In the hospitality ecosystem, there's a dynamic tango between sales and revenue management that, if executed poorly, can trip up even the most well-established brands. It’s a partnership of economic precision and human touch, and when they harmonize, profits soar. When they don't, the business feels the sting of missed opportunities, misaligned strategies, and money left on the table.
For hoteliers, synergy is critical not only during the Corporate RFP (Request for Proposal) season but year-round, affecting every calculated move to optimize corporate business and, by extension, overall hotel revenue.
Revenue vs Sales: A Tale of Two Strategies
Central to this is the stark contrast between how revenue management and sales approach the same revenue challenge.
You've got revenue drivers who speak the language of data, charts, and profit optimization, and sellers who are fluent in the dialect of personal connections and client needs. What can be a statistic on a revenue report to one, is the plight of a loyal customer to the other.
In a Perfect World...
In an ideal scenario, a hotel company’s strategy would seamlessly flow from the boardroom to the frontline, with revenue management providing rate guidance and sales steering a strategic course toward higher accepted rates and occupancy volumes. However, the real world often deviates from this script, hampered by various challenges and disconnects that threaten to erode the bottom line.
In the Real World: A Dissection
For Revenue Management
The core of revenue management lies in making data-based recommendations through rate guidance. This team is tasked with the pivotal responsibility of creating a strategy that not only boosts corporate rates but also ensures the right corporate base is secured to maximize occupancies. Achieving this necessitates a balancing act of several factors, from observed rate vs. competitive set and accepted rate growth to understanding the percentage that is negotiated.
- Are we targeting the right segments with our revenue strategies?
- Are we truly growing market share, and are we growing with the right accounts?
- How thick is our corporate base in the mix of business, and is it growing sustainably over time?
- How's our negotiated rate growth stacking up? What is our accepted rate performing vs competitors? What about same time last year?
Corporate & Hotel Sales
Sales teams, on the other hand, are the frontline architects of a hotel’s corporate business. Their concerns revolve around understanding the objectives for corporate business, navigating the complexities of the RFP season effectively, growing and maintaining customer loyalty, and fostering a negotiation environment that aligns with both their sales targets and the broader revenue strategy.
- What are the objectives for corporate business?
- Are we raising rates, or is it all about driving occupancy?
- Are we equipped to tackle the RFP season head-on?
- How many RFPs have been accepted?
- How many rounds of negotiations were required to seal a deal, and at what cost?
- How many RFPs have been accepted? Rejected? Declined?
When revenue management and sales aren’t on speaking terms, nobody wins – except maybe the competition. Rate loss, lower revenues from the business travel segment, and a slide in overall profitability.
The Reality of Rate Loading
One of the most tangible and time-sensitive issues is the ineffectiveness surrounding rate loading. This entails a complex process fraught with delays and errors, resulting in contracted rates not being available when needed, missing potential revenue. Does any of this sound familiar?
- Large corporate clients get the red carpet, rate loading for smaller accounts is often delayed by months.
- By the time rates are loaded, hotels have missed out on a quarter of potential business from the smaller accounts.
- Of the rates that are loaded, more than three-quarters of them aren’t even accurate.
- Negotiated rates are rarely, if ever, available at high-occupancy properties – even if the account has contracted last available room.
The dissonance between operational realities and contractual obligations can lead to the endgame you never wanted—a sold-out hotel that can't honor its negotiated rates, leaving both your sales team and your revenue managers twiddling their thumbs with frustration in the face of such an ironic 'success.'
The inefficiencies persist year after year, with rate loading figures barely fluctuating since the early 2000s! The solution isn't throwing money at more technology or hiring more analysts. It's simpler: remove your star players from antiquated processes, rally them around outcomes (revenue is a team sport!), and get off the hamster wheel that's become "the way things are done."
Centralize Process to Actualize Progress
Centralizing the RFP process is one way to mitigate these discrepancies and get the wheels of profit back in motion. This approach streamlines the RFP process, reduces errors, and makes rate availability a non-issue. Alignment from centralizing this process ensures that every stakeholder has a clear line of sight to the shared, ultimate objective.
Learn how centralizing the corporate RFP process benefits sales, revenue management, owners and accounts.