Excerpt from CoStar
Hidden Fee Laws, AI Adoption Among Obstacles Revenue Managers Face
The hotel industry is in a “new normal” environment, not necessarily fully recovered from the pandemic but distanced from most of the chaos that came with it. As the travel segments recover at different paces, it’s been a challenge for revenue managers to dig their feet in and forecast for the future.
In a roundtable discussion at HSMAI’s Commercial Strategy Conference, Erica Lipscomb, senior vice president of revenue strategy at Crescent Hotels & Resorts, said destination resorts recovered faster than other properties but are now failing to hold on to rate as occupancy continues to decrease. After a broadly challenging first quarter for the hotel industry, Crescent is targeting the segments that aren’t fully back to 2019 levels.
“We are looking for what are those segmentations that have not recovered, and then how are we leaning in heavy on those to make sure we’re spending our marketing funds in the right place,” she said.
Group travel is one of those segments that hasn’t fully recovered. Priya Chandnani, senior vice president of sales, revenue and distribution strategy at Sage Hospitality Group, said a consistent base of strong group travel can protect transient rate efficiency, but if you lean too hard into it, transient rate will erode along with its demand.
That group travel may help to build occupancy, but it won’t necessarily be at the desired rate as it replaces leisure travel, said Linda Gulrajani, vice president of revenue strategy and distribution at Marcus Hotels & Resorts.
“It’s all about the mix of business that’s hindering rate from growing as much as people hoped it would — or even maintaining rate because as leisure’s changed and group or [business travel] has replaced it, it’s just not coming in at the same rates,” she said.
The return of business travel has varied from market to market, Lipscomb said. What has changed, though, is the ability to model a successful market to another similar market.
Biggest Obstacles Ahead
California’s new laws targeting hidden fees are among the biggest challenges hotel revenue managers will have to account for moving forward, said Jack Easdale, chief commercial officer at By The Sea Resorts. Those fees account for a significant amount of top-line revenues, and while the law originates in California, there’s an immediate impact on all other states and a lingering impact of other states across the U.S., with the potential for more to enact similar laws.
If every property were to be affected by this, it wouldn’t be an issue necessarily, but that isn’t likely to be the case, Easdale said.
“If everybody does it, if everybody comes up, theoretically you can maintain your existing revenues. I just don’t see that happening,” he said.
Click here to read complete article at CoStar.
