Despite years of discussions about the drawbacks of organizing marketing, sales, and revenue in silos reporting to different leaders, very few hotel companies have made any organizational changes until now. It seems like the pandemic triggered the willingness to bring marketing, sales, and revenue together in a commercial organization.
Working in silos often leads to suboptimization and waste of time. This way of organizing commercial work in hotels proved to be very inefficient. Many hotel companies downsized their commercial teams when the demand disappeared. Best case, a few people stayed and barely managed commercial activities, if any at all. Hotels have realized that they cannot afford the same number of people during the recovery. Fewer people need to become more cross-functional to handle commercial activities. The driver for this reorganization is, unfortunately, only cost savings. Instead, the primary reason for bringing all commercial roles together in a team should be to increase productivity in attracting guests and revenue. Saving on costs generates 1x in profits, while high productivity generates 10x in profits.
Qualities in a commercial leader
Many talents have left the industry for other equally or more interesting jobs with much higher compensation packages. The hospitality industry faces a scarcity of experienced people and probably needs to extend the reach to find talents outside the industry.
Revenue managers think that the commercial manager role is theirs since they are the only ones familiar with data-driven analysis and decision-making. They all believe that commercial strategy in hotels is a science with a little bit of gut feeling based on experience. The expert, however, might not be the best leader and would instead have a more critical role as an expert providing analysis and expert advice to the whole team.
Marketing, sales, and revenue people have very different personalities. Marketing is associated with creativity and media, sales with people and relationships, and revenue with figures and analytics. The commercial team leader should probably have an extrovert personality and be skilled in building lasting relationships with owners, customers, employees, and other stakeholders. A leader has to ensure that the team moves in the right direction and encourage collaboration and communication. A revenue manager with people skills would be the perfect fit. Otherwise, a person with a background in marketing and sales would often be a better leader of the commercial team.
Organize for flexibility
There is no best practice on organizing the commercial work in a hotel company operating several hotels. All hotels have different needs depending on the type of hotel, facilities, location, target group, and other variables. Some roles will benefit from being centralized, and some functions will be more productive when placed on the property. Build the structure based on productivity, not on the principle of centralized or decentralized. Keep the overall objective - attract guests and capture revenue - in mind when setting up the organization.
The first role to hire is the commercial manager that will have complete responsibility for all commercial work and the top-line revenue in the hotel group. The manager might be the only commercial role at the beginning of the recovery in a small hotel company. When demand increases, the next step is to add the needed roles to the team. The company should carefully evaluate every addition to the team from a return on investment perspective. Hiring a sales-, marketing, or revenue person is a significant investment that takes at least six to twelve months before it pays off. There is also always a risk that investments in people never pay off.
Instead of hiring people, a more flexible and affordable idea is to extend the team with external experts as freelancers for a certain number of hours or a specific assignment. Working with freelancers is a great option when it is difficult to forecast how quickly the demand will return.
For more ideas, download the white paper "Create a High-Performance Commercial Team."
