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HOTEL Yearbook
FORESIGHT AND INNOVATION IN THE GLOBAL HOTEL INDUSTRY
SPECIAL
EDITION ON

2014

S

DIGITAL MARKETING

www.hotel-yearbook.com

This e-publication may be ordered online | € 14.50

ISBN 978-2-9700896-2-9
SPONSORED CONTENT: REVENUE STRATEGY

Moving from
revenue management
to revenue strategy
by Patrick Bosworth i Member of the HSMAI Revenue Management Advisory Board and HSMAI Foundation Board of Directors

The hotel industry continues to see revenues bleeding away to intermediaries – and now to “metamediaries” as well. This
wake-up call from Patrick Bosworth, CEO and co-founder of San Francisco-based Duetto, will help hoteliers see that they
must take steps to strategically regain control of their net revenues – and they must do it now.

You don’t have to be a professor of economics to realize the
industry is nearing an inflection point. Industry-wide revenues
continue to increase, but commissions paid to distribution
partners are growing twice as fast. In some cases, customer
acquisition costs are as high as 40%. If hotel owners can’t
regain control of their bottom line, one of the most lucrative
industries could join publishing, music and the airlines on the
list of industries forever altered by the Internet.
Revenue management—a field that is vital to the success of
any hotel—is no longer enough. A new revenue strategy is
critical for hoteliers to survive and thrive in this new world of
not just intermediaries, but now metamediaries that are taking
a bigger cut of the action. This strategy must integrate revenue
management and marketing and take advantage of all the
tools and technology available.
Times have changed
When Marriott took a page from American Airlines’ yield
management in the 1980s, the Internet barely existed. Expedia
was still a decade from launching, Mark Zuckerberg was just a
baby and Google was 20 years from changing the world.
Think about how customers booked hotels back then. Think
about how it’s done today. How many bookings today are
processed or touched by others? Even the most profitable
customers visiting the hotel’s website to book are likely first
14

HOTEL Yearbook 2014 special edition on DIGITAL MARKETING

visiting other sites, more than 10 by some accounts, and many
of those are getting a piece of the pie. In the case of Facebook
and Apple, it’s believable (check the patents), if not expected,
that those sites will soon be even more involved in the hotelbooking process and taking more money from hoteliers.
Very little today constitutes a “direct booking,” and tomorrow,
it will be even less. The Internet, cloud computing, open
source software and mobile technology have changed the
industry for good. The distribution and data science side of the
business has become far more demanding, with new channels,
social media and one-to-one marketing.
Yet many, if not most hoteliers today still use the same revenue
management systems and strategy employed decades ago.
Best-available-rate pricing is no longer acceptable when open
and dynamic pricing is a viable option. Managing (and pricing)
to meet budgets and mistaking inventory management
for revenue management are costly mistakes that can’t be
made with today’s thinning margins. If the right segments
of customers aren’t first understood and defined, and then
yielded independently, money is being left on the table. Why
don’t most revenue management systems track customer
behavior and take into account web-shopping data that could
help get a clearer picture of price elasticity?
About Duetto	
Duetto provides dynamic, intelligent revenue strategy solutions
to the world’s leading hotels, allowing them to maximize profits
through superior, actionable data to better manage pricing,
revenue and business mix decisions. Leveraging a cutting-edge,
cloud-based architecture, combined with a feature-rich product set,
Duetto transforms the way hotels price and sell rooms. Duetto has
attracted many of the highest regarded investors and advisors from
the hospitality and technology industries, including, among others,
Thayer Ventures, Battery Ventures, Benchmark Capital, Altimeter
Capital, Trinity Ventures, Lee Pillsbury, founder and Chairman of
Thayer Lodging, and Marc Benioff, founder, Chairman and CEO of
Salesforce.com, Mark Lomanno, former CEO of STR, Rich Barton,
former CEO/Co-Founder of Expedia and Sam Shank, CEO and Founder
of Hotel Tonight.

uu www.duettoresearch.com
A new revenue strategy
The technology and tools used by hotels must change, but
even more importantly, the overall approach to revenue
generation must be reprised. No longer can revenue
management be done in a vacuum, separate from the
marketing department that is tasked with stimulating
demand.
A holistic and integrated revenue strategy must be used
to combat the increasing commissions that threaten the
livelihood of hoteliers. It must encompass sales, marketing,
distribution, revenue management, loyalty and everything
else that is a part of generating revenue. And revenue isn’t
even really the right ultimate goal anymore. It must be net
revenue we talk about and strive for, because not all revenue
is equal. The cost of acquiring that customer—the money
being paid to intermediaries, now metamediaries and other
marketing fees—is increasing exponentially.

should a loyalty program member receive for his 20 stays,
and might that displace a customer willing to pay top dollar
for that room that night? Data is available today that could
answer those questions, but too often the departments that
need it cannot get it, even when someone else within the
organization has it.
The industry has changed, and continues to at warp speed. If
hoteliers don’t catch on, and up, they’ll be forever left behind.

■

Market intelligence gleaned from revenue management
forecasts must serve as the starting point for proactive
revenue strategies. How can marketing know how aggressive
to be with offers and promotions when they don’t know when
they’ll need them? If the promotions department is projected
to fill 500 rooms in a month, are they filling them when
demand is low or are they flooding the market with deals
on days when it’s not necessary? How much of an upgrade
www.hotel-yearbook.com

15
Additional recommended reading
Reputation
Management

Search
Marketing

uuHotel guests read 6-12 reviews

uuMetasearch OTA channels - the who,

uuExclusive advice for hotels from

uu9 Not-to-be ignored trends for
hotel distribution in 2014

before booking, says new
TripAdvisor survey

Google, TripAdvisor, Facebook
and Twitter

what, why and how of the newest
(and potentially, most lucrative)
online distribution channel

Social
Media

uuGoogle, Facebook, TripAdvisor

tout benefits | hotelnewsnow.com

uu5R’s of digital marketing and

social media engagement:
renew, review, repute, replace
and respond

uuHere’s how Google search will

uuHotel social media strategies in

uuHotels: if your online reviews are

uuThe top ten questions to ask your

uuHotel marketing cannibalization:

uuThe circle of trust | by Ben Jost

uuHow metasearch is shifting

uu14 Hotel marketing trends

uuTravelers now read hotel reviews

uuThe digital direction: hotel

uu4 Smart ways to optimize your

uuA year in review on hotel reviews

negative guests won’t consider
you. Period

in a revolutionary new way:
Weta-Reviews™ summarize
everything said about hotels

change after a three-year battle
with European regulators

paid search vendor

the balance of power

marketing budgets and a digital
101 for hotels

2014: painfully authentic, help
not hype, and 24/7 coverage

is your hotel website traffic
eating itself?

for 2014 [infographic]

hotel’s social media strategy

Links are brought to you by

uuwww.hospitalitynet.org
25
WWW.HOTEL-YEARBOOK.COM

HOTEL Yearbook
FORESIGHT AND INNOVATION IN THE GLOBAL HOTEL INDUSTRY
SPECIAL
EDITION ON

2014

SAAS

DIGITAL MARKETING

www.hotel-yearbook.com

This e-publication may be ordered online | € 14.50

PUBLISHER

Click here to purchase
the full version of
The HOTEL Yearbook 2014
special edition on DIGITAL MARKETING

ISBN 978-2-9700896-2-9

PUBLICATION PARTNERS

FOUNDATION

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Moving from revenue management to revenue strategy

  • 1. HOTEL Yearbook FORESIGHT AND INNOVATION IN THE GLOBAL HOTEL INDUSTRY SPECIAL EDITION ON 2014 S DIGITAL MARKETING www.hotel-yearbook.com This e-publication may be ordered online | € 14.50 ISBN 978-2-9700896-2-9
  • 2. SPONSORED CONTENT: REVENUE STRATEGY Moving from revenue management to revenue strategy by Patrick Bosworth i Member of the HSMAI Revenue Management Advisory Board and HSMAI Foundation Board of Directors The hotel industry continues to see revenues bleeding away to intermediaries – and now to “metamediaries” as well. This wake-up call from Patrick Bosworth, CEO and co-founder of San Francisco-based Duetto, will help hoteliers see that they must take steps to strategically regain control of their net revenues – and they must do it now. You don’t have to be a professor of economics to realize the industry is nearing an inflection point. Industry-wide revenues continue to increase, but commissions paid to distribution partners are growing twice as fast. In some cases, customer acquisition costs are as high as 40%. If hotel owners can’t regain control of their bottom line, one of the most lucrative industries could join publishing, music and the airlines on the list of industries forever altered by the Internet. Revenue management—a field that is vital to the success of any hotel—is no longer enough. A new revenue strategy is critical for hoteliers to survive and thrive in this new world of not just intermediaries, but now metamediaries that are taking a bigger cut of the action. This strategy must integrate revenue management and marketing and take advantage of all the tools and technology available. Times have changed When Marriott took a page from American Airlines’ yield management in the 1980s, the Internet barely existed. Expedia was still a decade from launching, Mark Zuckerberg was just a baby and Google was 20 years from changing the world. Think about how customers booked hotels back then. Think about how it’s done today. How many bookings today are processed or touched by others? Even the most profitable customers visiting the hotel’s website to book are likely first 14 HOTEL Yearbook 2014 special edition on DIGITAL MARKETING visiting other sites, more than 10 by some accounts, and many of those are getting a piece of the pie. In the case of Facebook and Apple, it’s believable (check the patents), if not expected, that those sites will soon be even more involved in the hotelbooking process and taking more money from hoteliers. Very little today constitutes a “direct booking,” and tomorrow, it will be even less. The Internet, cloud computing, open source software and mobile technology have changed the industry for good. The distribution and data science side of the business has become far more demanding, with new channels, social media and one-to-one marketing. Yet many, if not most hoteliers today still use the same revenue management systems and strategy employed decades ago. Best-available-rate pricing is no longer acceptable when open and dynamic pricing is a viable option. Managing (and pricing) to meet budgets and mistaking inventory management for revenue management are costly mistakes that can’t be made with today’s thinning margins. If the right segments of customers aren’t first understood and defined, and then yielded independently, money is being left on the table. Why don’t most revenue management systems track customer behavior and take into account web-shopping data that could help get a clearer picture of price elasticity?
  • 3. About Duetto Duetto provides dynamic, intelligent revenue strategy solutions to the world’s leading hotels, allowing them to maximize profits through superior, actionable data to better manage pricing, revenue and business mix decisions. Leveraging a cutting-edge, cloud-based architecture, combined with a feature-rich product set, Duetto transforms the way hotels price and sell rooms. Duetto has attracted many of the highest regarded investors and advisors from the hospitality and technology industries, including, among others, Thayer Ventures, Battery Ventures, Benchmark Capital, Altimeter Capital, Trinity Ventures, Lee Pillsbury, founder and Chairman of Thayer Lodging, and Marc Benioff, founder, Chairman and CEO of Salesforce.com, Mark Lomanno, former CEO of STR, Rich Barton, former CEO/Co-Founder of Expedia and Sam Shank, CEO and Founder of Hotel Tonight. uu www.duettoresearch.com A new revenue strategy The technology and tools used by hotels must change, but even more importantly, the overall approach to revenue generation must be reprised. No longer can revenue management be done in a vacuum, separate from the marketing department that is tasked with stimulating demand. A holistic and integrated revenue strategy must be used to combat the increasing commissions that threaten the livelihood of hoteliers. It must encompass sales, marketing, distribution, revenue management, loyalty and everything else that is a part of generating revenue. And revenue isn’t even really the right ultimate goal anymore. It must be net revenue we talk about and strive for, because not all revenue is equal. The cost of acquiring that customer—the money being paid to intermediaries, now metamediaries and other marketing fees—is increasing exponentially. should a loyalty program member receive for his 20 stays, and might that displace a customer willing to pay top dollar for that room that night? Data is available today that could answer those questions, but too often the departments that need it cannot get it, even when someone else within the organization has it. The industry has changed, and continues to at warp speed. If hoteliers don’t catch on, and up, they’ll be forever left behind. ■ Market intelligence gleaned from revenue management forecasts must serve as the starting point for proactive revenue strategies. How can marketing know how aggressive to be with offers and promotions when they don’t know when they’ll need them? If the promotions department is projected to fill 500 rooms in a month, are they filling them when demand is low or are they flooding the market with deals on days when it’s not necessary? How much of an upgrade www.hotel-yearbook.com 15
  • 4. Additional recommended reading Reputation Management Search Marketing uuHotel guests read 6-12 reviews uuMetasearch OTA channels - the who, uuExclusive advice for hotels from uu9 Not-to-be ignored trends for hotel distribution in 2014 before booking, says new TripAdvisor survey Google, TripAdvisor, Facebook and Twitter what, why and how of the newest (and potentially, most lucrative) online distribution channel Social Media uuGoogle, Facebook, TripAdvisor tout benefits | hotelnewsnow.com uu5R’s of digital marketing and social media engagement: renew, review, repute, replace and respond uuHere’s how Google search will uuHotel social media strategies in uuHotels: if your online reviews are uuThe top ten questions to ask your uuHotel marketing cannibalization: uuThe circle of trust | by Ben Jost uuHow metasearch is shifting uu14 Hotel marketing trends uuTravelers now read hotel reviews uuThe digital direction: hotel uu4 Smart ways to optimize your uuA year in review on hotel reviews negative guests won’t consider you. Period in a revolutionary new way: Weta-Reviews™ summarize everything said about hotels change after a three-year battle with European regulators paid search vendor the balance of power marketing budgets and a digital 101 for hotels 2014: painfully authentic, help not hype, and 24/7 coverage is your hotel website traffic eating itself? for 2014 [infographic] hotel’s social media strategy Links are brought to you by uuwww.hospitalitynet.org 25
  • 5. WWW.HOTEL-YEARBOOK.COM HOTEL Yearbook FORESIGHT AND INNOVATION IN THE GLOBAL HOTEL INDUSTRY SPECIAL EDITION ON 2014 SAAS DIGITAL MARKETING www.hotel-yearbook.com This e-publication may be ordered online | € 14.50 PUBLISHER Click here to purchase the full version of The HOTEL Yearbook 2014 special edition on DIGITAL MARKETING ISBN 978-2-9700896-2-9 PUBLICATION PARTNERS FOUNDATION