Understand your customer, focus on profitability and take lessons from those running the show, says a revenue management whizz at Accor
In an interview with Adam Hayashi, VP of Revenue Management & Analytics at AccorHotels, who will be speaking in Las Vegas this October, we heard how the group is putting luxury at the centre of its strategy. Now we hear his tips from the frontline. Hayashi will be sharing more in Vegas but in the meantime here is a taster.
#1. Price based on demand and customer demographic
An early lesson came from the revenue and sales managers of a Fairmont hotel in Bermuda. Hayashi was visiting the property and asked the revenue manager if he could see the rooms. The revenue manager said she’d call the sales manager because “I don’t go into rooms. I price them.”
“The revenue manager had the insight to realise that it really doesn’t matter what the room looks like, what her perception of the room is, or mine for that matter. We price based on demand, and the guest we are targeting. In the luxury space, you are selling an experience and services and everything that goes with that,” Hayashi explains.
It really doesn’t matter what the room looks like…we price based on demand, and the guest we are targeting
Ultimately, it is really about understanding your customer demographic, and how to approach each segment; how to market to them and price the room right.
“It was a key lesson. I stopped looking at demand as a whole and looked specifically at the demand that we were targeting within a market,” he stresses.
Call it tough love, but if a hotel chain has invested $140million in a renovation, rooms need to be priced accordingly.
He explains it like this: “So if a guest starts saying ‘this hotel is too expensive now’, then maybe, at this point of time, we have to accept that we aren’t the right fit at this time for this guest. Or maybe, they aren’t our guest during this season, or they are our guest for just a weekend rather than a week-long stay.”
Having said that, with 25 unique brands “we are able to appeal to all guests at different times”.
#2. Focus on total hotel profit optimisation (THPO)
About four years ago, FRHI adopted a total revenue management approach with a programme called RevPro. This signalled a move away from yield management, which was really an airline constructed process based on supply and demand.
“The point of RevPro was to change the way we thought, to approach things differently,” says Hayashi, adding: “It’s very easy to get stuck in that cycle of asking questions like: how should we price it this weekend, are we making budget, how we are going to forecast.”
These are all common questions that revenue managers ask but for Hayashi, it was about “changing the dialogue, educating people and inviting the right people to sit round the table.”
So, the group went from convening revenue meetings once dominated by the GM to including everybody from the director of food and beverage to the directors of golf, valet services and spa. The idea was to focus on how to truly move the needle by optimising every available space. “There was some really unique dialogue, but also some great aha moments,” he says.
‘Aha’ moments that revealed how much better heads of department could work together to optimise revenues. Hayashi explains: “For example, if there has been a group buyout but nobody is playing golf, why not offer golfing break out sessions, or a golf clinic. On the other hand if the hotel is not full with group bookings, could there be an opportunity for F&B to capture guest revenue in-house by running a pop-up restaurant or bar in one of the empty group areas.”
“It’s about looking at available space and what that looks like in terms of occupancy forecasts. And this shifted the culture of yield and pricing management to thinking about ‘what is the next big idea’ and ‘how can we better use our space’,” explains Hayashi, who will be speaking in Las Vegas in October.
THPO considers all ancillary spend, and the revenue that comes with it; how seasonality, length of stay and other such patterns affects the bottom line. “From a luxury group standpoint, we don’t get the highest average rate in our group segment but we have higher than average spend, the highest ancillary revenue and the longest length of stay, which means the best contribution to profitability,” explains Hayashi.
He continues: “When you are looking at things from a profit and not a yield management standpoint then you are thinking more about the bigger picture, and more about the bottom line, not the top line. That is good for our hotels, it is good for our owners and it is good for our company.”
#3. Take lessons from the field
This is Hayashi’s first role leading a region, and his first step was to assess what worked and what didn’t. What he found was that very often the corporate engine defines the strategy, and leaves those at the coalface to roll it out. “This doesn’t always make sense, and does not address needs on the ground,” says Hayashi, and this means that people don’t always buy into a new programme. According to Hayashi, “we didn’t do a good enough job understanding what the regions pain points were before coming up with a solution”.
If I create a report based on what I need without connecting with the person actually using it, there is already a disconnect right there
Hayashi wanted more input from the field and within six months had set up a revenue advisory committee (RAC), which has a rotating group of five directors of revenue management. “They assess everything that comes through the corporate office and have the opportunity to vet the programme to pilot the tools, to test reports and offer feedback. As a result, there have been great insights, which [before] we would never have seen,” he says.
By taking direct feedback from the field, and changing direction whenever necessary, there has been much better adoption of RM programmes. After all, people in the field are the users. “If I create a report based on what I need without connecting with the person actually using it, there is already a disconnect right there,” says Hayashi.
And that is the last thing you need in such a competitive environment.
Join us at EyeforTravel North America (Oct 18-19) to hear more from Adam Hayashi, VP of Revenue Management & Analytics at AccorHotels
October 2018, Las Vegas