This is a guest post by Patrick Bosworth, CEO of Duetto, a San Francisco-based revenue strategy technology company.
While revenue management and distribution discussions have been buzzing at the top in the United States for the past few years, I am certainly seeing the same movement here in Asia now. I read a recent story that quoted Colman Ho, vice president of group marketing for Century City Holdings, a real estate company, telling the audience at the recent WIT Hospitality conference in Hong Kong that hoteliers have to now “think beyond real estate.”
What’s happening in Asia mirrors the evolution of distribution and revenue management in the United States. At many of the major real estate and investment conferences, the hot topics today during the main general sessions are not about mergers and acquisitions or real estate valuations. Rather, distribution is usually one of the first things talked about.
In the past, hotel owners and real estate executives worried more about renovation costs and other investments to improve their physical investment than how rooms were booked or priced. Today, that is changing and it’s not unusual to hear hotel company heads and even real estate executives like Ho talk more about distribution costs and OTAs than cap rates or lenders.
Owners are waking up to the idea that the value of the hotel, or its potential, can be measured by examining what’s under the hood. In fact, looking at revenue management data gives hotel owners important insights and even help answer questions about when to renovate, reposition or sell. Real estate investors now understand that revenue management has to be a key part of their decision making.
But they could be digging into so much more, and in many cases, the data is available. It’s all a part of the current revenue management function, which is really revenue optimisation and includes both marketing and distribution disciplines. Smart executives are realising that adopting a holistic revenue strategy that brings together sales, marketing, revenue management and all revenue-generating functions is the surest way to drive RevPAR growth and improved profitability.As part of the pro forma, most real estate investors are doing some level of segment analysis now and looking at historic data and whether the asset is drawing the right customers and enough of them.
Meanwhile, challenges around distribution continue to grow. At the WIT conference in Hong Kong, Ho and other panelists discussed how several developments — including the consolidation of OTAs, the blurring of lines between online distributors and metasearch players — have made it more difficult for hoteliers. The continued development of technology has allowed these players to widen the gap between hoteliers and the end customer.
So what does all this mean for hoteliers? Immediately, they need to increase their capacity to control rates and inventory and increase their direct share. According to PhocusWright, OTAs in Asia have dominated hotel distribution in 2014, snapping up 69% of all bookings.
As customer acquisition costs continue to rise, driving direct bookings becomes a bigger priority. A moderate increase in revenue can translate into a massive increase in profit. That’s why savvy real estate investors and management companies are paying attention, and one of the many reasons the leaders of these companies are interested in what used to be just revenue management.
The future of this industry lies in the convergence of marketing and technology, in a more integrated revenue strategy that focuses on optimising demand and measuring overall profitability. To be successful, this approach needs to encompass sales, marketing, distribution, revenue management, loyalty and all facets of generating revenue. There must be a common goal among those departments, and it has to start at the top.
See original article at http://www.webintravel.com/distribution-becomes-top-mind-hotel-investors/