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Stop working in silo’s and start gaining revenue

So be honest… how often do your Sales, Events, Marketing and Revenue Departments communicate? And I mean really communicate? In my mind, departmental or ‘silo’ working has the potential to have one of the most negative impacts on our business.  In the most basic terms this means that the right hand usually doesn’t know what the left hand is doing. But at its worst, can mean that teams work in isolation – striving to achieve personal or team targets – often over-looking what is actually best for the business as whole which of course then has a direct impact on your bottom line.

Ask any department and they will usually say that they work well with their peer departments but what does that actually look like?

Scratching the surface of communication might be your Sales team asking Revenue for a rate for a group booking whilst Marketing might want to run a special promo code online or perhaps for a magazine offer, but how often do these teams actually sit down; strategise and work for the greater good?  And what is that ‘greater good?’, well surely it is increase RevPar and profit straight to the bottom line. Isn’t this enough reason for these teams to work together?

So how can you improve both communication and a better understanding?

  • A good starting point is each department understanding each others budget. Knowing what each team is working towards each month will be critical.
  • Is each department aware of whether the ‘big picture’ is occupancy or rate?  What is the overall goal for the property (and note that I refer to an overall goal – a big picture – and not individual team targets…
  • Make sure that Revenue and Events know how much Sales & Marketing have to spend so that they are not putting too many demands on those teams to produce when budgets might not allow over certain months
  • Understand Revenue’s ‘cost of sale’.  There is no point in Sales securing business for a volume account at a contracted rate if this has the potential to displace higher rated business that Revenue believes will come from other markets. This could lead to friction between teams as both teams may have individual targets to work towards which actually might be conflicting. As an example, Sales might be targeted with securing 500 bed nights from new accounts this quarter (with little thought to rate/day of week arrival/lead time or booking source), when in fact Revenue have been targeted with growth in ADR and this new business will displace higher value segments. Teams need to work together to understand common goals.
  • Both Sales & Marketing need to understand when Revenue actually needs the business.  When are the peaks and troughs? What ADR needs to be achieved? When can the hotel afford to be softer on rate or when is it imperative that Revenue holds out?
  • From that Sales & Marketing can plan their campaigns but never forgot the power of the information you may have through Google Analytics. For example, are searches increasing from the American market?  This market usually has a longer lead time so what are marketing doing about targeted Pay Per Click campaigns for the US? What packages are Sales putting together that will be attractive to that market?
  • Who is actually communicating with the events team?  Do you measure how profitable those weddings, conferences or events actually are for the whole business?  As an example, if you block out a large percentage of your bedrooms for a bride, what impact is that having on your potential to gain higher rated leisure guests?  If you have a wedding that dominates your hotel, this can often mean an empty restaurant, empty spa or empty golf course.  Guests can’t book leisure breaks and use your outlets if all the rooms have been given to wedding guests.  So therefore it is critical that each piece of business from each segment is understood and more than that, the revenue from each is evaluated.
  • Of course the flip side of that is that the hotel could have a wonderful conference with thousands of pounds in Room Hire and F&B that only take 5 rooms for the speakers.  But is this a good piece of business?  Probably… that decision is yours to make
  • Revenue needs to understand that they can achieve optimisation through marketing and the data that marketing have at their finger tips through Google Analytics, Social Media data, booking engine data etc will be critical to Revenue planning their strategy.

Each team needs to understand how much each piece of business is costing to bring in to the hotel. Then the rate charged needs to be evaluated and of course the associated spend while on property will be crucial.  Not all business is good business, so having an idea of rate versus cost versus spend versus the impact on other segments of business should be at the top of the importance list for all departments.

Stop blaming the OTA’s and their commission cheques for your drop in profitability.  They of course have an impact but maybe we should look a little closer to home on how we can ‘get our house in order’.  Start where you can make a fix and fix it fast and honestly, the quickest fix is better communication!

and for all things ‘revenue’ just ask@rightrevenue.wpengine.com