What needs to change in commercial work in hotels?

03 February 2022
Hotel people are masters in finding excuses why something did not work out as planned or expected. One example is that we have all tried to blame the weather for explaining the unfavorable variance in revenue. Other examples are late cancelations, governmental restrictions, lack of staff members, sick leave, calendar effects, new supply, and endless other explanations. Fortunately, hotel people can never be held responsible for all these "Force Majeure" that happens all the time. We are all running like hell in the hamster wheel doing our job, and there is nothing we can do to prevent bad things from happening. At least, we can laugh a bit about how creative we are.
However, it is no joke that the pandemic has been devastating for travel and hospitality. Two years ago, it was impossible to predict the impact of the pandemic, primarily due to difficulties understanding how long it would take until it was over. However, everyone agreed that the pandemic would be over at one point in time. Based on the actions, such as laying off people, the industry seemed to agree that the pandemic would impact revenue for at least six months. Consultants, benchmarking companies, and economists predicted early on in the pandemic that the recovery for hotels would take years. There has certainly not been a lack of data and predictions when making decisions. A hotel company can choose to "wait and see" or "prepare for the future." It is hard to reach and influence the "wait and see" group, so this blog post is for the hotels that want to prepare themselves for the future.

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Re-organize commercial work

The time is right to eliminate the silos between marketing, sales, and revenue. From now, the commercial department is one entity reporting to the general manager or company CEO. Gone are the times with three independent departments reporting to the next level. The challenge is to appoint the head of the commercial department and get the other roles to accept that they do not report directly to the boss any longer. It will take some time to build the team and practice teamwork. Part of organizing all commercial work in a more extensive department is also for the general manager or the company CEO to let the head of commercial take full responsibility for acquiring guests and customers to bring in the total revenue to the hotel.
 
Making plans, working as a team, and getting organized for the future is perfect when the business is slow. Preparations to capture the demand when the market comes back are essential to success.

Re-think the marketing mix

The marketing mix definition is simple. It is about offering the right product in the right distribution channel at the right time and at the right price. The marketing mix components are still the same, but the content has changed dramatically. The guest/customer does not want the same offering as before the pandemic. They prefer other distribution channels, and the booking window has changed. Finally, the price sensitivity has changed. On top of that, the segment mix has changed, so a hotel will get fewer guests from some segments and need to find new target groups to compensate for the loss.

Implement new systems

The old systems might have worked well pre-pandemic, but when you go from silos to teamwork, old solutions will not support the new way of working. Look for new systems and tools that encourage collaboration. Ideally, the team has access to the same data to relate to a single source of truth and make decisions faster and more accurately. During the pandemic, digitalization accelerated and enabled hotels to monetize their valuable data or use it to make better decisions.
 
If the hotel's current systems are older than five years and still on-premise, it is time to re-visit the system strategy and consider moving everything to the cloud. The modern solutions are user-friendly, easy to manage, and the total cost of ownership is lower. You will probably pay more to the system provider, but you will save more on other expenses and gain other non-monetary benefits. In addition, many technology providers have speeded up development during the pandemic to be ready with new features that the hotels will need in the future.

You can never make up for lost time

The hotel industry is well aware that an unsold room is lost revenue since time has passed, and the revenue opportunity is gone forever. The "wait and see" group has lost the chance to prepare for the future, while the "prepare for the future" group is better prepared now than ever before. There is still time to prepare, but the window of opportunity is shrinking. When the demand comes roaring back, hotels will be so busy with guests that there is no time to make any changes.