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Blog Article

The Davidson Difference -Revenue Management with Kathy Hood and Harry Carr

Jul 07, 2021

A properly developed and actionable Revenue Management plan can be the catalyst of stronger revenue gains and higher profitability when delivered through an efficient and effective process. Revenue Management is composed of selling the right room, to the right client, at the right moment, for the right price, through the right distribution channel, with the best cost efficiency. As a concept, revenue management began in the airline industry, where companies found ways to anticipate consumer demand and introduce dynamic pricing. However, it is applicable in any industry where different customers are willing to pay different prices for the same product, where there is only a certain amount of that product to be sold, and where that product must be sold before a certain point in time. The concepts and principals of revenue management have remained roughly the same since its inception. However, the volume of data now available through brand revenue management systems, brand data warehouses, 3rd party business intelligence platforms, and the evolution of artificial intelligence have made the revenue management process more granular and allowed our systems and leaders to pinpoint a specific price point to charge for a king size bed room, with an ocean view balcony, while only allowing a four night stay or greater with arrival on Thursday, and only bookable via our direct website, no 3rd party bookings. As an ever-evolving discipline, Revenue Management is now more Business Development than pulling levers; we not only have to predict consumer behaviors and trends to create a strategy, but also need to mine for and pursue new strategic opportunities through distribution partners and technology. More and more revenue leaders are embracing the marriage of traditional revenue management, e-commerce marketing, and vertical distribution management.

Davidson Hospitality Group is unique in how we embrace revenue management and how our diverse portfolio allows for cross utilization of resources and strategies. Our portfolio reflects a broad spectrum of different brands and independents which adds to the complexity of our hotels and our knowledge base. If an owner wants an operator in the upper-upscale space that focuses on group and catering business within the branded, independent, and resort space, Davidson Hospitality Group should be first on every owner’s list for consideration. We encourage our Directors of Revenue Management to take risks, test new ideas and push the envelope. This is how we identify best practices. As we develop those best practices, we share them across all brands. We empower our property teams to apply best practices in a way that fits their unique hotels and builds on a culture of trust and loyalty within the organization. Our results are a testament to that culture. One of our favorite core values within revenue management is, “Stay Hungry, Stay Humble.” We celebrate successes, but we don’t stop there. We know our competition is at our heels, and our work is never done.

Total revenue management is a major component in our success. Total revenue management takes into consideration dynamic pricing of all revenue streams based on demand. These revenue streams include rooms, food and beverage, banquet and catering, spa, and other revenue. Embracing rational pricing is paramount to our overall success. Rational pricing drives more business to retail channels by enticing consumers to buy BAR (best rate available) through our hotel websites, which is far more profitable than engaging with third party channels. We focus on metrics such as Effective Rate Index, Premium Mix, and TrevPOR (total revenue per occupied room), all of which drive the most profitable revenue to every property regardless of market, by clearly understanding distribution channel costs.

Collaboration between the corporate level team and our leadership teams is where we excel. This became especially obvious during COVID as our leadership teams took on expanded roles within operations. The corporate team stepped in to provide support in establishing COVID relaunch plans and operational standards to present to ownership groups. We established new forecast evaluation tools to better understand opportunities and risks in the present rather than using historical data. In addition, we have developed new dashboards to identify opportunity hotels to help drive our focus of support. We developed 2022 pre-planning tools for establishing a forward-looking budget plan that makes sense. Our corporate revenue management team attends several revenue meetings with each property every week to assist with strategy, collaborate on new ideas, and share best practices we have gathered from across our portfolio. We also spend quality time with our on-property revenue leaders to drive effective analysis from several industry platforms such as Amadeus Hotelligence, OTA insight, etc. Utilization and analysis of this data ensures the correct strategy to drive more of a premium mix versus our competitors. Davidson also encourages our revenue leaders to communicate across properties, with regular meetings where our teams can collaborate and share ideas with their peers.

Our success roadmap also includes the ability to source the best talent, pairing them with the correct leadership teams, providing onboarding and training to the Davidson operating standards, connecting our teams with peer resources as needed, and establishing goals. The result has been a well-established tenured group of revenue and sales leaders who believe in and represent the culture and DNA of Davidson Hospitality Group. This culture lives and breeds success.

Our pillars of revenue management are built on a cutting-edge approach, solid talent, consistent corporate engagement, and the ability to deliver results. Our approach has allowed us to consistently beat our competitors in growing share for 18 consecutive years. There is no other management company out there that can match this success metric. Our Revenue teams wake up every day with one goal in mind… BEAT THE COMPETITION!