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How independent regional hotels can be revenue smart

In this episode the first of a mini-series on revenue management and pricing strategies, we speak with an independent hotel property, an independent regional hotel group and a revenue management specialist about the opportunities to optimise hotel rates.


In a recent survey between IDeaS RMS and The Caterer, responses show that independent and regional hoteliers are working smarter than harder to bring the right revenue. Key insights include:


  • Regional hotels are falling behind city centre properties in how they measure success, with an emphasis on occupancy (28.3% in rural, coastal and beach hotels) highlighting their priority of ‘heads in beds’ - a strategy which increases both operational and marketing costs.

  • City hotels remain focused on maximising revenue per room, with 45.5% using RevPAR as their dominant performance metric.

  • There is a gulf in the use of technology to enable commercial success, with less than half (45.3%) of regional hotels using a revenue management system (RMS) compared to over three quarters (77.2%) of city hotels.

  • Properties using an RMS were reported to have a 14.15% ADR increase in 2022/23, compared to just an 11.69% ADR increase for those without.


We are joined by Michael McCartan, Area Vice President, EMEA, IDeaS; GEZA Bocsak, Head of Revenue Management and Sales, Harbour Hotels and INNA Nekrassova, Head of Revenue, The Lanesborough to discuss:

  • Why independent hotels need to rethink revenue management and strategy models

  • How to use team skills and technology effectively

  • Where to invest to maximise return

  • Ai/ automation


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Programme Notes


Ryan Haynes:

Hello. and welcome to Travel Market Life. In this episode, we are looking at how regional and independent hotels are lagging behind. I'm your host, Ryan Haynes. In a recent survey of 186 UK hoteliers commissioned by IDeaS RMS and the UK's leading hospitality publication, the Caterer found that hotels are working harder and not smarter, uncovering missed op revenue opportunities for regional hotels and overdue cultural changes for more profitable integrated revenue strategies. Key findings include regional hotels falling behind city centre properties in how they measure success, with an emphasis on occupancy with well over 28% in rural, coastal, and beach hotels.


Ryan Haynes:

Using this as a key metric, highlighting the priority of heads in beds, a strategy which increases both operational and marketing costs. While city hotels remain focused on maximising revenue per room with 45.5% using RevPAR as their dominant performance metric, there is also a gulf in the use of technology to enable commercial success with less than half, 45.3% of regional hotels using a revenue management system compared to over three quarters, 77.2% of city hotels. Furthermore, properties using an RMS were reported to achieve a 14.15% ADR increase last year compared to just an 11.69% ADR increase for those without a revenue management system.


Ryan Haynes:

In this episode, we will explore the findings and get feedback from two hoteliers as we look at why independent hotels need to rethink revenue management and strategy models, bringing a commercially focused culture and maximising pricing strategies to discuss these insights. We are joined by Michael McCartan, VP EMEA of IDeaS, Geza Bocsak, the Head of Revenue at Harbor Hotels and Inna Nekrassova, the Head of Revenue at the Lanesborough Travel


Ryan Haynes:

First on the line, joining me is Michael McCartan, the VP of EMEA at IDeaS. Michael, welcome and congratulations on recently joining IDeaS RMS, it's great to have you back here on Travel Market. Life.


Michael McCartan:

Thank you, Ryan. It's great to be back and great to be representing ideas.


Ryan Haynes:

Now, you've recently sponsored this survey with a Caterer and there are some really interesting key findings that we just looked at in the intro, but what really stood out when we interviewed and surveyed both global independent brands?


Michael McCartan:

Yes, there were lots and lots of interesting insights, but for me, the most interesting of the bunch, there were essentially four. The first one was that just over half the respondents indicated that they had a dedicated revenue management function, and this provided confirmation to me at least, that employees of many independent hotels wear multiple hats and are very busy people. The other interesting insight is that half the respondents identified that a good revenue strategy is the most important factor in improving revenue performance, but this said about 60% said that they're falling behind in reacting to opportunities in a timely, timely manner.


Michael McCartan:

And that was their biggest challenge. And then lastly, 38% of the respondents provided, provided, said that they provided revenue management training for their staff. So, a large number of people that are actually performing the revenue management function don't have any formal training in the discipline, which is, which is very interesting.


Ryan Haynes:

Absolutely fascinating, particularly in a day of age when, you know, the distribution landscape is so complicated and there's so much change in demand in the market and, and changing consumer behaviours that, you know, pricing is mu is absolutely essential for being successful and profitable.


Michael McCartan:

Absolutely. Yeah, it's. I think there's broad recognition within the biggest in, in the brand sector, at least that revenue management or commercial management is, is a key function. And it seems that whilst the discipline is recognized by a large portion of the independent hotels, there's still some way to go to really establishing it as a core component of a hotel operation within the independent sector.


Ryan Haynes:

Well, the great thing is, Michael, we've got a couple of hoteliers with us on the line now who’s actually going to help us sift through this data and give us their perspectives on how they're seeing changing changes in revenue management function. Now, firstly, I'd like to introduce them both, both of them fantastically has previously worked at large global hotel chains and now in the independent sector so we can actually see the differences between working in those two different categories of hotels. So firstly, I guess a Bocsak, the Head of Revenue at Harbor Hotels. Thank you for joining us today.


Michael McCartan:

You're welcome. Nice to be here.


Ryan Haynes:

And also, Inna Nekrassova over the Head of Revenue at the Lanesborough in London.


Inna Nekrassova:

Great to be here, Ryan. Thank you.


Ryan Haynes:

Now, Inna, come to you first because I know that you worked at the Four Seasons previously, and so you've worked at these mega global hotel chains. What do you see as a difference in revenue management strategies and the opportunities for independence?


Inna Nekrassova:

Thank you for the question. So, in general, the cornerstones of revenue management are the same. So, what you are looking at, you know, this is the beauty of revenue management, is that it can be applied to different accommodation types starting from a budget hotel to student accommodation, to all the way through ultra-luxury hotels. Again, the beauty of revenue management is that you don't need to occupy a niche to be successful in revenue management because the cornerstones, and the logic there are the same. However, there are some fundamental differences between sometimes the speed of execution of strategy. Bigger brands usually are fantastic at foundations, so got really solid knowledge of revenue management and the training is, is very comprehensive, but sometimes when it comes to change management, independent hotels have a better opportunity of getting things across quicker because there are fewer hoops to jump through.


Ryan Haynes:

Wonderful, thank you very much. And over together, I understand that you previously worked at Accor and now managing this portfolio of hotels across the UK, both city and regional. So, what do you see as the key differences?


Geza Bocsak:

I think I definitely just kind of joined what Inna already mentioned, that the speed is absolutely different. So, and, and I think especially with right now, the changing market conditions, you, you got to be quick if you make a quick decision creating some promotion or, or, or, or applying some, some changes in strategy. You don't have to wait for approval from the head office. You don't have to think about it at all. Is it band brand compliant? Is it something which I can do, or can't? So that's, that's a really important, also, I think it's important, it's, it's, we are a small boutique beauty brand, which actually we can be more flexible and more kind of bespoke in a way.


Geza Bocsak:

We, we kind of execute the strategy and create the strategy behind that.


Ryan Haynes:

Yeah, I mean you are going to have a really interesting perspective because whilst you're an independent brand, you work regionally, and you've got properties across the country. So, what do you see are some of the differences that you're experiencing in regard to revenue and revenue generation and managing pricing across the regions?


Geza Bocsak:

I think we; I don't want to exaggerate it. So basically, we have, we have Southwest, a couple of hotels in Cornwell and Devon and a door set, and then we have a city location. I wish to have like all over the country, but probably, or, or Northwest Hotel is BRI stores. So, so I think it is, but definitely the difference always between leisure and business hotels and, and so where, why city location has a certain need, a certain, certain kind of reaction, time, dynamism, leisure is kind of, is different. So obviously the strategy should, should be, should be different on that.


Ryan Haynes:

So, you really have to be thinking that okay, you need to train your teams to be responsive for two really cool, completely different markets regardless of the fact that they're in the same country.


Geza Bocsak:

Yeah, and also, it's, it's interesting because if you go back a couple of years that, that everybody said, oh, it's London is really dynamic and then Now, you don't really know if you don't have any hotels in London and obviously came pandemic. And then we obviously had the massive staycation, and I can tell you that probably pesto was more dynamic in 21, 22 than any London hotels in the city. So that's interesting. But I think now we, we are getting back to the, to the, to the normal times when it was before Covid, but yeah, well definitely we really need to be quick on those periods when was a massive demand.


Ryan Haynes:

I mean, yeah, it sounds like you really had to be on your toes there and is now working at an independent property in London. I mean, things have been going crazy in the capital. How has your demand performed over the last year?


Inna Nekrassova:

Yeah, as you said, there's been a lot of movement. I mean, last year it's fair to say London has seen absolutely rapid rates in summer because of the pent-up demands that we keep talking, kept talking about it finally came through. And this year I can say that of course we, we were a bit apprehensive about the repeat of the success of last summer because again, the, the rates that we were seeing in the market were incredibly aggressive. But I'm happy to say that this summer seems to be very, very busy as well. There's a lot of demand, there's a lot of events happening and some of the markets like us are very willing to travel and spend more on the experiences and all those bespoke, you know, bespoke packages.


Inna Nekrassova:

And so, so yeah, we're seeing good demand in the market, good rates out there. But I guess the challenge always is that you, we have good strong summers and of course capitalise on that for the rest of the year as well.


Ryan Haynes:

I mean, you talk about aggressive markets, I guess, again, that keeps you on your toes. You need to be constantly thinking, looking at the data and reacting in real-time.


Inna Nekrassova:

Absolutely. And this is where, you know, technology is, is really what sets you apart when it comes to reactivity when it comes to pricing and being able to react quickly to any changes in the market, any news, I mean, sometimes things that you don't even suspect might trigger a change in the pricing. So just keep an eye on a kind of more global socioeconomic environment. But this is again where platforms like ideas, for example, are very valuable because one single person, which a lot of the time for an independent property, there's one revenue person if even that sometimes it's a, it's a role that is combined with reservations. So, you have a reservations and revenue manager, for example, that one person just cannot physically keep an eye on all the changes in the market.


Inna Nekrassova:

I mean, we're talking about current, you know, modern revenue management systems change pricing many times a day. We're not even talking about, you know, changes every day. It's, it's many times a day that it happens. So, this is where having, you know, a very adequate tech stack especially is, is particularly important for independent hotels and smaller groups.


Ryan Haynes:

Thank you very much. Now Michael, both of them have alluded to some really key elements of a successful revenue strategy and some of the challenges that are in there. Why do independent hotels need to rethink revenue management and strategy models today?


Michael McCartan:

I don't necessarily think they need to rethink their strategies. I think for me, and, and, and in alluded to this, I think a lot of what the, where the rethinking needs to happen is in, in the adoption of technology. I think technology and in particular what I'll call intelligent automation. Listen is levelling the playing field for independent hotels. In the past, the technology available to some of the brands was inaccessible to the independent sector. But that's changing and the advantages that we are seeing in AI and machine learning are eliminating many of the repetitive and tactical tasks, for hotels, which means that hotels are now able to function with leaner commercial teams.


Michael McCartan:

So that's a real advantage for an independent operator that doesn't have the capacity or the financial resources to invest in comprehensive commercial teams. So that is a distinct benefit for independent hotels. And I think we've seen that throughout the pandemic and now as we through the recovery that the adoption of technology in that sector is unprecedented. And this adoption consequently means that the teams are able to think more strategically and compete more effectively with the branded hotels.


Ryan Haynes:

I mean, yeah, we saw in the survey that a dose of an RMS achieved a 14.15% ADR increase last year compared to 11.69%. And we have seen obviously throughout the industry news that, you know, rates have been at a record high for so many hoteliers, but this must impact the guest perception of value guess at how you manage that effectively, that you actually got prices and rates out there that aren't going to affect the brand.


Geza Bocsak:

I think it's, it's really important. Yeah, obviously the operational side is the delivery and, and we, we had a lot of think and discussion about it. So how we can actually make a small thing which actually turns into it doesn't necessarily cost us as much of a money, but it's a value for the, for the guests that just, just to meet the expectation. It's really key and obviously needless to say that the whole industry is struggling with staff. So, with less staff and more challenging stuff, you need to deliver exceptionally high service levels. So, that's a constant daily bottle at the hotel level.


Ryan Haynes:

Thank you. And in a, I mean a luxury like Lanesborough obviously prices and rates can go through quite a bit of fluctuation, dependent on demand and the time of year. So how do you again, sort of like manage that expectation, especially for returning AI guests?


Inna Nekrassova:

That's a great question and I always say this in luxury, our guests are not price sensitive, they're value sensitive. And so, it is a matter of making sure that no matter how much you're charging, they don't feel the dip in the value they're receiving. And even in summer months where, you know, traditionally hotel luxury hotels in London have been charging really premium rates. These guests that are coming back and that stay other months as well, that they are feeling that they're getting their value worth, they're getting their money's worth, even if they might be paying, you know, more premium rates in, in summer months for example. And of course, guest recognition is absolutely number one. And this is, you know, the ongoing training with the team on guest recognition using guest names, but also personalization of this day.


Inna Nekrassova:

You know, sometimes amenities that you can put in the room that are personalised to this guest can go such a long way for that guest to feel recognized and to feel that you know, that they're coming back home. But


Ryan Haynes:

One of the other things that we are seeing in the industry is shorter lead times. How do you, how do shorter lead times enter affect the approach to pricing?


Inna Nekrassova:

So, looking at shorter lead times, you are right to mention that I think post-pandemic in general, hotels have seen shorter lead times with some of the markets, particularly some markets traditionally had shorter lead times. Some of the, you know, middle Eastern guests for example, do prefer to book very last minute, but, and some markets like us tend to have longer link time, but we have seen a bit of a combination of everything happening. I think it's really important to, first of all, make sure that your longer lead time offers are out there, so making sure that you are competitive and attractive for those travellers that do work with a longer lead time long, you know, a combination of longer lead time and shorter lead time is really what's important to drive in the hotel because then you, you want to have a base business by the time that you come to a short lead time and you can start increasing those prices.


Inna Nekrassova:

Pricing-wise, yes, of course, it does affect the way that you manage pricing, but again, a shorter lead time usually means that you manage to pick up some pretty good rates.


Ryan Haynes:

Yeah, thank you very much. I mean, because looking at regional hotels and how you manage that, because I know that it's not just affected the city hotels and how do you achieve the occupancy you need to meet that profitability with short lead times?


Geza Bocsak:

Yeah, it is definitely, I just a hundred per cent agree with Inna that the key is for maximising, the short lead is, is on the longer lead. So, make sure you're building your base business, which makes you more comfortable and not getting nerve-wracking at the last minute. However, in the leisure destination, there's always a big impact on the competitors because not everybody's thinking like this. And when they start to panic, which is impacting your pricing, unfortunately, so either being the big-headed guy in the market that is still keeping my rates up and then you got half of empty or, or you just try to follow, but then obviously the whole, whole revenue generation is a big bit out of date also, it's important in the leisure destination that the better element.


Geza Bocsak:

So, it is challenging because you're expecting shortly, I mean that if Monday, Tuesday is sunny that we are expecting a lot of bookings coming over the weekend, right? If it's not happening, then, then, then, then you start panicking and then you need to make some actions, which you shouldn't and you don't want to.


Michael McCartan:

Thank


Ryan Haynes:

You. Now Michael, I mean as GTA just mentioned, the weather really is affecting people's decisions to travel and make those bookings and that sort of data. I mean the more data you have to see the market behaviours and some of the things that can have an impact on rates or bookings, I guess is really important. What is the role of technology in that pricing strategy and how can independent hotels take advantage of opportunities?


Michael McCartan:

Yes, data is the oxygen that fuels the revenue management system Without, without good quality clean data, the algorithms can't perform that, and that intelligent automation that I spoke about earlier can't perform optimally. So, the best revenue management systems will incorporate not only historical data but forward and future-looking data and current data and really get a good clear picture of the market demand and respond in real-time to those changes in demand.


Michael McCartan:

If you are able to forecast and anticipate and understand what that demand looked like, looks like in the short term and, and recalculate your forecast in response to that demand, you will opt, you know, ultimately provide the best, best prices to the guests to convert the maximum number of guests at the right price.


Ryan Haynes:

Thank you. And now Geza, I mean we, we've already heard, you know, the value that an RMS can bring and being, I think some of the worries has been in the industry that it's replacing the role of the revenue manager. What do you say to that, and you know, how should hotels be considering the utilization of an RMS and how do they identify the positions they need in their team?


Geza Bocsak:

I think you, to be fair at we are just the beginning of the road because we are in the implementation of ideas. So, what definitely what can see is, is the role is changing, it's not being replaced, but you, you have like an additional assistant if you like, and then you need to a collaboration with an assistant. The assistant is helping you, which is obviously it's impossible to do in a day to looking at 365 days in the future, looking at the room type, looking at everything by segment and making decisions, which is like thousands of thousands of decisions in a day and it's just for one hotel.


Geza Bocsak:

So, you need to have these assistants hands-on hands, you need to have a discussion with the assistant, teach them and then learn from them. And, and that's how the role, because like, I don't know if it's traditional anymore, the revenue management, obviously you do pricing, you do inventory control, but it's all your own and then, and then you don't really have all this complexity. So, I kind of make use of it.


Ryan Haynes:

Thank you. Now Michael, you mean you are seeing across your customers quite cult quite a number of cultural changes in how they're approaching revenue strategies. Where are they specifically lagging in really being able to keep up with the market changes?


Michael McCartan:

Almost Jack, what G was saying, I think one of the big changes that we are seeing particularly with the independent sector is the recognition that intelligent automation can really help change the performance of the operation. It, it's helping them increase processing speeds, it's helping them reduce costs and it's helping them when optimizing decisions. And, and this in turn is allowing hospitality professionals to rely on their human capabilities. Technology doesn't replace, it replaces the redundant and the mundane and the sort of detailed data processing.


Michael McCartan:

What it can't do is replace the human aspects of our business technology is freeing up hoteliers to actually be more creative, to be more innovative, and to deliver strategic outcomes, focusing on the strategic rather than the tactical. So, I hope and together agree with me, but I think that the fundamental role of technology is to actually free up humans from doing repetitive and mundane tasks and allowing them to actually be, be hotels.


Geza Bocsak:

A hundred per cent. Yeah, absolutely.


Ryan Haynes:

Thank you. And, and I mean, as you say, you know, we've looked at sort of like revenue really just being about rooms, but things have massively changed, especially with Covid really recognising the importance of other business units to bring profitability at a time when you couldn't have rooms open, for example. And there's a lot of talk around total revenue management strategy. So, going to Inna, what are the challenges of actually implementing a total revenue management strategy in a hotel?


Inna Nekrassova:

Yes, you're right to say we have been talking about total revenue management actually for a while now. And I, I still don't think that any hotels out there, any, any groups or independent hotels out there are really out, you know, pushing and, and at the forefront and, and having, having implemented total revenue management fully to its full potential. And I think that's, there are several reasons why we're not there yet. One of them being, of course, the tools, the tools, you know, a lot of effort and a lot of emphasis has been on developing tools for room revenue management and some, some, you know, technology is starting to emerge now and I know IDEAS has some solutions, therefore rather outlets, but it's still, in my opinion, you know, technology out there is still in its infancy when it comes to total revenue management.


Inna Nekrassova:

I also do think that you know, we have a challenge of having heads of departments that are very operational, that has always been thinking in that, with that operational brain and Now, you know, having to kind of pull back from that a little bit and saying to them actually, you know, there's a lot of value in, in data and a lot of value in spending your time maybe taking away a bit of your time from being on the floor to the back office and, and analysing and looking at numbers. It's also been a challenge and I think it is a matter of at least starting that conversation for those hotels that are not actively pursuing total revenue management, start by just inviting those HODs to your strategy meetings because already then, they will be impressed.


Inna Nekrassova:

You know, that's, that's the kind of experience that I had so far in my career is that when you actually sit people down and show them the data and show them what is possible, you know, they might, they want to be involved, they want to implement that into their working. So, I think that's really, it's the education piece for operational, for people that have been really operational, that are managing those departments. It's the tools that are still, you know, we, we are not actively implementing those tools as an industry just yet as we are with the revenue management system. I mean, your statistics, you know, if, if half of the hotels are not using revenue management system for rooms, that answers your question why we're not there with total revenue management. I mean, even rooms, revenue management still has a long way to go.


Inna Nekrassova:

Even just started having conversations with your catering manager, looking at your events, having a heat calendar for the events team of, you know, where you have high seasons and slow seasons. It's kind of just stripping it back to basics but implementing those basics. Absolutely. Now is the right time. The first step is, is just having those conversations unfortunately, in my opinion, we're not there yet, but I think, you know, people like me and Geza if we start the process and implement already something and that will, you know, have a domino effect.


Ryan Haynes:

Yeah, I mean obviously a mountain to move there when it comes to total revenue management. But guess I mean the, the, the key thing first is actually getting the technology and getting the backing of owners and, and general managers. And this can be the biggest hurdle if especially half of the hoteliers are not using an RMS just yet. What advice do you give to people in your situation who are looking to get the backing of owners in GM?



Geza Bocsak:

That is additional assistance and then makes you make your revenue team, make your operations team more effective. And it's just a small example. So what we are looking at our rates for maybe the next three months or so, but the system is constantly four times a day looking at your next 365 days, how many, how much money you actually leaving on the table, just not being able to, to, to utilize because just you're being a simple human and not being u utilized that, that's so much outlook and I think probably is for me is the effectiveness, is the, is the important point of, of having a system.


Ryan Haynes:

Excellent. And Michael, I mean what advice do you give to hoteliers once they've invested in a revenue management system to get the most out of it? And it's not just about the technology, as GI has mentioned as well,


Michael McCartan:

And it's touched on this already. Actually, I think a key component in getting or deriving the maximum benefit from tools is to ensure that you adopt an integrated approach within your teams. What tended to happen is that different pieces of technology were developed to support different verticals within the hotel operations. And that meant you were those, those applications invariably didn't talk to each other. Now that those applications are starting to share data and talk to each other is providing better results and better performance from those tools. But the same applies to the human aspect as well. If you want to get the most out of the tools you need to take a holistic commercial approach to your operation, not just look at rooms or sales or marketing or F&B separately, but look at it from a holistic perspective, there is work still to be done.


Michael McCartan:

I think part of the challenge is why this hasn't happened as quickly as it possibly we would've all liked because the integrations in the backend haven't happened. So, it's a combination in order for us to reach that sort of total revenue management, Nirvana requires the technical ecosystem to support the operational ecosystem. And when we can combine those and achieve that, I think we'll see a big step forward in the adoption of technology, not just for rooms, but for all aspects of the operation.


Ryan Haynes:

Wonderful. Michael, thank you ever so much for joining us today and sharing those insights from the ideas and Caterer survey, INNA and Gaza, thank you ever so much for sharing your experiences and perspectives on how independent and regional hotels.

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