funnel with potential guests, acquire the most profitable guests, and get them to spend as much money as possible in all hotel facilities. Let’s see what these roles contribute to each step in the guest funnel.
Travelers to the destination
Pour all travelers to the destination into the top of the funnel. That is the total available market or the total demand for overnight stays. The revenue manager has the skill to analyze the overall demand in exact numbers. Marketing understands consumer (B2C) needs and behavior based on research. Finally, sales understand customer requirements based on good relationships with current and potential customers. Each one of the three roles sits on an essential piece of information that they need to share with the others to come up with a strategy on how to capture the most profitable guests.
Identify the ideal segments
Hotels need to focus on the segments that are ideal for the hotel. From an outside-in perspective, it is the same as the perfect hotel for a specific audience. Ideally, the team would identify the segments that fit best with the hotel and have a large enough potential to fill the hotel. The revenue manager understands the potential, marketing will create campaigns to attract guests from those segments, and sales will “fish” for customers within those selected segments. Everyone has a specific role with specific skills that hotels cannot live without.
Find the high spenders
Hotels with many facilities need guests that spend on other products and services than just the hotel room. The revenue manager can identify the high spenders by looking at historical data of the average revenue per guest and determine where these guests come from and how they book. Marketing can then target these guests and similar guests with marketing campaigns. Sales will hunt for customers willing to spend more than the average customer and use all facilities in the hotel to win B2B deals, such as meetings, events, etc. The revenue manager has the data, sales have the relationships, and marketing has the creativity to create campaigns that attract big spenders.
Attract the guests to book
There are many ways to get the guest to book. The content of what the hotel has to offer is an essential part of how to attract guests. Based on what the high spenders are looking for, hotels need to create offerings that attract these high spenders. Marketing has the best overall knowledge and skills to develop the offerings. Sales get commitments from customers by signing agreements for future room nights. Once a customer has signed a contract, the customer will start to book room nights at the hotel. Salespeople must, however, ensure customers buy all the room nights they have promised. Finally, revenue is the pricing guru and will adjust the rates to attract the right guests according to the commercial strategy that the three roles have agreed upon.
Onboarding is an unusual concept for hotels, stolen from the software as a service (SaaS) industry, where they are obsessed with maximizing sales and retention of their customers. Hotels can learn how to maximize the average revenue per guest by stealing ideas from SaaS companies. The purpose of onboarding a guest is to ensure that the hotel provides the right products and services and satisfies the guest with the stay. Most hotel guests are first-time guests and only have a vague idea of what they can expect. A systematic onboarding to the stay would make the guest feel relaxed and at ease or less nervous about the upcoming visit. A hotel can communicate with the guest from the time of booking, through check-in, during the stay, and after the stay. Knowing the guest, requirements, spending power, and behavior, the marketing manager, can create customized offerings during the onboarding process. Sales can nurture the customer to maximize order value for short business stays, meetings, and events. The revenue manager can manage capacity, so guests are not offered anything the hotel cannot deliver.
Teamwork creates success
The guest funnel is an easy way to understand how the three roles, marketing, sales, and revenue, have to work together to optimize revenue and maximize profits. The process is simple, the knowledge and skills needed in each step are explicit, and the contribution from each role is clear. Still, in many hotels, these roles work in silos, often with stand-alone conflicting goals, which creates unnecessary conflicts and never maximizes profits. There are probably many reasons why the industry has cemented working in silos. One is that people have a hard time changing. Another is how hotels incentivize people. A third is the lack of systems with functionality for all roles. A fourth is the difficulty of collecting data into one easily accessible system so that all functions can work with the same data and one truth. None of these reasons are hard to overcome. The future for all commercial hotel work is that marketing, sales, and revenue work as a close commercial team.
Anders is the CEO of Demand Calendar – a system with 100+ functions for management and the commercial team to plan, track and optimize all hotel revenue streams. With 30+ years in leading positions in hotels and restaurants, Anders started to apply rev…