By Larry Mogelonsky, MBA, P. Eng. (www.hotelmogel.com)
As simple as it may be, while marketing is forever a somewhat nebulous pursuit, everyone understands revenue, particularly general managers and owners. This alone has meant that the Revenue Director has gained status over the marketing ninjas within the past two decades, and yet the two must still work harmoniously.
Revenue is what drives our business. Revenue keeps the financial wolves at bay. Revenue is what allows paycheques to be written. Revenue equals cash flow and without it a property ceases operation. Accordingly, a revenue director is a critical member of your management team, especially one who can keenly manage channels and advise on upcoming promotions based on a pace report.
But what of the marketing department? It seems almost hereditary in the hotel business to consider marketing as an expense and at best a ‘black box’ where money is spent with no immediate or direct return.
Consider this. A marketing director at a rural resort recommends a billboard program to senior management to promote the hotel’s signature restaurant amongst locals and to raise awareness for upcoming F&B events. The budget was available, the need is strong and the campaign provides a well thought-out strategy insofar as location, creative content and negotiated costs. As a marketing proposal, it is as solid as it could be.
Did the GM approve the purchase order? Did he question any of the strategy, the need, the media outlet or the plan? No. Instead, he challenged the marketing director to ‘prove’ the ROI of the campaign’s spending. Just think about that request for a moment. Here is a senior manager applying traditional revenue management data analysis tools to a marketing proposal.
How can any individual element of a marketing campaign be specifically tracked, outside of Google Adwords and other digital programs? Does this mean a death-knell to any use of traditional media? Using these criteria, it is probably safe to say that ZERO dollars will ever be spent outside of digital, where there are many tools available that attempt to track every activity to a specific booking. And this being the case, the role of the marketing director is over. Let the revenue director automate the campaigns and execute them for short term (immediate), measurable response.
Revenue management is about the present. Great revenue management looks at comp sets, past and forecasted demand, and rooms sold to-date. Then tabulating all this information, the director sets about a rate plan.
Marketing is about the future and generating top-of-funnel interest. Great marketing embraces a long-term view of the guests, anticipating their needs and providing a reason to book. It also takes calculated risks to open new streams of customers, creating awareness where none existed and an emotional desire in the purchase.
In effect, it is ‘future revenue management’ as comparted to ‘immediate revenue management’. Marketing management can identify and create demand. With these programs developed and established, revenue management can work on the yield aspects.
Working in tandem, marketing and revenue managers can build programs that deliver what the property needs to grow, but one cannot work effectively without the other. Now, just don’t ask me who reports to who!
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Editor’s note: To discuss business challenges or speaking engagements please contact Larry directly.