Hotel Revenue Management

HOTEL BUSINESS REVIEW OCTOBER FOCUS: Hotel Revenue Management
How Smart Total Revenue Management Can Help You
Weather The Storm
By Priya Chandnani VP of Revenue Management, Benchmark, Pyramid Luxury & Lifestyle | October 2022
The concept of total revenue
management is not new and one that
the hospitality industry has talked
about for a few years.
Before the pandemic, the industry saw
consistent revenue per available room
(RevPAR) performance with little or no
growth year over year.
Take in�ation into consideration and
we were showing negative
performance. This triggered a need to
yield our other revenue centers
speci�cally function space and food
and beverage.
However, our biggest challenge then
and now continues to be technology. Companies don’t have the infrastructure to integrate data from our PMS,
POS and Sales and Catering systems. At Pyramid Global Hospitality, we’ve addressed the technology issue
through our analytics platform, NEO, giving us capabilities to make decisions that impact total revenue and
not just rooms.
Another challenge has been standardized measure of performance across all hotels. How do I know I’m doing
better than my competitors when none of us can agree on a standard measurement of performance for spa or
golf like RevPAR for rooms? The good news is that we are making progress, but the spectrum is broad with
some hotel companies just beginning the process to others well ahead of the game. A couple of things have
occurred over the years that have seen an evolution in total revenue management.
Risk Management Solution Companies Are Making This a Priority
Historically, the value of a guest was based on the room rate and nothing more. Today, we attempt to evaluate
total spend using folio data, but this information is only a slice of true total spend as we cannot integrate
guest spend from credit cards. In a world where bleisure travel is a rising trend, it is not surprising that a guest
would choose to charge room spend to the company but pay for a spa service or a round of golf using a
personal credit card. Total guest spend helps the revenue manager identify segments and rates that drive
revenue for the total hotel even if this does come at the cost of rate.
This became even more highlighted after the pandemic when we saw record growth in rate, but food and
beverage and spa revenues were still lagging to 2019. Golf, on the other hand, did well as friends chose to
connect outdoors during the pandemic and working from home helped drive demand.
Non-hotel guests are even harder to track. Reporting from POS systems or other revenue streams is clunky at
best and lacks the sophistication we’re used to with room revenue management. The good news is that help
is on the horizon. In the past year, there have been conversations with two big and noteworthy RMS partners
who identify this as an opportunity and have added total revenue management to their development pipeline.
We’ve run a beta on two of our hotels and while we did experience some learnings along the way, fully expect
to start testing the tool by year end.
Rooms Had a Stellar Year, But Food and Beverage Was Lagging
2021 was the year of the leisure traveler. After staying home in lockdown for a year and seeing a record high
household savings, our guests were ready for new experiences and had the disposable income to indulge. As
leisure became king, hotels saw a signi�cant segment shift from group to transient which contributed
immensely to our average daily rate growth, but impacted food and beverage revenue speci�cally banquets
and catering. Given the labor shortage, grab and go outlets increased in prominence and we started exploring
robotics and automation to create e�ciencies in service.
At a recent leadership conference, I was served a cocktail by a robot with a bow tie. Personal observation: The
bow tie did nothing to humanize Albert the robot, but I did appreciate the excellent cocktail. The technology
investment and upgrade has been key to revenue optimization in food and beverage. Easy access to data like
meal period occupancy, turnover and menu item consumption has helped create pricing and yielding
opportunities.
Start With a Pencil and Ruler
When I started as an analyst, my mentor told me how lucky I was to have excel whereas when they developed
The culinary team at Mountain Shadows (a Benchmark, Pyramid Luxury & Lifestyle property). Food & Beverage Manager Jim Gallen, Pastry Chef
Jordan Stime, Executive Sous Chef Richard Garcia, Chef de Cuisine Alfred Muro, Executive Chef Charles Wiley.
room revenue strategy they sat on the �oor and made grids on large pieces of paper using pencils and a ruler.
I believe this is questionable since I know she would never sit on the �oor and carpet makes a terrible surface
for drawing lines; however, my point is that the founders of room revenue management started with limited
tools and a skeptical leadership team. Our tools are far more sophisticated in that excel sheets are better than
a pencil and supportive leaders are better than skeptical ones. Let’s start there when building the foundation
for total pro�tability.
How Do You Eat an Elephant?
We’re trying to do too much too quickly. Every time I speak with an industry colleague on how they’re
approaching total pro�tability, I hear about and associate with the challenges they’re facing when trying to
implement food and beverage revenue management while also developing strategies around golf and spa.
Maybe we start with one, build foundational structures around one revenue channel, implement new
strategies, learn from fail and recover with one discipline before jumping on to the next. Some elements of
revenue management will scale across multiple disciplines while other will need to be speci�c. In the past
year, we introduced revenue best practices for golf and are only now starting to build a framework for spa. And
yes, we use excel workbooks which will eventually integrate into our analytics platform.
Cultural Integration and Investment
The culture of total pro�tability will not and cannot stay speci�c to revenue management. It needs to be
ingrained in our cultural framework where we show our commitment as a company and support our goal with
investments in technology, training and most importantly, clear communication of what strategies we are
implementing and the ones we are not. Referencing the elephant theory, we cannot do everything at once
Guests at the Garden of the Gods Resort and Club (a Benchmark, Pyramid Luxury & Lifestyle property) can experience a soothing couple’s massage at
Strata Spa.
Ms. Chandnani
Priya Chandnani serves as Vice President of Revenue Management for Benchmark, Pyramid
Luxury & Lifestyle, a division of Pyramid Global Hospitality. Ms. Chandnani leads the revenue
management team at Benchmark and is passionate about pro�t centric revenue management
principles, emerging distribution platforms and talent development. For the past 20 years, she
has been active in hospitality sales and revenue management for major brands within the
industry, most recently serving as vice president of revenue management and distribution for
Trump Hotels, where she was responsible for hotel revenue goals and pro�tability. Ms.
Chandnani is a graduate of New York University, where she earned a master’s degree in
Hospitality with a concentration in Revenue Management.
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similarly we cannot drive revenue and grow pro�ts at the same time. Driving revenue requires serving our
guests an authentic experience and that does come at a cost which will impact our pro�tability.
We’ve been talking about total revenue management for a few years now and I know there is a degree of
frustration around slow process and lack of technology. I say everything good starts with a conversation so
we’re already halfway there. We have survived the worst impact to our industry and done it with grace and
perseverance only to deliver record performance on the rebound. There is no better industry to affect change.