Josiah: In my recent state of the hotel industry research, the number one challenge hoteliers are facing is driving revenue and profitability. It’s tough out there in many regards, but today’s guest has answers on how to drive financial performance for your hospitality business. Judith Cartwright is the founder and managing director of Black Coral Consulting. She’s the former senior vice president at Kertzner International, and in this episode shares practical strategies that you can use to navigate whatever is ahead this year. Judith’s advice and perspective, Judith’s advice and perspective that she shares in this episode was shaped in part by her work leading revenue strategy for iconic brands like Atlantis and One and Only, where she created some very groundbreaking, innovative revenue optimization models. And now in her work as an advisor and consultant, sees a lot with regards to revenue strategy. So keep listening to hear what’s happening in the market right now, how to differentiate your property or your brand so that you can thrive in both good times and bad. And most importantly, ensure that your revenue flows all the way through to the bottom line. There’s so much actionable advice here. So let’s get into it.
Josiah: Judith, thank you for taking the time. I have enjoyed our conversations and learning from you and what you’ve done. To timestamp this, we’re recording this at the end of January, 2025. I know the industry moves quickly, but over the past couple of months, I’ve been doing research around what is going on in the hospitality industry. Number one challenge was that hoteliers are finding it really tough to drive revenue and drive profits. I’m curious from your perspective and your work, are you seeing and hearing this as well in the industry now?
Judith: I’m hearing the same. It really depends what region of the world you’re in and then also what type of property you have and how you manage the various business units than to run it on a profitable side. Some hotels, all hotels, they go through a certain seasonality. They have their peak season, their high season, and then they have their shoulder days. And then what we find very often is that if the peak season and the high season is not managed correctly, most hotels that do about 70% of their entire profits within three to four months. Some hotels that do it within six months, and if that isn’t optimized, then the shoulder season days often they run at a loss. they cannot compensate what you missed during your high season and your peak season. So the stronger your strategies are from a top-line, you know, revenue optimization, commercial strategy, activation perspective, the better. And then it also then depends if you’re running a ultra-luxury hotel, destination resort, if you’re running a city hotel, and how the various demands are in the destination that you’re running your property.
Josiah: Well, let me ask you this. So I feel like driving revenue has always been a challenge. Some of the factors that you allude to, whether it’s seasonality or difference in product types or where you’re based in the world, that has always been there, right? I guess, is there something going on now in 2025 that is uniquely challenging that our listeners should be aware of?
Judith: It’s staying ahead of the curve, staying innovative and staying competitive. That’s really the key. You know, when you have things where the bubble bursts or when times are tough, the first thing that a lot of hotels do, they just drop the prices. And then if then one of your hotels within the com set drops the prices, the next hotel follows, and the next one, and the next one, and then you just go into a downward spiral. which really doesn’t help. If you focus on why I should come and stay with you, so if five hotels were on the same stretch of road, on the same beach, it doesn’t really matter what product, if it’s three, four, five, so ultra luxury, and everybody was charging the same price point, why would I come and stay at your hotel? And that really needs to be crystallized out. The end consumer is looking for experiences. Live tourism has become, you know, one of the latest, I guess, industry words now and live tourism has always been around. It’s just now that it’s a thing and people talk about it. People realize how much more accessible certain destinations are. So if there are, you know, concerts, like, you know, when you look at the series of Taylor Swift and what impact that did have on certain destinations, happy days, every charge is at a premium. But then what happens then when that concert isn’t happening anymore? And then you always go then into those shoulder days. And how do you really optimize those? And when I say optimize, it doesn’t mean that you have to run 100% occupancy. If there is demand for 50%, how do you optimize the 50%? If there is demand for 30%, how do you optimize those 30%? And the same thing that if there’s demand for 70 or 80%. And how do you really make sure that you then carry as much profit as possible down to the bottom line?
Josiah: What I like about your advice is it’s both timely and timeless. You know, we’re recording this at the beginning of 2025, and regardless of where our listeners are finding themselves in the moment, I always want these conversations to be useful for years to come, right? And hospitality is very cyclical. There’s good times and bad times. What you describe, though, of building differentiation into your business is so important because in good times, you have more pricing power, right? And in bad times also you’re separating. And so I think both of those are true. Both pieces of your advice don’t get caught in this cycle of cutting prices, but also you have to create this experience that is worth paying more and it’s different. So you can’t just comparison shop and say all these five hotels in this area are the same.
Judith: No, exactly. Absolutely. And then it’s really then, you know, what is your storytelling? What do you take on to social media? And social media has become so much more important these days than what they were three years ago, four years ago. And back then we thought, you know, social media was really important. But it’s just really gone to a very different level and also what the end consumer is looking for. When you look at now certain trends that are happening, you know, where hotels can stay ahead of the curve is then also the piece of longevity, fitness, wellness, health. And that’s where, you know, some hotels now they’re jumping onto the trend. and others are still stuck in outdated brand standards. And that’s also one of the key challenges that a lot of hotels have, is if the brand standards are outdated, it leaves you very little room for innovation. So for example, when you look at fitness. Most fitness or gyms that you go to in hotels, they’re boring. But the end consumer has changed so much, demanding a lot more now from a fitness, you know, from a fitness perspective. And yes, you have Equinox, you have Syro, etc. But those are a few around the globe, but not the trend. So when you look at the vast majority of hotel gyms that are available, The brand standards, a lot of times they mandate, so if you have a 100-key hotel, you have to have a 60-square-meter gym. And that’s really then where it starts. So then the gym becomes an amenity, it becomes a cost center. From an owner’s side, you don’t want to invest a lot of money because it doesn’t generate any profit. From a hotel side, you know that you have to have a 60-square-meter gym, so then you tick the box. But the end consumer has since then evolved And that’s something where Hotelsnow can really start thinking about, okay, so how can I be more innovative on that space? And how do I set myself apart from the competition? That if there is a business traveler, if there is somebody going on vacation, and you know that you have a nice gym, then I might choose you over the competitor that might be charging $20, $100 less, you know, it doesn’t really matter what the price point is. But with a whole gym piece on seeing that as an amenity, And then you have, or then also with the wellness area, and then you have the director of spa who doesn’t join until three months prior because that’s what the pre-opening budget says. And then somebody in procurement chooses the gym equipment, who doesn’t understand fitness and wellness, and chooses that from, you know, one of the most popular gym brands that is out there. But not every gym brand is amazing in every single item, you know, when it comes. It’s the same thing like when you talk about property management systems, CRS systems, you have different systems that are strong in different areas, and that’s the same thing for gym equipment as well. And then you expect the director of spa and wellness to run the gym and the spa facilities that have been designed. Then the whole program has been chosen by somebody else. But then the expert that comes on board then, you know, has this ready-made box and is expected to run this as not just an amenity, but also as a profit center. And it has the least amount of revenues that comes to us, you know, and then it always becomes a cycle and then you just have your typical spa, you have a typical gym. And, you know, on that side then alone, there could be so much more innovation happening.
Josiah: I’m hearing takeaways for people regardless of where they find themselves. If you’re a developer creating a new project, it is bringing people, budgeting for experts coming in earlier in the process so they can select the right things. I’m here if you’re a brand or management company thinking about your SOPs or your brand standards to create room for innovation like this. And then for people working on property to think about kind of how might I innovate within the constraints that I have within the space, within the brand standards, there’s probably something you can do. I’m curious if a hotel resort or hospitality company comes to mind that you’ve seen over the past year do something interesting in this regard of differentiating their property through the gym or through their fitness offerings.
Judith: It’s the, in terms of, I mean, there are quite a few companies that have done, you know, nice, nice areas and that are starting to go onto the innovative track. But what I hear a lot from the industry that, you know, when they talk about innovation, they’re rebranding the spa, but they’re not necessarily taking that 360 degree approach on what needs to happen. Or then you have treatment rooms that are converted into longevity rooms. but it’s a lot of tiny touch points that are being, you know, the service is being scratched. But there is nobody really out there that you can say, okay, they’ve really cracked the nut on what needs to happen. Equinox, they come from a gym background and they’ve done a great job then also integrating the hotels. Syro is a new brand and they have done a nice job on, you know, having the hotel together with the gym and the fitness. But then when you go back to, you know, the longevity piece, and then also then the gym not being the amenity, but actually, you know, clip it on the head around, the hotel could be the amenity as part of the wellness in the gym, a bit like Shenoda’s in Vegas. You know, for them, their core center is then the well-being, the wellness area, the whole 360 degree. And for them, the hotel is the amenity. So they flipped it around. But there is a lot more opportunity out there in terms of what hotels can do and what the end consumer is looking for. There is a movement, just a much, much longer way to go.
Josiah: Okay, so it’s one thing to think creatively, drive demand, differentiate, drive revenue, all very, very important things. It’s related, but not the same thing as driving profits from doing that. And how can our listeners think about operating this way that you’ve described in a way that also makes sure that that increased revenue is flowing to the bottom line and they’re driving profits from their hospitality business?
Judith: is understanding what your costs are and how much each area is costing. And then that will help you then to assess how much you need to charge. When you do the benchmarking, it’s almost like a top to bottom approach and then a bottom to top approach. So if you look at how much you’re benchmarking and what your price point, you know, should be or could be, and then you run down to the feasibility to see, okay, what is actually the profit line? And then sometimes you have areas where you say you have something that is an amenity and that’s a hook, it’s a talking point in order to get the crowd in and to get the crowd interested. But then you have other areas where you can then really drive the revenues that then also go down to the profitability. And it’s when you then dissect your hotel into different sections and every single offering that you have, so whether it’s restaurants, whether it’s your spa, whether it’s your rooms, and you almost take the airline approach. You know, you have your private jet customer, you have a first class customer, you have your business class customer, and you have the economy class customer. And in which area in the hotel speaks to what customer? is, you know, if your entire hotel speaks to the economy class customer, then you set the strategies accordingly, you have the pricing accordingly, and you need to manage your costs in order to achieve your profitability. If you have different sections, and if you take, let’s take a high energy restaurant, whether it’s Zuma, whether it’s Nobu, or, you know, a sushi, samba, etc, etc, you have different areas within the hotel that have the prime seating with a minimum spend, that could be a first class customer. And then you have the medium spend, that’s your business class customer, and then you have it around the bar, that might be your economy class customer. And that’s the same analogy then also across the hotel when you look at your inventory. You know, when you have your high-end villas, you have your suites, you might have your club floor, or you have your entry category. And based around that, you really have to set your strategies accordingly, versus then just going after the masses, the volume, and then upgrading people into an experience that they haven’t actually bought.
Josiah: Can I ask about what our listeners can do to prepare themselves to operate in this way? Because I’m hearing you describe this, it sounds strategically important, but behind the scenes, what needs to be true? Is there technologies or processes that make it easier to view the operations, the costs, as you’ve mentioned, of a business? What do you advise your listeners in that regard?
Judith: Yeah, it’s having the right team in place and really building the culture around where, again, we have one gatekeeper and that’s usually somebody in the revenue management department. And then that gatekeeper then is almost like orchestrating with the various functions on where the focus should lie. how much money needs to be spent to activate certain markets, certain areas, but then also what technology is needed. And that really depends on your business. But you could have the best technology in place if it’s not set up correctly and if the user doesn’t understand it, then the technology isn’t going to help. But there are a lot of business intelligence tools that are available now, revenue optimization tools, amazing CRM tools, analytics across the online platforms that you have, where you really can understand the customer behavior, how they book, how they buy, what your infrastructure is, and also from a distribution perspective. And it’s really understanding that, challenging one another to see how that can be leveraged, then also then to the next level. And just to give you a very basic example, it’s not like that, let’s say the end of year needs to be the focus, but at the same time, you’re advertising already for Easter. You know, just like as an extreme example, it really needs to be in sync. Or if, let’s say, if the fillet is the item that you want to sell on the menu, you cannot be advertising for the sea bass. So it’s really the strategies that need to be aligned across the various departments. And that’s why these strategic meetings are so important. And then for the functions across sales, marketing, PR, finance, operations, and revenue management to really be in one room and to drive that forward together from a decision making perspective.
Josiah: That’s fascinating. So you listed a bunch of technologies, but you need to start with the people, the culture, make sure you have the tools to do it. And then I’m hearing this meeting becoming critical to align different team members, different functions that you’re operating in this way. I wondered, Judith, if we could, to bring all of this to life, if you could walk us through a, maybe a recent project or a thing that you have, an organization where you’ve seen has adopted some of these principles and what did that take? Walk us through that story.
Judith: I can’t name any names, but in terms of if it’s an existing property, then the best way to do is to do a gap analysis. You see where the team is, where the technology is, where the bottlenecks are, and then from there you go then into a project plan and then you really see what areas can be taken to the next level. But you do that collectively with the team. So when people hear a gap analysis, then the first thing that comes to mind is, oh my gosh, peer factor. Somebody might be pointing the finger. But when we work with hotels, we actually take the teams onto the journey. We listen to what they have to say. And then collectively, we help them to implement what needs to be implemented. And then we also then measure the success once that implementation has started. If it’s a new project, a new hotel, the best thing that somebody can do is really to start working with that expertise from day one before the design phase even starts. Because it’s, you know, from a design space and again, when you want to take a look at how profitable each square meter, so that’s more from an asset management side of things later on, you want to make profitable, but then also what technology do you need and why. And there is a lot of amazing technology out there, but it always depends what the needs are, what destination you’re in, what your business mix is going to be, and you really have to assess with the team what is needed. And from there you build your standards and procedures, you get the teams trained, you have your critical path, and then you open up the property then after you have launched your commercial plan. And all that planning is so important. A lot of times hotels, they get a lot of expertise in, but then you have to be very careful that if you don’t have somebody who’s holding it together, you have silos that are created. And that’s just a natural, and that’s not to anybody’s fault, it’s just because everybody is so busy, has their own to-do list to do, and then people, they forget to speak and to communicate, the silos happen, and that’s when certain bottlenecks start creeping up.
Josiah: So interesting. Thanks for walking us through that. I will include links in the show notes where people can learn more about you and your work. But before we go, Judith, is there anything else on your mind? What are you thinking about or excited about these days?
Judith: In general, just like the industry, it just keeps evolving and it keeps going from strength to strength and I’m extremely proud that I’m part of it. In 2024, I launched an e-book on asset management with a commercial lens with some top tips in there on how you can really optimize every single business unit that the listeners can download with our compliments from our website blackrollconsulting.com. And then for 2025, you know, travel is at the forefront, you know, from anybody’s mind, really. And there’s just so many destinations that are there to explore. And I’m really glad that I’m part of that industry.
Josiah: Well, Judith, thanks for taking the time to talk with me today. I’m really excited to think about, you know, what this looks like this year to see what our listeners will be able to do using some of these strategies. So I’ll include, again, a link in the show notes where people can learn more about you, your work, and this e-book that you mentioned. Thanks for taking the time to talk today.
Judith: Thanks so much for having me again, Josiah. It was a really great pleasure.
