Today's Insights into Sales, Marketing and Revenue Management
By Robert Gilbert President & CEO, Hospitality Sales & Marketing Association Int. (HSMAI) | November 16, 2014
It's an ever-changing world for hotel sales, marketing and revenue management professionals. In 2014 we've seen continued global hotel demand growth and moderate supply growth, but we've also seen a focus on integrating the disciplines of sales, marketing, and revenue management more than ever before. As customer acquisition costs continue to grow and erode hotel profit margins, the science of understanding and optimizing the business derived by channel and managing these and other intermediation costs will be paramount to success.
Hotels and resorts, as well as hotel brands and management companies, must be focused on these fundamental shifts in how business is sourced and transacted. Hotel sales, marketing and revenue management professionals must act differently, think differently and understand differently.
Integration is Key
The hotel industry is a fragmented one with various brands, ownership and management groups. The rapid change in consumer behavior globally for all traditional group and transient market segments has created multiple opportunities for distribution channels and intermediaries to assist with customer acquisition.
While many industry partners exist and do provide value, hoteliers must acknowledge that there is a cost to acquiring customers this way. The direct and indirect costs of distribution expenses, commissions, and topline opportunities from wholesale channels, are growing at a rate faster than industry RevPar growth. If the current trajectory continues, it is estimated that distribution costs will increase to $100 million by 2016 in the U.S. alone – that amount coming right off the bottom line.
This does not take into account other costs that are rising, such as minimum wage increases and energy and utility costs, that are impacting profitability. Thus there is a critical need for sales, marketing, and revenue management functions in hotels and hotel companies to intentionally integrate all of their customer acquisition strategies and tactics. The industry's inability to do that will only result in excessive customer acquisition costs, marketing inefficiencies, and eroding profit margins.
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