Commercial leadership from chaos

21 September 2021
The commercial leadership disappeared during the pandemic. Therefore, hotels laid off the commercial teams and let them leave for other industries. The way back is a solid commercial leadership with authority to make decisions and take action.

"Leadership from chaos" is the pan European revenue management event in Stockholm, London, and Rimini on 12 October 2021. It seems like many of the speakers will share what they learned during the pandemic and what they expect from the next couple of years. I sincerely hope that the pandemic gave hospitality people insights that will permanently change how commercial work is organized and executed in the industry. I will speak at a break-out session about five practical ideas on creating a high-performance commercial team by the end of the day.

Leadership

The leadership for the commercial work in hotels has been vague. The pre-pandemic version was at least three silos, marketing, sales, and revenue. In independent hotels, each one of them reported to the General Manager. In hotel groups, each silo had more people, and the head of each silo reported to the CEO. There were other ways to organize work, but rarely had a Commercial Manager full responsibility for all commercial work.

Commercial work is crucial for the success of a hotel and must be well structured and managed. The commercial department is one entity - not three or more silos. During the pandemic, hotels laid off many marketing, sales, and revenue employees. The short-sighted reasoning was that these employees were not needed when demand decreased (and everyone acted as the market would never come back again). Less (if any) people working in commercial roles in hotels creates an opportunity to organize the work more productively. The starting point is to hire a Commercial Manager that will lead the commercial team and report to the General Manager or the CEO. The ideal person for this role has superior leadership skills and extensive experience from commercial work in hotels.

Chaos

Chaos is, according to several dictionaries, a state of extreme confusion and disorder. Governments made decisions about restrictions, mostly about keeping a distance from other people that might spread the virus. However, companies within hospitality took immediate action to adapt to the unusual situation. In many countries, governments have given financial support to hospitality companies to ease the burden of the implications of the restrictions. As a result, most companies within hospitality have managed the pandemic well even though they have lost a lot of money. Very few are in a chaotic stage.

The real question is how hospitality companies can come out stronger after the pandemic. After the financial crisis, many hotel revenue managers panicked, lowered their rates, and opened their availability to all OTAs. The result was that it took forever to get the ADR back to pre-financial crisis levels. Fortunately, this time it seems like hotels have kept their rates on a higher level.

Another hot topic is market segmentation. The demand has shifted from some segments to others. As a result, hotels need to change the marketing mix and which audiences to target. For example, some hotels might need more marketing expertise and fewer salespersons to attract new segments. Other hotels might require more direct-to-consumer sales and less focus on room revenue optimization. It all depends on the destination, size, type, target groups, and other variables. All hotels are unique and need individual solutions.

These two reflections are general, so on 12 October, the ideas presented will be practical and actionable.