Revolutionize Hotel Profitability: Embrace Commercial Strategy

January 23, 2024

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The hotel industry is, once again, in a state of flux; the COVID pandemic forever changed how hotels operate, but we are currently in a second evolutionary phase, in which the convergence of technology and solid commercial leadership is proving to be an operational imperative for hotels to ensure profitability over the long-term.

An essential first step in this new operational evolution is implementing a commercial leader to oversee all the internal departments responsible for revenue generation. In the past few years, commercial teams have started being established in prominent, branded properties, but today, it is essential for all properties – from a 50-room independent property to a 1000-room resort – to implement a commercial leadership role or department to be successful going forward. And, even if you have a small 10-room BnB, changing to a more commercially focused mindset will do nothing but good for your operational efficiency and bottom line.

Here’s why…

A hotel’s success relies heavily on the ability of its revenue management, marketing, and sales departments to seamlessly collaborate towards shared goals, breaking down the siloes that traditionally exist between these operational departments. This is made possible through implementing a robust commercial leadership team that will oversee the three departments, keeping them working towards common business goals through collaborative action. With access to shared data, departments no longer work in isolation but collaboratively shape strategies that respond dynamically to market trends. This strategic alignment ensures that all efforts are synchronized, maximizing the impact of the hotel’s commercial initiatives.

Strong leadership fosters a culture of collaboration, innovation, and adaptability, which is hugely important in our ever-changing hospitality industry, but leadership alone will not give hoteliers the edge that they need to stay ahead of the curve. Informed interdepartmental decision-making, based on easy-to-understand unsiloed data, is the cornerstone of successful commercial strategies, making a commercial strategy platform the catalyst for a property’s strategic alignment.

One important caveat: Many solutions call themselves a commercial strategy platform, but they don’t perform functionality beyond that of a data well, which will unsilo your data but will not have a tangible impact on your property’s bottom line. The real ROI of a commercial strategy platform is its strategic insight, which enables each revenue-generating department to take proactive, transparent, forward-thinking actions.

What is a commercial strategy platform?

A commercial strategy platform is a centralized hub that provides an aggregated and real-time view of critical metrics, which eliminates the traditional data silos that have existed between a property’s operational departments. Using a shared pool of information across the revenue management, sales, and marketing departments allows for a more holistic understanding of the market, guest behaviours, and the hotel’s overall performance, which is beneficial for all three departments’ deliverables and responsibilities. From adjusting room rates based on demand and consumers’ willingness to pay, refining marketing campaigns to target specific demographics, or optimizing sales efforts for peak periods, a commercial strategy platform provides a single source of real-time data upon which all strategic decisions should be made, ensuring more effective, data-based decision-making.

Commercial strategy platforms provide hoteliers with the property data that traditional business intelligence solutions offer, as well as real-time demand and market data, in addition to providing valuable revenue management functionality, such as rate optimization, group rate optimization and forecasting functionality. But the best part is that commercial strategy platforms give your revenue management, sales and marketing teams access to strategic recommendations on how to accomplish their departmental business goals best. These actionable insights make this solution invaluable to hotels, as it eliminates all guesswork and encourages proactive action more quickly.

Providing all the data that all three departments could need from a centralized solution empowers the departments to act independently, without the need to request information from other departments, to facilitate timely decision-making. It also enables the departments (and the individual team members) to be more nimble and quick to action as the hospitality industry and the destination’s supply and demand change, resulting in the ability to shift from being reactive to proactive in identifying new sources of revenue and internal areas that need improvement.

Commercial strategy platforms don’t just benefit the individual departments; in fact, they can be a hugely valuable resource for the commercial leadership team because, as a centralized data centre, it makes it easy to provide the property’s corporate leadership, investors and stakeholders with the data that they need, while still leaving time for the commercial leadership to do their most important work: moving the property towards accomplishing their overall business and revenue goals.

Lori Kiel, CCO of The Kessler Collection, shares the experiences that led her to implement a commercial strategy platform:

“Whether I’m giving the investors what they want or not, relative to our targets, I’m in a constant state of explanation. If I’m constantly explaining, that takes away from the time I get to spend on doing the actual strategy and the time I can spend moving forward. It had served me well to bring my three teams together under one commercial umbrella from an operations perspective but my data (which is how I explain the “why”) was still incredibly siloed, so the problem was not resolved; however, I am in the process of implementing a commercial strategy platform to break down the silos between my teams’ data, which will help me find a proper balance between explaining and putting in the work to accomplish our overall strategic objectives. I am confident that the platform will positively impact our overall productivity and profitability.”

Overall, more profound clarity on the state of a hotel’s business, derived from a single source of data (a commercial strategy platform) + AI-powered strategic recommendations for all of your revenue-generating departments, fosters the ability for both the commercial leadership team and the property’s internal departments to make bold choices and indeed lead, resulting in improved operational efficiencies and increased profitability, especially over time.

By combining the insights gained from a commercial strategy platform with effective leadership, hotels can unlock their full commercial potential. As the hospitality industry evolves, hotels equipped with both elements are better positioned to navigate any challenges, capitalize on potential revenue opportunities, and thrive in our highly competitive market.

So, what are you waiting for? Start breaking down your property’s interdepartmental silos using a commercial strategy platform today; trust me… your bottom line will thank you for it!