Six ways to strategize with RMS during a crisis

The hotel industry right now is facing an unprecedented challenge.  Perhaps now more than ever, hoteliers must focus on the fundamentals: maintaining communication channels, building trust, and strategizing for when demand starts to pick up again.

It’s challenging to say the least when we’re faced with the reality of today: lack of staff, closed hotels, rapidly changing situations, and revenue issues.  But it is achievable, even with light resources.

You can read more about communications and building trust in some of our recent articles. When it comes to strategizing, we have six recommendations to help you to plan for different possible scenarios.  Your revenue management system (RMS), which you may typically rely on for day-to-day tactical decision-making, can also be an invaluable tool for planning strategy around the recovery. This may feel like a far cry from what your instincts say right now as we tackle tasks day-by-day.  But, doing so will allow you to plan appropriately for when the industry begins to pick back up, which is what we’re all eagerly awaiting right now.

Understand your seasonality

We don’t know when society will be able to get back to normal, but we shouldn’t assume it will be at any one specific time. This means you will need to take a look at your usual seasonality trends and plan for various scenarios for demand ramping up at different times relative to your usual peaks and valleys. Understanding this you may be able to leverage periods of seasonal strength in pricing and demand. It may however coincide with a time of year that your hotel runs at low occupancy – this of course is met with challenges in itself but planning for different scenarios will help you determine what promotional, pricing, and Sales strategies need to be put in place. Whatever the outcome, plan ahead so you can be prepared to open your doors to any business that may come your way.

Look at booking windows

Usual booking windows are likely to change so look at the different possibilities and plan for each occurrence.  Pent-up demand coupled with re-opening your hotel on relatively short notice would likely shorten your typical booking horizon; changes related to relaxing cancellation policies or terms for advance booking rates might have the opposite effect.  Ask yourself how possible changes in booking windows affect your overall strategy, forecasting, and revenue.  You may also need to be prepared to make tactical changes at times that are different from what you are used to.

Compare market rates

We’ve seen from previous downturns that hotels who didn’t slash their ADR during times of duress experienced less extreme or prolonged RevPAR decreases in the long-term. It’s easy to act based on what others are doing – and it’s important to understand what’s happening around you – but don’t let it guide your pricing strategy. Try to put yourself in the position of a market leader rather than a follower, rely more on promotions versus pure pricing actions to stimulate and capture demand, and trust in the data available to us now from previous studies.

Measure group impact

Future group business is unpredictable, but scenario-planning for different levels of impact will enable you to prepare to execute upon an array of strategies.   Perhaps you may encounter a 20%, 50%, or 80% level of group cancellations and/or wash, for example, that will in turn affect your available transient capacity. Based on these scenarios you can dive into how that may impact your bottom line as well as your reliance on transient bookings. Will you need to level up on that type of business? And if so, how can you work with your marketing team to ensure you’re reaching the right people?

Review your segments

Evaluate early demand signals among your different segments to help determine who is most likely to be the first to return.  Again, develop different scenarios so that you are prepared to go in one of a few different strategic directions. Based on how these contrast with your usual segments and business mix, you may decide that a particular segment may be unable to start travelling any time soon; for instance, certain corporate travelers may still be hampered by company-imposed travel restrictions going deeper into the year. In these cases, you may need to look for business elsewhere. If so, work with Marketing to determine where opportunities lie to make up lost demand and plan an approach and strategy to drive business via the most appropriate channels.

And finally, as part of this process, be sure to keep your finger on the pulse of what is happening. Leverage the enormous amount of resources available in the industry today to help guide you through your planning. Here are just a few:

Understanding both the data and what local and global institutions are saying will also help inform your scenario planning. Above all, work closely with your teams. Cross-collaboration right now is fundamental to success and will enable you to act quickly when you need to and ramp up at the right time.

Dan Skodol

Dan Skodol is Vice President of Data Science and Analytics Cendyn. Dan came to Cendyn following the acquisition of The Rainmaker Group in 2019. With over ten years of Revenue Management experience in gaming, hotels, multifamily real estate, and airlines, he is responsible for researching and designing enhancements and innovations within Cendyn's product suite, as well as supporting thought leadership topics and studies via analytics. Dan previously held Director of Revenue Management roles for two casino organizations in Atlantic City, and Archstone Communities. He holds a BA from Yale University and a Master of Management in Hospitality degree from Cornell. Dan and his wife reside in Denver, CO with their four year old son and enjoy skiing, hiking, cooking, and travel.

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