Marketing + Revenue Management = ♥️

This was the subject of a conference that brought together two solutions and two related areas of expertise in the hotel industry: CRM and RMS. These two softwares are used by different teams, the guest experience and marketing teams and the Revenue and/or Yield Management teams respectively.

To discuss this topic, Mathieu Pollet, CEO and co-founder of the LoungeUp solution - the guest relations and hotel operations management platform - presented with Romain Charrié, Associate President of revbell, the RMS edited by N&C a Revenue Management consulting firm. Eric Belluardo, founder of the Friendly Hotels group, also shared his views. His group includes three hotels in the mountains: Totem in Flaine, Victoria Lodge in Val d'Isère and La Cachette in Les Arcs.

The focus of this conference was to first define the objectives of the teams using these two tools, and to discuss how they can collaborate to increase hotel revenue, with Friendly Hotels presented as an example of a client utilising both solutions. 

The CRM x RMS pairing

What is a RMS or Revenue Management System?

Put simply, the principle of revenue management is to maximise hotel revenue by looking to answer the question: "For the remaining stock to be sold on a given date, is there enough demand to sell it?" If demand is high, the tendency is to raise rates, and vice versa, to lower them to generate more demand. The key strategy is to define when to do this and with what variation.  

What is the difference between Revenue Management and Yield Management?

Both are designed to optimise hotel occupancy in off-peak periods and to maximise hotel revenue in peak periods. 

Yield Management is a component of Revenue Management, which focuses on room occupancy, whereas Revenue Management takes into account all revenue optimisation strategies within the establishment. 

What is CRM or Customer Relationship Management?

Customer relationship management software allows hotels to access all  their guest information and manage interactions between the hotel and the guest before, during and after their stay(s); this includes online check-in, message exchanges, loyalty campaigns, etc. The teams in charge of guest relations use this type of software to analyse the profiles of their clientele and personalise the guest experience, in order to offer the guest a fluid path adapted to their expectations and needs at different times during their stay.

How can a CRM help increase hotel revenue?

By getting to know the guest and consequently their expectations and needs, the hotelier can adapt the services and the recommendations they offer. The guest, since they are only asked about their interests, is more likely to accept guidance and ask the hotel for anything they might require during their stay.

Several studies have shown that an infinite list of options (choice overload) is less effective and has less impact on the guest than a short list with tailor-made options.

CRM therefore makes it possible to generate additional turnover by offering each guest the services that interest them most, at the right time. Another benefit of CRM is improved guest loyalty, which, in the long term, also increases the hotel's profits as the cost of guest acquisition is reduced. Enhanced guest satisfaction is also likely to result in better reviews on review sites, leading to increased bookings. 

Can a CRM - RMS pairing work effectively?

Both solutions seek to increase the hotel's revenue, but their approaches and mechanisms are different. The teams using each software are not the same and rarely have the opportunity to coordinate their actions.

One - the RMS - will focus on the room, while the other - the CRM - will focus on the guest. Their objectives may differ and, in some cases, even conflict: 

• A marketing team's campaign will aim to generate a maximum of conversions on a given number of mailings: the more bookings, the more successful the campaign is
• A campaign by the Revenue Management team will aim to fill rooms during the off-peak season,  , even if only a few bookings are made. The key goal is to target the least-popular dates

How can we get these teams to work together?

Eric Belluardo uses both solutions on a daily basis; his view is that the two teams behind these two tools should work together and consult each other to coordinate their actions while pooling the information that each team has.
 

One real example of this is when marketing teams prepare a guest base interested in last-minute offers allowing them to be reactive when Revenue Management identifies available slots on nearby dates. It is in the establishment's best interest for these two teams to work closely together, as the opportunity to generate revenue is lost once these off-peak dates pass.  

"If last-minute offers don't work out, you can't make up for it because the date has passed. A constant increase in occupancy is an option, particularly for cash flow, and gives you the possibility of feeling out the market by charging a price to end up selling the last rooms at the last minute."
Romain Charrié, Associate Chairman, N&C

The levers of the CRM - RMS partnership to improve hotel revenue

Boosting quiet periods or last minute uptake

The RMS makes it possible to detect the dates of high demand as well as when demand is low. This is where the CRM can intervene, by listing the guests who have come or who come regularly during these quiet periods and who can be contacted  and  offered ultra-personalised offers. For example, this offer will not apply to guests who only come once a year during school holidays. 

Another instance where CRM x RMS can be used is to fill an empty weekend: with the help of a last-minute promotion, it is possible to target only those hotel guests who are in the vicinity or easily accessible, or those guests who have already booked a last-minute stay (and are therefore likely to take advantage of this kind of offer).

In order to improve the responsiveness to a last-minute promotion, it may be interesting to create, on the Marketing side, segments of guests that could be interested in last-minute offers, as well as marketing campaign models to be able to quickly react when the opportunity arises on the Revenue Management side. 
 

Not advertising to loyal guests

Offering attractive promotions to the most loyal guests (who come every year at the same time, for example) is not necessarily a good strategy for the Revenue Manager. Especially if the dates of their stay coincide with a busy period (and therefore high prices). For these guests who book almost a year in advance, it is not the price that interests them but the place and the date. 

Rewarding guest loyalty is not simply a matter of lowering the price. After all, the quality/price ratio already suits these guests, since they come back every year at this time.

A well-designed CRM allows you to exclude guests, and in particular the most loyal guests, (by knowing how to target the type of loyalty, in this case: recurrence of stay), from promotional offers. This means rewarding their loyalty in other ways rather than by reducing the price, for example by giving them early access to reservations.  

Increasing added value

Eric Belluardo points out that the challenge is to find the right balance between what brings value to the guest and what is low cost for the hotel. That value is not always found where the hotelier thinks it is. 

"For us, the challenge is to find what has high value for guest and what costs us much less than the - x% early-booking"
Eric Belluardo, Co-founder, Friendly Hotels

One of the examples he gave was to offer his regular guests the opportunity to keep their skis for free. Not only is this a great time-saver and convenient for the guest, but for the hotel, the management is also easy (the hotel already has ski storage facilities), cost-free (the hotel is closed out of season), and the hotel ensures guest loyalty. 

Another more general example is to give the guest a choice of room number if they book well in advance. For some regular guests, being able to choose their room is more valuable than an early-booking discount.

These loyal to-be-rewarded guests can be grouped into a segment in the CRM to which open booking campaigns can be sent, to maintain the sense of exclusivity of being among the hotel's best guests.

Improving upgrade/upgrade sales

The Revenue Management team identifies the periods to work on, the types of rooms or the empty areas. The Revenue Manager's job is to assess whether there is sufficient demand for the higher-end rooms. If not, upgrade techniques can be used to free up entry-level rooms so that all rates are available, while maximising turnover.

Be careful, however, not to always upgrade the same guests who might realise that it is better for them not to book a superior room directly. This is where, once again, the CRM can be useful to remove guests who have already taken advantage of such an offer. Either by tagging them so that they can be excluded from the offers (as the upgrade information is not always identifiable), or by displaying a list at Reception of guests who have already been upgraded on arrival.  

It is important to note that the guest must be well informed about the upgrade in order for it to be meaningful and for its added value to be fully appreciated by the guest. 

Improving e-reputation

E-reputation is based on the ratings of online reviews of the hotel. It is not totally unrelated to Revenue Management because very high prices can lead to negative reviews from guests who deem the quality/price ratio to be unfavorable. To compensate for this effect, adding small personal touches to enhance the guest experience can help justify the price paid. Indeed, e-reputation is directly linked to how the guest perceive the quality of their experience, so improving this perception contributes to a better reputation. The key focus is on the quality/price ratio as evaluated by the guest.

"We mustn't forget the fundamentals, which are the product or service we're selling. A warm welcome and beautiful rooms are the basis for making customers want to come back"
Mathieu Pollet, co-founder and CEO, LoungeUp

If prices are high because of a trade show or festival, value can be added for the guest by providing additional services such as information about the event, transport to the event, or services to facilitate their return to the hotel. By putting yourself in the guest's shoes, you can determine how to add value to their stay.

CRM can also help improve the hotel's reputation by detecting areas for improvement: the quality of the rooms, refurbishments, management quality, the level of staff training, etc. 

In conclusion

✓ To recap, CRM is the ideal tool to sell the right product, the right offer, to the right guest at the right time; and Revenue Management knows how to identify the right moment to put them forward.  

✓ What is important is that the bridge internally between the two teams (RM and Marketing) is already established to act on quiet periods by dedicating marketing offers to the right guests to fill empty rooms

✓ Formalising the procedures to be implemented for each scenario (occasional upgrade, early-booking, adding service, etc.) is essential to coordinate both areas and objectives

✓ In Revenue Management, you have to test (and sometimes make mistakes) to find out what each action can achieve and learn from your mistakes.

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Speakers at this conference:

• Moderator: Vanessa Guerrier-Buisine, Journalist - Journal des Palaces
• RMS Speaker: Romain Charié, Associate President - revbell
• CRM speaker: Mathieu Pollet, CEO & Co-founder - LoungeUp
• Hotelier: Eric Belluardo, Co-founder - Friendly Hotels

Watch the conference here : ‍