Making the most of demand patterns and forecasts

Published: 09 Jul 2009

IN-DEPTH: Wyndham Hotels and Resorts on integrated RM and marketing approach

Proponents of revenue management feel that this discipline must develop into its description.

RM is about generating incremental revenue over and above the `entry price’ that the consumer has in their mind before beginning their search. RM development must include `value’ data and incorporate search enquiries into the system algorithms. It is not good enough to look backwards and dictate the future.

Assessing the same, Chinmai Sharma, VP - revenue management, Wyndham Hotels and Resorts admits that even though the RM discipline has made great strides in the last few years, there is ample scope for improvement.

“As an industry we have to do a much better job in areas like capturing what the consumer is really looking for (both during pre-arrival / search stage and during stay), in tracking denials and regrets by segment and channel to understand true demand and buying behaviour, in tracking on property spend by customer segment and channel to understand their full value, in understanding online behaviour especially with the advent of web 2.0 and overall in integrating customer analytics into the revenue management process in order to develop relevant pricing for each customer segment. I also think the gaming companies do a much better job in this area than most traditional hotel companies,” said Sharma.

Sharma, who is scheduled to speak at EyeforTravel’s Travel Distribution Summit North America 2009 to be held in Chicago (September 16-17) this year, spoke about segmentation, value demand generation and much more. Excerpts from an interview with EyeforTravel.com’s Ritesh Gupta.

Incorporation of interactive CRM data across customer segments in the construction of `booking classes’ will be fundamental to generating 'value' offers for the consumer and the business. How do you assess this viewpoint?

I agree with this statement. The more we can segment the market based on customer behaviour including characteristics like purchasing patterns, purpose of visit, propensity to pay, group size, type of hotel / room type selected, day of arrival and length of stay etc, the more we can develop individual pricing strategies and offers that are more useful for the customer and beneficial for the business at the same time.

This will help not only in developing value offers but also to understand the need to trigger offers based on shifts in customer behaviour.

According to a section of the industry, RM departments should not only focus on cost of sale reduction but should evolve to become Profit Management departments where cost of supply is incorporated into algorithms leading to a Gross Profit model, which in turn will better inform 'value' offers and segmentation integration. What’s your take on this?

I think GOPPAR is already becoming a standard industry metric and we need similar metrics for profitability like ‘Net RevPAR by channel’ (RevPAR less distribution cost by channel) or ‘Net RevPAG’ (Revenue per available guest less cost of marketing/loyalty/acquisition) in order to gain a holistic view of profit and segmentation.

Such metrics along with some of the CRM data will really help in better decision making processes along with prioritisation of segments during periods of high demand.

If RM strategies were to focus on 'value' demand generation, what do you think is critical in achieving optimal results from the same?

First and foremost, I think it will be critical to be able to collect and organise all customer related data. Other critical areas will include things like the ability to develop and deliver customer centric value based pricing offers, ability for Marketing, Distribution and Revenue Management departments to work together, ability for real time monitoring of customer behaviour and trends, good demand patterns and finally to have a really good Science and Analytics team.

How do you think companies are approaching integrated RM and marketing approach?

I think this is an area that’s improving fast although still has a long way to go. Although the traditional 4 P’s of the marketing mix suggest that these disciplines should work hand in hand, in practice I have seen varying amounts of integration in the industry.

I think most companies understand that Marketing’s role of demand generation is a lot more effective when they have access to the demand patterns and forecasts from Revenue Management.

This helps in channelling demand where it’s needed and developing offers that are meaningful to customers. An integrated approach of Marketing and RM, which includes facets like customer behaviour and loyalty programme management along with Pricing and Distribution is definitely on the radar of some hotel companies including Wyndham Hotel Group. This also leads to a better reporting/analytics infrastructure as that becomes the basis for most of the decision making process in such an integrated environment.

Sharma, along with other 25 speakers including ones from Continental Airlines, Hilton Hotels Corporation and InterContinental Hotels Group, are scheduled to speak at Revenue Management and Pricing in Travel USA conference, to be held as a part of the Travel Distribution Summit N. America 2009.

Travel Distribution Summit N. America 2009

Chinmai Sharma is scheduled to speak at EyeforTravel’s Travel Distribution Summit North America 2009 to be held in Chicago (September 16-17) this year.

For more information, click here: http://events.eyefortravel.com/tdsusa/conference/

or contact:

Helen Raff
VP North America
+44 (0) 207 375 7582 (UK)
helen@eyefortravel.com

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