Mr. Bolf

Revenue Management

Looking Ahead to Revenue Management in 2020

By Brian Bolf, Vice President of Revenue and Profit Optimization, Kokua Hospitality

From driving a vehicle to constructing a building, alignment is the foundation for ensuring stability (competitive advantage), obtaining optimal traction (demand), and safely handling capacity (supply). Despite revenue management remaining neutral in its pursuit of optimal performance, many other disciplines within the hotel organization remain fairly isolated and instead focus on departmental objectives. Although specialized areas of concentration, such as meeting group cross-over goals or improving customer satisfaction scores, can lead to improved hotel performance overall, establishing fundamental goals across all internal teams is the true bedrock to build upon. These goals must first be established by ownership and management, then shared through open and transparent communication to ensure each and every department's objectives are aligned. The most successful organizations identify their vision, broadcast their everlasting devotion to their objective, and focus all of their efforts to achieving their goals, relentlessly. This model is what will lead to the perpetual success of a hotel.

Once the internal team is aligned and focused on an undivided mission, it is much more palatable to tackle bringing that vision to market. At this point, the hotel's goals are actually measureable, hoteliers can be held accountable, and unified targets are identified. Establishing these target markets and guests is crucial. While that seems to be an obvious statement, over the last decade, this has been somewhat cast aside for a number of reasons. During and following the recession, hoteliers cast their marketing nets far and wide, attempting to satisfy the needs of all guests. Next up, we had an infinite amount of technological platforms become available providing new distribution pathways and allowing for the expansion of market segmentation, almost to the point of chaos. Rather than cast our net to the infinite depths available, success lies in utilizing resources to hone in on your targets. It is unlikely that a single hotel exists today that would serve as the property of choice for each and every traveler, so why try to satisfy that need?

With the specialization of room offerings, loyalty programs, amenity choices, social climates, and a host of other attributes, it is not a reasonable expectation that any one hotel can remain genuine and preferred by the entire market. Travelers are individuals expecting personalized service. They desire a customized, unique experience delivered to them in return for their booking commitment. Travelers are also faced with an overwhelming amount of hotel options that are continuously marketed to them, especially when compared to more limited travel options, such as car rentals and flight options. The deliberation process grows deeper as hotel bookings are known to be much more of an emotionally driven selection directed by personal preference. After all, the hotel serves as the traveler's home away from home for the entire travel experience. In the end, a customer is seeking to meet his or her specific needs; hotels should be doing do the same, refocusing their external alignment to their respective audience and continually evaluating this match. It is a two way street.

Equally important to identifying unified targets is the need to establish a distinct and customized marketing mission for a property. The days of letting "location, location, location" rule the roost are nearing an end with the availability of improved transportation offerings like Lyft and Uber. Similarly, the majority of the legacy sort options for hotels are becoming less and less meaningful to many travelers, i.e. distance to city center, star rating, and even pricing (to a certain degree). Identifying who is the aligned, "right" guest today, tomorrow, and in the future is imperative for eternal success. No longer can marketing dollars be spent haphazardly across all distribution models, nor can efforts remain as generic as utilizing a single email bank to send quarterly, blanketed offers. It is time to recognize who truly is the target audience for a specific hotel and then allocate resources and funding to execute accordingly. As a recommendation, do not simply copy last year's Sales and Marketing plan template and begin updating the pace and data fields. Take the necessary steps to ensure the internal and external goals are laser-aligned, then direct the necessary monies to execute as a collaborative team.

If it is recognized that a property is misaligned from several years of status quo performance, it may be necessary, or even easier, to start with a clean marketing slate. Beginning the process could feel disheartening or untimely, which can potentially stall successful implementation. Instead of foregoing another year of mediocre performance, it is better to tackle this fundamental task in manageable portions, such as quarterly or monthly targets. Before long, a full year will be established and can be built upon with the ambition to construct a five year dynamic program. This program can, and should be, continually reviewed and realigned as necessary. The only true challenge to successfully executing the internal and external alignment exercise is accepting that the process is perpetual and imperfect. Remaining flexible to adjust course as necessary will remain critical to remain a competitive leader.

With goals set, the team aligned, and marketing dollars allocated, the next course to take is digital execution. There are a variety of digital assets available to help meet customer expectations, beginning with ensuring proper availability across all identified distribution channels. In an effort to improve conversions, complement real-time availability with the richest of accessible content to showcase the property's distinct and favorable strengths Highlight the most robust, high-resolution imagery, including full 360-degree HD video of all experiential areas of the hotel when possible. The confident display of customer affirmations and positive review scores is proven to be beneficial and further elevate pricing confidence, which will in turn promote consumer assurance. Although many business travelers continue to state that location and price are the most important factors in decision making, hotel photography and visuals rank at the top of the list for leisure travelers; a growing segment for many hotels.

There are a multitude of distribution channels available that can be evaluated at the customer acquisition cost level. However, three primary revenue streams have demonstrated the greatest reach and opportunity for hotels over the last decade and they will continue to demonstrate higher yields for years to come. A hotel's direct booking channel (website), online travel agencies (OTA's), and the Global Distribution System (GDS) will continue to be the primary channels utilized by hotels to generate the majority of bookings for hotels in the near future.

Direct Booking (Website)

The most profitable channel or booking source will remain the hotel's own website. It goes without saying that a responsive mobile website that is translatable and easily navigated is critical moving forward. Complimented with online marketing initiatives including PPC and well-constructed SEO initiatives, a hotel's website can demonstrate higher conversions than most other channels due to retaining full control and flexibility internally. In addition to the website's cost-effective benefit, a well-constructed and informative website provides an advantage to achieving a personalized connection with potential guests, while also providing improved data collection to be utilized in future marketing efforts. Even though the major brands utilize this essential channel and ensure the best rate is available here, surprisingly, many independents continue to under-utilize this imperative profit center. The absolute best value for any property should always be made available on the hotel's own website through dedicated 'Book Direct' strategies.

Global Distribution Systems (GDS)

When was the last time your property's GDS hotel listing was reviewed for accuracy? I would speculate that the answer would be much longer than you expected. Over a decade ago, processes like these were much more easily handled on a regular basis through the reservations-operations department. As divisions have been scaled back through cycles of economic downturns, as well as through the transformation of revenue strategy, opportunity within this channel has been forgotten by many hoteliers. Either that, or presumed to be a declining source of business unworthy of the investment of time. The reality is that the GDS continues to demonstrate measurable contribution for hotels and proves to be a source of opportunity for most properties. There are effective and measurable promotional opportunities within the GDS that can assist targeting specific seasons, demographics, and market segments. Additionally, select agencies can be incentivized for their consistent and reliable contributions to hotels. In these instances, hotels can assign choice segments or specific need periods to the GDS and offer rewards for the increased bookings that result.

Online Travel Agents (OTA's)

Similar to the GDS and the hotel's own website, the hotel's listing on the OTA sites should remain accurate and updated as the contribution from this distribution stream will remain critical to the success of many hotels. The visibility and marketing reach that an OTA can facilitate for a property is unparalleled to any other stream. This is due to the robust marketing budget utilized and the OTA's established loyalty programs. As the cost of distribution remains relatively high through this channel, it remains imperative that hotels manage this resource as effectively and competitively as possible in the upcoming years. As OTA management can become overwhelming quickly, the most efficient opportunity is to utilize a channel manager or a more sophisticated PMS that ensures real-time integration. These resources enable a hotel to remain focused on optimizing revenue and profitability.

Regardless of the distribution channel, the goal of digital marketing is to reach a new identified customer base, at the right time, and on the desired platform that provides a high probability of conversion. For digital marketing to previous guests, data extraction from the PMS or CRS can be utilized to gain the business intelligence to create a successful, multichannel marketing campaign.

With goals set, teams aligned, marketing dollars allocated, and digital marketing underway - the remaining item to establish is effective pricing. Benefits from deploying a psychological pricing strategy remain an opportunity for many hotels in the upcoming years. It has been found that certain specific price points trigger a more significant psychological outcome for consumers. There are at least five pricing models that can be tested individually and at a very granular level (i.e. by rate plan, by day of week, adjusted seasonally) for further consideration.

Charm Pricing: Using Pricing That Ends in 9 and 99

There is quite a bit of analysis available that supports the cognitive advantages of this pricing technique. In summary, the brain places greater emphasis on the left-digit in price cognition and therefore, a benefit of improved conversion exists from reducing a rate of $200 to $199, for example. The perception of the $1 decrease is far greater than the actual decrease. This is the most commonly utilized pricing strategy of the list.

Prestige Pricing: Making All Numerical Values Rounded Figures

An alternate study found that rounded numbers, such as $100, $150, or $200, are processed more quickly. The quick reaction to these figures revolves more heavily around emotions and feelings, rather than processing cognitively. A $100 price point may actually "feel right" and can be processed more confidently.

BOGO: Buy One, Get One (or any modified version of receiving a discount as a result of paying for one full-price item)

Focus on obtaining something free is the catalyst of this strategy, rather than the price point or the value proposition of the offer. Unfortunately, many booking engines lack the functionality to allow for this strategy to be showcased, or executed, successfully. Wouldn't it be great if a large family, or even a small corporate team, comparing options could include marketing options such as selecting additional rooms at a discounted price over need periods? This strategy would allow smaller hotels to compete more effectively with larger, suite hotels or even Airbnb properties which are often booked merely due to price relative to square foot.

Comparative Pricing: Offer two similar offerings simultaneously, with one offering's price substantially more engaging

This is possibly one of the most effective pricing strategies that is underutilized by hoteliers looking to sell their most undesirable room types. Very similar room types, if not the same exact room type, are promoted together at slightly varying price points in an effort to sell the least desirable room type first. Or just the opposite, the more expensive room is deemed better despite appearing similar merely based on a slightly elevated price point signaling better "quality."

Visually Highlight a Reduced Price ("Slash Through Pricing")

Offering a new price point directly next to the original price has been shown to improve conversion due to a customer's feelings of receiving a bargain. OTA's utilize this strategy to its full potential by further psychologically adjusting the font, size, and color of the reduced price. Booking engine technology for several branded hotel groups, as well as independent hotel platforms, have yet to progress to the level necessary to deploy this strategy effectively. This simple, yet effective strategy is prevalent in the retail industry. If translated effectively to those same retail customers shopping for hotels, greater conversions would be achieved.

Utilizing the appropriate pricing strategy on each available channel is a necessary component of a hotel's overall distribution approach. Further, this strategy should be executed using the most updated technology available to remain consistent and efficient through all channels.

At its core, revenue management is defined as selling an aligned, impressionable offering, across a high conversion distribution channel, at the right psychological price point to ensure the most profitable and likely outcome. Keeping this definition and the fundamental goals of revenue management top of mind, employing the strategies outlined for each focus area, remaining flexible and adaptable to new technology, and paying much closer attention to our consumers, is critical for success in the coming years. We must also remember to embrace innovations for the purpose of sustainability, not merely as a competitive advantage. Through keeping this narrowed focus on revenue management, we can achieve positive, measurable results aligned with a property's goals throughout the inevitable changes that lay ahead.

Vice president of revenue and profit optimization, Brian Bolf is responsible for revenue management and e-Commerce at Kokua Hospitality. He is a collaborative, trusted leader who is valued for his holistic and transparent approach to assisting properties reach their optimal performance. Mr. Bolf works closely with hotel executive teams, asset management groups, and owners to properly align customized efforts to reach a unified goal. Through his twenty-five plus years of experience across a multitude of independent and branded hotels, he has specialized in process improvement and utilizing data analytics to creatively develop profit opportunities for the portfolio. He is in charge of Kokua’s recently developed revenue management platform. Mr. Bolf can be contacted at 312-644-4800 or Please visit for more information. Extended Bio... retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by

Receive our daily newsletter with the latest breaking news and hotel management best practices.
Hotel Business Review on Facebook
General Search:
Coming Up In The November Online Hotel Business Review

Feature Focus
Architecture & Design: Authentic, Interactive and Immersive
If there is one dominant trend in the field of hotel architecture and design, it’s that travelers are demanding authentic, immersive and interactive experiences. This is especially true for Millennials but Baby Boomers are seeking out meaningful experiences as well. As a result, the development of immersive travel experiences - winery resorts, culinary resorts, resorts geared toward specific sports enthusiasts - will continue to expand. Another kind of immersive experience is an urban resort – one that provides all the elements you'd expect in a luxury resort, but urbanized. The urban resort hotel is designed as a staging area where the city itself provides all the amenities, and the hotel functions as a kind of sophisticated concierge service. Another trend is a re-thinking of the hotel lobby, which has evolved into an active social hub with flexible spaces for work and play, featuring cafe?s, bars, libraries, computer stations, game rooms, and more. The goal is to make this area as interactive as possible and to bring people together, making the space less of a traditional hotel lobby and more of a contemporary gathering place. This emphasis on the lobby has also had an associated effect on the size of hotel rooms – they are getting smaller. Since most activities are designed to take place in the lobby, there is less time spent in rooms which justifies their smaller design. Finally, the wellness and ecology movements are also having a major impact on design. The industry is actively adopting standards so that new structures are not only environmentally sustainable, but also promote optimum health and well- being for the travelers who will inhabit them. These are a few of the current trends in the fields of hotel architecture and design that will be examined in the November issue of the Hotel Business Review.