Success in hospitality is often determined by how well a property can plan for what’s to come, but how can hotels hope to navigate the uncertainty of today’s markets? The first step: Prepare for a downturn but live in the moment. The hospitality industry must stay aware of profit-increasing incentives and cost-cutting measures without negatively impacting service delivery and guest satisfaction. This requires walking a fine line between minimalist operations and classic hotel service, and hotels rely on technology to strike that balance effectively.
Successful hoteliers are tapping into practiced contingencies and time-honored playbooks to preempt the pain of any impending downturns, but they aren’t doing it alone. Operators across all chain scales leverage revenue management, guest engagement, and property controls to react to unpredictable scenarios in real time. These solutions rely on advanced data analytics to stay vigilant, allowing operators to react to new information and quickly adapt by adjusting pricing and inventory strategies. It starts with “revenue management” data, but the potential impact extends to all corners of a hotel.
While uncertainty is an unavoidable factor in any market environment, top-tier revenue management tools use sophisticated data analytics to deliver responsive, nuanced demand forecasts that rely on data—not feelings—to drive optimal revenue results and inform operational plans.
There is no silver bullet for maintaining profitability when consumer confidence is shaken. Instead, hotel leaders should consider using technology in three strategic ways:
Risk Assessment and Mitigation
A skeptic’s market can be a dangerous playground for hotels because business owners must always expect the unexpected, often by getting ahead of their guests’ thought processes and adjusting the stay experience ahead of time. This is easier said than done, so agility and ingenuity are often as crucial as planning should occupancy pull back. However, there are a few longstanding risks hoteliers—and the hotel industry as a whole—must avoid making.
First, operators must find ways to minimize the impact of discounting strategies on market perception during down periods by wrapping them into bundles or loyalty rewards. It can be difficult for business owners to regain lost ground once consumers see prices pull back, and it can lead to a domino effect where rates crash to the floor alongside consumer confidence.
Additionally, operators must reconsider their technology stack and how their suite of tools helps preserve their bottom line without compromising. Advanced revenue management technologies can assist hoteliers by factoring in risks like cancellation and rebooking behaviors to help mitigate challenges with overbooking and room inventory optimization.
To access these capabilities, hotels must network their revenue management system with property management systems to automatically implement and adjust these strategies on the fly based on new information. Automation is the key to effectively mitigating the risks of uncertainty, as it is often too challenging and demanding for staff to react to new insights from revenue management data manually. For instance, an overbooking strategy guided by automated controls and advanced demand forecasting allows hoteliers to optimize occupancy and revenue each night, but if applied manually, a poorly managed strategy can lead to disastrous results where a property is overcrowded, and both staff and guests are let down.
Dynamic Forecasting Supports Long-Term Planning
Having just weathered a few significant recessions in 2008 and 2020, hotels have ample information on how markets recover from disruptions. We know that hotel leaders can expect to be pressured to think short-term during uncertain times, but poor decisions made in the name of short-term gains can penalize your property over time.
Instead, hotels must find the strength to think long-term when the future is still unclear. Hotel leaders can do this based on dynamic modeling of their property and its competitive set, enhanced by up-to-date information delivered through machine learning and automation. Operators committed to using technology like this to adapt to long-term shifts in the market will have a competitive advantage over those that don’t.
Additionally, hotels tend to stop experimenting with services and offerings when times are uncertain. Doing so at this stage would be a significant misstep for the hospitality industry, which just began a renewed effort to expand revenue-generating spaces beyond the guestroom. These efforts must continue, as food and beverage, spas, golf offerings, unique rooms, and bespoke experiences are a core element of the hotel experience as a growth offering.
Rethink Current Models Using New Data
With the industry shifting as rapidly as it does, hoteliers must dial in on the data that specifically impacts their market segment and tune out the rest of the noise. Owners and operators benefit from relying on data when their personal experiences fail them. During turbulent periods, this could mean dispassionately analyzing current trends and using new information to solve problems rather than relying on personal judgments.
Hotels must be watching for major market shifts alongside opportunities to grow incremental revenue wherever possible. The more granular the data, the better. Pricing and inventory decision making must be flexible yet targeted based on actionable information drawn directly from the hotel revenue management system. If hotels can adjust their thinking to focus on growing their overall business mix rather than chasing individual revenue targets, they stand to create the foundation for long-term profitability.
Ultimately, hotels want to plan for scenarios, not just forecast for short-term gains. This is how hoteliers use technology to take back control of their destiny and break free from the cycles of uncertainty that have restricted their growth.
