By Robert Rauch

This year marks an exciting point for hotels within reach of 2019 numbers. Many select-service and resort hotels fit this profile, but the majority of hotels should see great growth in 2022. What is the landscape?


Threats to the Industry

The greatest threats to the travel and tourism industry include new supply; Airbnb, Vrbo, and similar short-term rental companies; interest-rate increases; oil prices and terrorism. Reduction of visa issuance, global economic stability and economic growth by inflation are other concerns.

Russia, China and Iran are all threats to stability in the Middle East, Eastern Europe and Asia, and this provides for more chances for disruption. As a nation, we remain divided due to poor political leadership, and we’re not pointing to any one individual.



Our opportunities are the continued need for lodging despite all warnings that videoconferencing would reduce demand — first mentioned in industry publications in 1982 and repeated frequently for two decades — as well as the yet-untapped growth in international travel. While listed as a threat above, Airbnb provides the lodging industry with the opportunity to embrace and adapt to the short-term rental market by changing the offerings for guests to accommodate the needs of today’s travelers.

Lodging is a noble profession that will grow due to the need for groups and salespeople to connect face-to-face, and the perception by Americans and others in free nations that travel is considered a birthright. We will soon see the Zoom phenomenon reduced and business travel slowly return despite this pandemic. The end is near!


Unique Attributes of Lodging

The lodging sector is cyclical like other industries, but it is much more scientific now than ever before. Algorithms are sophisticated for revenue management, distribution channels are limitless, short-term rental entities have become mainstream and the competitors include apartment complexes, cruise ships, timeshares and more. Based on this, the vulnerabilities are real, and the need for intense day-to-day management leaves many real estate investors on the industry sidelines.

We must accurately project room demand based on history and local activity, including, but not limited to, area booking pace, competitive rates and type of business. With that information, one can begin to move business from expensive channels like online travel agencies to direct channels. Further, understanding how long it takes to book that less-expensive business and whether or not that business might potentially be a repeat business further enhances the likelihood of successful revenue generation. Lastly, we must hold rates up instead of “dropping our drawers” at the first sign of a slowdown. This is an essential element that saved us this past pandemic cycle — we held rate!

A good revenue manager must be creative and analytical. If one is set in their ways, this is a non-starter. Revenue management must include knowledge of digital marketing and the tools for the 2020s must be used. These include Kalibri Labs, Demand 360, understanding of content on our websites, social media, newsletters and any marketing campaigns. Involving the staff in menu writing as well as social posts like Instagram and Facebook will make it more engaging.


Revenue Management: To Outsource or Not

There are many great third-party firms, and some of the brands have a real handle on revenue management, so it is a big decision. A revenue manager is a six-figure investment, so we prefer to farm it out and manage it intensely. Other firms to utilize in addition to Kalibri Labs and TravelClick are Coddi, Google Hotel Ads, metasearch firms and more.

Revenue management refers to the strategic distribution and pricing tactics we use to sell perishable inventory to the right guests at the right time via the right channel at the right price. Other products such as our amenities, food and beverage, and other services are critical add-ons at full-service properties.

Every traveler has an optimum value they offer to our hotels — revenue management is about capturing as much of this value as possible. Booking directly, extending the stay and becoming a repeat visitor are great starts.

Today, staffing is critical. With effective revenue management, we are able to protect against scheduling too many staff members during slow periods while ensuring adequate numbers of staff are safely working during the peak periods.

Revenue management drives the business plan and advises sales team members when they need to find business. Although there are multiple channels, hotel direct, global distribution services and online travel agencies are the biggest. Determining our ideal customer is paramount to revenue optimization. Reviewing our feeder cities, booking window and conversion rates online and through the voice channel are all very helpful.

We wish everyone in this great industry a profitable and healthy 2022!


*This article was first published in Hotel News Now in February 2022