Welcome to the world of Non-Room Revenue Managers. Once shunted to the sidelines, as having limited potential towards the topline, senior decision makers are now realizing that this avenue is not only important to get those extra dollars, but also to drive a deeper engagement with the guest, which ultimately drives higher satisfaction, and lifetime value from the customer. While there are so many possible revenue streams to tap into, the challenge is knowing what to focus on – and that can be different for each guest.
To solve this problem what is important is to understand guests from two perspectives:
- Propensity: For E.g. – When Joe visits a new city on business, he needs ground transportation and high speed internet
- Affinity: For E.g. – Jill booked two rooms for a long weekend and she is coming in with her husband and kids; she may be willing to pay more for connected rooms
Retailers have been doing this for a long time using a technique called Market Basket Analysis. More recently, hospitality companies and especially cruise lines have applied this thinking and are seeing great results. Once we understand Propensities and Affinities, we have the ability to create two very intelligent solutions. First, we can inform product development. Of course, additional insights may be needed to create the best packages and price them appropriately and conjoint analysis is a great way to do that.
he second lens that can be developed with these insights brings into sharp relief, the variety of opportunities that exists with each customer between booking and checkout. The right frequency and cadence of pre-arrival messages can be critical to success.
A $10 BN hospitality services brand has done this very successfully and even developed category level loyalty programs to maximize ticket size. They did this by identifying categories that were predictive of high value – for e.g. if a guest buys Category X on day 1, he/she is twice as likely to become a high value guest and needs special attention. They also bundled Category X with products from 2 other categories that had the best affinities. This resulted in well over 15% increase in incremental revenue on the non-room services with an ROI of over 35.
For information on the analytics and technology needed to implement this, reach out to us at Hospitality Solutions.
Author: Guha is part of the Hospitality Solutions team at Absolutdata. This team of Decision Engineers helps clients drive Incremental Revenue, enhance Promotions Effectiveness and increase Marketing ROI. Guha is based in Dallas, USA and works closely with Customer Marketing Leaders and Revenue Managers across various Hotels, Cruise Lines and other Travel and Hospitality brands. You can reach him at firstname.lastname@example.org or tweet him @GuhaAthreya