Ed has been covering the hotel industry for more than 40 years. He was editor-in-chief of Lodging Hospitality from 1980 to 2012. He then joined Hotel News Now as an Editor at Large, until his retirement at the end of 2014. Ed still contributes to several publications and is a member of the advisory boards for the hotels schools at Michigan State and Penn State.
As we all dive into the new year, hotel owners, operators and revenue strategists are probably a bit perplexed as they try to determine what kind of 2017 it will be. Will the hotel industry’s long upswing continue with further increases in occupancy and higher levels of average rate? Or will the merry-go-round finally come to a stop and everyone need to devise ways to gain bigger shares of declining or flat markets?
The worst news a revenue manager can hear is that a new hotel is under development across the street or even across town. The only thing worse is when an entire market is in a building boom. Managing rate and distribution strategies in a market of expanding supply might be the toughest task of all for a revenue strategist.
Airbnb made a lot of noise at its recent annual conference for hosts and guests. At the event in Los Angeles, the company announced several initiatives and hinted at possible future directions for the leader in the shared economy accommodations sector.
In case you haven’t noticed, the hotel industry has changed significantly in the past decade, and in many ways revenue management is leading these changes. Specifically, at most hotel companies revenue management has evolved from just a rate-setting function to a strategic discipline that relies on predictive analytics to guide the entire enterprise’s quest for increased profitability.
To some hotel operators, marketers and revenue leaders, it seems as though Airbnb has been a thorn in their sides for a long time. In reality, the sharing economy site didn’t launch until 2009 and took two years to book its first million roomnights. Today, it is ubiquitous, especially in markets like New York City with high hotel room rates and lots of tourists.
As hotel sales and revenue management teams engage in corporate rate negotiations this fall, they might find themselves at a disadvantage for the first time in a few years. To prevail, or at least to maintain their market shares, hotel negotiators need to stress the value they can offer that’s not available at their competitors.