SPOTLIGHT ON Arshad Mohan, Director of Revenue at Movenpick Resort, Kuredhivaru Maldives, Accor

Movenpick Resort

The role of revenue management has been transformed as it leads the hotel industry out of the pandemic, alongside technology. Arshad Mohan explores new best practices, changes within consumer relationships, and the need for hotels to control their own distribution network.

Revenue Management and technology are thought to be the keys leading us out of the pandemic. What changes have you made to ensure maximum revenue?
Arshad MohanToday, Technology- and Internet-savvy consumer behaviors have fundamentally changed the way in which revenue is managed. Total Revenue Management at resorts in this time is the need of the hour, ensuring we are driving revenue from all revenue-generating streams and aim to assess the value of each guest’s patronage and develop a specific relationship with each customer.

With changes envisioned by our hotel leaders, the practice of revenue management evolves into the more precise and extensive notion of Total Revenue Management because every inch of space in a hotel is an opportunity to meet the total needs of the customer, thereby capturing a higher share of the customer’s wallet in the most profitable way possible at the same time, managing customer experience.

There has always been a lot of talk about how RM professionals should look at Total Revenue Management, one of the main reasons why this has not been taken seriously is the lower profit margins of other revenue streams versus rooms that have the highest profitability. The other challenge is the lack of tools & reports for data mining as hotel chains rely on various technology companies for software support and get tied to rigid tech frameworks which focus on specific priorities.

Technology plays a big role in ensuring the owners are getting a return on their investment, yes investment in technology is expensive but it pays off in the long run. Hotel chains should really look at creating their own software for revenue management, property management system, even digital marketing tools which lets them control the various aspects of the software including updates, new development opportunities.

Movenpick Resort

What will be the biggest challenges hotel operators will face over the next few years?
Control on Distribution Network – The need of the hour is that hotels should take control of their distribution and reach out to the guests directly with the help of technology. Easier said than done, OTA’s started in 1996 while hotels have been around for centuries and yet we are dependent on them to drive revenue into our hotels. Hotel operators will be arm-twisted by their partners to influence pricing to drive volume, hotels should be vigilant and aware that driving down rates will not create demand instead it might mean higher markup margins to some partners. Lower rates at luxury hotels have a knock-on effect on the service and quality standards which are invariably compromised. Hotels must take control of their distribution network rather than merely depending on middlemen such as various travel agents, destination management companies and OTA’s.

Accessible analytics – To drive a culture of fact-based decision making and to optimize performance it is crucial to have information in the hands of all relevant personnel in the hotel. It’s important to link the customer preferences, past experiences to the customer loyalty journey at the hotels. Hotels should be able to get closer to the customer with the help of technology.

Hospitality Talent Management – A lot of young hoteliers would be conscious of what happened during the pandemic and may not take hospitality up as a profession of choice, unfortunately, there has always been a lack of talent in hospitality. In fact, hospitality graduates from expensive hotel schools land up getting a very basic package, after spending huge sums of money on their education. The pandemic has pushed a lot of hoteliers and revenue management professionals out of the industry to look for other career opportunities due to various hotel closures due to the pandemic. Revenue Management is not rocket science but does require a level of analytical thinking, commercial outlook, and of course business acumen. Hotels still don’t have the right career options to develop revenue management talent on property and that’s why hotels should invest in a concept called ‘Data Centers.’

What new tools have emerged that could be game-changers?
Some hotels have already invested in remote solutions for revenue management, but a lot more needs to be done to increase the scope of this function and to have subject matter experts in Revenue Management, Finance & Digital as a combined vertical, it would be interesting to see if hotel chains take this idea seriously and how hospitality goes about its business in the near future.

Data centers are the way forward for the hospitality industry, while clusters & shared service centers have been around, not much has been done to expand them into data centers which are all about taking emotions out of the hotels and anything with data, computation, analytics should be managed remotely. Hotels should create hubs especially in the regions where there is a talent scarcity especially in the areas of revenue management, certain finance functions, and e-commerce/digital marketing roles.

Data Centers would let hotels have a holistic overview of the market and streamline distribution as well as digital campaigns, to avoid overlap of tactical offers while being able to promote specific marketing initiatives keeping in mind the target audience. It is thereby crucial to have the right price point for the brand keeping in mind its position within the hotel chain to maintain the identity.

Over time we have seen the migration from the term yield management to become revenue management, the role & the scope of the field has evolved with the way technology is revolutionizing the hospitality space. New revenue and digital tools are popping up and it is time to take a step towards artificial intelligence to manage pricing and total revenue management.

What is the biggest lesson you have learned coming out of the pandemic?
The biggest lesson that hotels have learned is not to rely on just one market or a handful of source markets. With the various travel restrictions coming into effect every other week, successful hotels were constantly on the lookout for new opportunities. It’s key for hotels to have a healthy mix of nationalities in their business mix.

Hotels have learned their lesson the hard way, those who have not optimized distribution faced challenges when only certain markets opened up, and not having the right partners made them scramble to connect with operators who then took advantage of the situation and demanded extremely good deals to get the hotels listed. However to be listed with all the various agents is a long painstaking process of offline rates distribution, getting featured on the various brochures and connecting to their extranets takes time. Travelers to the Indian Ocean still prefer a brick-and-mortar shop to book their holidays as the source market is Russia, CIS, and Europe, which contributes to 80% of their business mix.

When it comes to the various OTA’s, getting the hotel profile built, mapping rates plans, and getting the distribution set up via direct connect option is still limited to a handful of tech companies. The success of online travel agencies is largely attributable to their marriage to leading-edge technology and a keen insight into consumer behavior patterns.

Hotels that didn’t invest in digital marketing also lost out, with hotels going aggressive in their campaigns on various digital and social platforms.

What does the future look like as luxury hotels start to recover?
Luxury will never go out of fashion as humans crave to get pampered as it makes them feel good, it’s psychological. Personalized service is key to luxury travel, as humans, we need to connect with another person, and that why call volumes have not dropped in various call centers around the globe and at the property level. Global call centers with multilingual agents are still relevant in today’s business environment.

Luxury resorts especially in exotic locations such as Maldives, Seychelles, Mauritius, Hawaii, Bora Bora, Bali are not just selling rooms because these hotels build a strong experience-driven reputation. These destinations are successful as they have great food and beverage concepts along with recreational, wellness, adventure, and leisure space to cater to high-end clients hence it is a great opportunity to focus on non-room revenue streams and be able to innovate with industry partners while working internally to invest in processes, people and systems.

Hotel chains should take a very long-term approach and start embracing technology a lot more than before and a direct, faster, and personalized contact with the guest must be a conscious effort to harp on the guest experience and radical profit share as today’s consumers rely less upon traditional travel agents and more on web-based research when booking travel.

There is also a need to balance short-term revenue maximization with long-term customer development to help driving change in how the RM function collaborates with other functional units, including operations and marketing. For instance, hotel chains have started to find new and innovative ideas to grow the business and market share by not having a direct sales team onsite rather than being deployed in key business markets to drive business and generate sales as per destination and clientele requirements.

Focus on building more intelligence around each customer segment and applying knowledge to those segments while also promoting online guest feedback reviews help the revenue management professionals to drive up rates as they know they have the backing of the operations team to support yielding over peak periods which then translates into better RevPar/TRevPar.