Top 6 Revenue Management Trends For 2023
Revenue management in 2023 will plot a very different course to 2022 - one defined by a conflict between the rising demand for travel and the threat of rising costs.
Last year, we predicted that Revenue Management trends in 2022 would fixate on service recovery, big data, cross-departmental alignment and flexibility of offer, in-depth customer analysis and post-COVID pent-up demand being finally unleashed. Indeed, the vast majority of venues did see an expected bounce-back, with high occupancy rates across the board and a sense of the domestic fightback against COVID being won.
- “The hotel occupancy rate in the United Kingdom was 81 per cent in September 2022. This shows an increase when compared to the same month in the previous two years”.
But, as we highlight at length below, the sun doesn’t shine forever. EoY reports indicate a nervous start to 2023 and the potential for a year dominated by a RevPAR difference between London and the rest of the UK.
- “Despite rapid growth and a stronger than expected rebound in demand in 2022, recovery in the UK hotel market is set to stall in 2023 in the face of continued volatility of trading conditions and rising operational costs”.
But every problem contains the seeds of a solution.
Here are the top 6 Revenue Management trends of 2023:
1) Storm clouds are on the horizon, but demand is still high
Even with talk of recessions, hotels are forecasting increased occupancy and increased ADRs (Average Daily Rates) in 2023. The good news is that despite the economic gloom, the vast majority of the UK population still wants to travel and there is still some pent-up demand from COVID. However, the occupancy positivity will be strained, and more than likely will drop from the heady double-digit increases we saw in 2022. For the humble Revenue Manager, the big question will be around costs and inflation - rates will undoubtedly have to rise (if they haven’t already), and Revenue Managers will have to work hard to keep costs sustainable. The signs are there that the industry will hit significant financial headwinds despite the continued high demand. 2023 could be the year when GOPPAR becomes the go-to KPI for the industry.
2) Big Data and Forecasting 2.0
Last year we highlighted Big Data and real-time forecasting as two of the most effective and important competitive advantages a Revenue Manager could deploy. Nothing has changed and if anything, optimisation of digital services and continued investment in data-led service adjustments are more important than ever. We feel 2023 will be defined by understanding more long-term customer trends and predicting buying trends via the use of real-time data to help maximise revenue. Above all else, the efficient use of data should be focused now on tangible outcomes - how to pull together and visualise the entire customer journey, and how disruption and pricing shocks (and dynamic pricing reaction from RMs) can impact everything from staffing outlay to inventory management. The age of the fully connected hotel is here, and its imperative data leads the way. Hotels used the positive market in 2022 to replenish challenging cash positions after COVID so many were not able to invest in the technology as they wanted. The key for 2023, will be who manages to invest in the right tech areas to push ahead.
3) ESG and sustainable services
Environment, Social and Governance issues are more than ethical guidelines - they are absolutely critical to business operations. From efficient, waste-free supply chain management and venue environment stewardship, to customer choices and purchasing preferences, the entire landscape of Revenue Management is now defined under the umbrella of operational sustainability and customer expectations of ESG. Revenue Managers must be co-owners of how ESG commitments are illustrated and communicated to customers across the entire brand and marketing chain. Customer buying behaviours are now influenced by how venues communicate their “green” and sustainable agenda and this impacts the entire value chain, from the provenance of the food they want to eat to the amount of plastic they use, and even the reviews of how staff and guests are treated and how venues represent and work within their community.
4) Inventory control - 2023 Edition
To have a thorough understanding of inventory data is one thing, but to be able to adjust to demand in real-time to optimise ROI and stabilise pricing will be how venues make inroads into battling inefficiency during a disrupted year. Improved venue tech and access to BoH/Supply data will do much of the inventory heavy lifting. Through the collation of this data, Revenue Managers will be able to better predict long-term financial commitments and venue ROI, plus reduce overspending.
5) The upward trend for business travel
Business travel is on the up and returning to pre-pandemic levels. Conferences and events are back on the up. Weddings are continuing to roll out and demand is beating expectations. But drilling into the wider business travel data provides some interesting views on the market. For example, one-day trips are slightly less frequent than pre-COVID (mostly due to video conferencing taking a chunk out of the market), but people are travelling more for longer trips, and the demand for face-to-face meetings is still trending to the good. We predict this to continue in 2023. Will the term “Working holiday” be a new customer segment as people combine a few days holiday with a few days away with work?
6) The digital marketing bonanza
There has been a changing of the guard in 2022 - Digital Marketing has seen huge levels of investment in the hospitality sector. But with digital marketing getting pulled closer into central business ops, and as marketing becomes revenue-critical, the overall responsibility for digital marketing has started to fall under Revenue Management. Reactive, hyper-personalised and agile marketing strategies are essential if venues are to take advantage of our always-on culture. How better to highlight hyper-relevant products than by focused marketing output, geofenced and programmatic advertising, and engaging and attractive social media management, all serving the greater revenue good and underpinned by revenue strategy?
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West London, London
West London, London