As travel rebounds, revenue managers looking to capture demand and drive profitable growth need to balance scalable automation with a customer-focused strategy. Cloud-based tools that deliver personalized offers and react quickly to changing consumer preferences can help.
Hotel tech adoption has accelerated since before the pandemic, with cheaper cloud storage and advancements in artificial intelligence making sophisticated revenue management tools more accessible. At the same time, accurate forecasting has become more and more difficult due to uncertainty in the marketplace.
To help hospitality professionals adapt to this new revenue landscape, hotel technology company Duetto recently published “Rebooting Revenue: Refreshing Strategies for 2022 and Beyond.” In this report, Duetto’s chief revenue officer, Chris Crowley, noted that “We are going to see a big re-engagement with the customer this year, both through the use of technology in terms of marketing, personalized offers, and driving loyalty.”
Founded in 2012, Duetto has grown from a revenue management consulting firm into a cloud-native revenue strategy solution. SkiftX spoke with Duetto CEO David Woolenberg to reflect on the company’s 10th anniversary and gain insight into how revenue managers can pivot their strategies away from short-term forecasting and toward long-term growth.
SkiftX: What will some of the biggest challenges and opportunities for hotel revenue managers be in the year ahead?
David Woolenberg: One of the most significant challenges hoteliers are facing today is having the tools and systems in place to react with agility and be strategic in terms of pricing and inventory controls, especially while markets are in flux.
The industry is still early in adopting revenue management systems (RMS). Many hotels continue to operate using spreadsheets or legacy systems. To keep pace with change and survive in hypercompetitive markets, hoteliers need modern, cloud-based tools that help them react quickly to market demand and rate changes.
Another challenge is the use of historical data to make pricing decisions. Hotels need the flexibility to look at different time frames — same time last year (STLY) is not necessarily the best benchmark right now.
These challenges also present opportunities. Automating manual revenue management tasks frees teams to focus on strategy. We call this “managing by exception” — by skillfully mixing automation and more traditional workflows, revenue teams can operationalize their true potential as strategists.
SkiftX: Given ongoing uncertainty in the marketplace, how can hotels prioritize building long-term strategies over short-term forecasting?
Woolenberg: Focusing on strategy will continue to be the primary responsibility of any revenue manager. However, booking windows are likely to remain short, and forecasts need to be flexible. As the hotel industry reemerges in a new normalized environment and we see the return of group business, teams need to be prepared to capitalize on that. Hotels must continue to focus on the customer and create great offers that entice people into thinking — and booking — further out.
SkiftX: How has Duetto’s vision changed over the past ten years, and how did the company pivot during the pandemic?
Woolenberg: Ten years ago, Duetto was viewed as disruptive because of our open pricing philosophy and cloud-based technology. Being the industry’s first cloud-native RMS, Duetto has stayed true to its original vision to become the hotel industry’s revenue and profit operating system.
In terms of how Duetto pivoted during the pandemic, it quickly became apparent that historical data was obsolete. Hotels could not navigate forward by looking backward. Duetto adapted its algorithm to emphasize short-term history and forward-looking market demand signals to provide more accurate recommendations. Within the first few weeks of the pandemic, Duetto’s short-term forecasting rules became available to all hotels running on our platform.
And in April 2020, Duetto launched the Pulse Report in response to requests from clients and the broader hotel market for data insights into demand and consumer behavior. This report provides a free, data-driven analysis of key metrics.
SkiftX: According to the latest data in the Pulse Report, hotel cancellations are in decline, and group bookings are seeing double-digit growth. What strategies can hotel revenue managers build from these data points?
Woolenberg: The data shows that group business is coming back with a vengeance, which is a huge opportunity. As of March 1st, 2022, group revenue on the books for June is on par with 2019 levels and is trending higher in each month during the fourth quarter this year. It is critical now for commercial strategy teams — revenue management, sales, and marketing — to communicate effectively so that they’re not leaving money on the table.
Duetto is seeing properties become even sharper, more strategic, and more adaptable. Clients such as Van Der Valk Hotels have pivoted their predominantly business-orientated product to a leisure offering to meet the changing demands of the market.
SkiftX: How are booking windows changing?
Woolenberg: Our latest Pulse Report data shows the 30-day booking trend holding steady for now, and we believe it could stay that way for a while. But as group business kicks back in, the leisure window will have to widen because the availability and the great rates are simply not going to be there. Properties will, once again, be able to build that base layer of group business, giving them more pricing power to drive transient rates in the shorter booking windows. In terms of corporate business travel, the booking window now stands at 12 days versus 20 days pre-Covid.
SkiftX: Any other data highlights that can help hotel revenue managers strategize for the year ahead?
Woolenberg: We’ve always maintained that website activity, including regrets and denials, would provide an early indicator of potential recovery — it’s often the prelude to actual bookings. Regrets are when someone visits your website, checks out your rates, and decides not to book. Denials are when a customer comes to your website, checks availability, and doesn’t find the availability because either the hotel is already fully booked or a restriction is in place that did not allow the customer to book.
The latest Pulse Report data shows us that, overall, consumer web searches for lodging accommodations remain highly elevated around the world, led by travelers in the U.S. and Europe. This intensified activity resulted in a 34 percent jump in committed occupancy for the balance of 2022 at a double-digit average daily rate increase from the prior year.
SkiftX: Can you share a few promising results from Duetto’s latest survey?
Woolenberg: In line with the digital transformation we are seeing, the most promising result was that 77.6 percent of respondents expect to increase their hotel tech investment in the next three years.
This was a Duetto-run survey, so it wasn’t surprising that most respondents — 67.6 percent — currently use a revenue management system. However, what is promising is that of the remaining 32.4 percent, half said they would invest in revenue technology in 2022, with a further 23.4 percent looking to invest in the next two years. This shows that modernization, digital transformation, and upgrading to cloud-based technology are on the radar of a lot of hotel executives.
When asked to identify the most important trends in revenue management for 2022, the top three responses were integrated systems at 58.6 percent, automation at 54.8 percent, and total revenue per available room (TRevPAR) at 36.7 percent. It’s great to see integrations at the top because high-quality, two-way integrations make the data easier to attain and more actionable.
SkiftX: You referenced the fact that many hotel properties are still running revenue management on spreadsheets. What is your advice on how they can get started on their digital transformation?
Woolenberg: We hope that revenue managers will come to understand that adopting a revenue management system is not about replacing the skills and the work that they already do. This is about enhancing those skills, making them more strategic and more effective in their jobs while automating repetitive manual tasks to help them do more in less time and in periods of growth to help them scale quickly and efficiently.
What’s great about a flexible system like Duetto is that we can tailor solutions to your specific needs. Some customers want full automation, where you turn it on and forget it. Others want controlled automation, which offers a combination of automation and manual strategy. Our team is always happy to talk to anyone about starting a digital transformation, whether their revenue strategy journey begins with Duetto or another solution.
Download Duetto’s report on the latest revenue trends and opportunities to watch out for in 2022.