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On the eve of the new year, we asked six industry Revenue Optimization experts for their thoughts on the coming year. You can read their interesting comments about 2024 below.

As 2024 unfolds, predictions for the hospitality industry indicate a modest 2-4% growth in Revenue Per Available Room (RevPAR) across the United States with rising operating costs and margin pressures. This growth is expected to vary based on factors such as class and location, with the latter half of the year anticipated to experience more substantial growth compared to the initial months. The industry is undergoing a transition from the echoes of 2019 to the resonance of recent trends. Here are my top predictions on how the year will unfold:

  • Hunt or Be Hunted: this should be the year’s prevailing mantra. Hotel owners and operators are aiming for above-market returns, emphasizing the need for strategic moves to attract new business or fiercely protect existing market shares. The agile and innovative players are expected to thrive in this low-demand environment, as proactive measures become crucial for success.
  • Incidental Hotel Fees (more or less): A significant shift is anticipated in hotel fee structures, especially in California, where full price transparency is set to be mandated by July 2024. This move is expected to set a precedent for other states, stimulating debates on hotel fees in an election year. Hotels with existing fees will need to adapt to comply with new mandates, either by removing or strategically adjusting fee structures.
  • Fortune favors the bold: 2024 is poised to be a year of innovation and experimentation in the hospitality sector. Industry players must be willing to explore novel strategies and overcome the fear of failure to navigate stagnant demand generators successfully. Success in 2024 will be associated with those who dare to venture into uncharted territories, highlighting the importance of adaptability and strategic acumen in this transformative journey for the hospitality industry.

I am starting 2024 super-energized. My first full year at WHG, 2023 was dedicated to sorting out data and technology challenges, and standardizing key processes like forecasting, budgeting, sales goal setting, and weekly strategy calls. We struggled early in the year to fill sales positions, but now we only have a few vacant spots and by far the best group of DOS’ that anyone can remember. We also had zero turnover in Revenue Management, so what was a strength has only gotten better.

So when I look around today, I see an effective and scalable revenue optimization platform and the people in place with the ability and desire to take it to the next level. Energized. With that in mind, here are my professional resolutions for 2024.

Resume looking at market segments in a more granular way. In most cases, the past few years’ growth has come from one or two major segments. While we expect decent overall growth in 2024, individual market segments will be far from stable. A notable example is the pull back of leisure business in South Florida. We need to be adept at identifying issues and finding the emerging business that will inevitably fill in the gaps, ideally before our competitors do. Leadtime is extending, so the window we monitor, especially with group business, must extend out further to match.

Place more focus on group business. Last year was a decent year for group, but in most markets it’s not nearly what it once was, and most of it is coming from the traditional sources. Brand national sales and Cvent have been driving the bus. But similar spots in previous cycles have seen new sources like SMEs, who do not rely on the traditional channels. It’s going to be the business YOU find, not the business that finds you, that will make the difference in 2024.

Push key processes down in the organization. Every team has strengths, and in my case, having the basic processes in place and an amazing Revenue Management team allows me the luxury to lean on them a little more in 2024. This will allow me to become more strategic as a consumer of business intelligence, versus the creator, and I will allocate the recovered time to manpower development and leading our sales effort.

Manpower development. As 2023 progressed it became obvious that that we had to find new ways to fill open positions. We began placing a higher value on the potential of the individual and our ability to teach them, over experience on a resume, and it worked. It’s going to be who you GROW, not who you HIRE, that will make the difference in 2024.

Lead WHG’s sales effort by example. The majority of people in sales positions were not in the same role the last time group solicitation mattered this much. They may be great closers, but to most, prospecting means running straight to Google. Direct sales isn’t easy, but it can be really fun, and I intend to make way more than a token number of sales calls with my team this year. Those who know how to find business, and especially those who can teach others to do it will be at a premium in 2024.

Prophecy for 2024: Brands’ and governments’ attempts to simplify hotel booking fees has resulted in major turbulence in online distribution that makes me feel like we’ve learned nothing from “rate parity wars” or the “affiliate wild west”, and now the random elevation of the topic to the national political stage all but ensures it’s going to get worse before it gets better in 2024.

Over the last year and a half, I’ve said that this could be revenue management’s finest hour, and 2024 is the time to live to that potential. Despite some headwinds, the industry has largely stabilized. With stability comes the opportunity to become more forward looking and keep pushing against legacy behavior. Here are three resolutions for revenue leaders that will help you not just survive, but thrive, in 2024 and beyond.

  • Resolution 1: I will start standing up to owners and GMs who waste RMs time. Owners and GMs are famous for asking for the same reports in different formats, arguing about rates and dates instead of strategy, dragging teams into unnecessary meetings, and otherwise distracting the revenue management team from driving profitable revenue. It’s time to refocus the revenue generating resources on generating revenue, which means we will have to have the courage to push back on these leaders, respectfully, when they let things get in the way.
  • Resolution 2: I will stop blaming the system for everything. It’s really easy to say ‘well the system said’ when stakeholders disagree with a strategy. “The system” is only one tool in the revenue manager’s arsenal. If revenue management wants be looked at as a strategic partner, they need to own the strategy. So, build the strategy using all your tools as well as your experience and knowledge, and be ready to defend it with fact-based insights.
  • Resolution 3: I will expand my understanding of all business levers. Commercial strategy is in danger of becoming one of those famous overused and under-actioned terms like “optimal” or “total hotel revenue management”, but if done right, it’s a profitable shift in perspective. Those companies that will excel at commercial strategy understand that in the end it’s a leadership play. It’s about bringing everyone who has a lever that can influence performance to the table and synchronizing their activities. With competing agendas and perspectives, this is much harder than it sounds. It starts with a basic, shared, understanding of what levers are available and how they operate. If you start by building that understanding, you can become the leader that pulls the team together to execute.

2024 should experience more normalized demand at every level, with corporate and group businesses continuing to return and reduced pent-up leisure travel. With this demand expectation, the RevPAR growth will likely be driven by an increase in ADR. The national RevPAR growth is expected to range between 2~4% year-over-year. As concerns about a recession decrease and interest rates are anticipated to drop in the latter part of the year, more growth is expected in the second half of 2024.

Major destinations where the demand is driven by conventions, corporate travel, and government business are expected to see stronger growth in RevPAR this year, fueled by continued returning business travel and more large group meetings. However, some regions, like Florida, for example, may continue to experience softer demand, but hotels there will try to mitigate the decline in RevPAR through strategies focused on ADR. Another example is ski resort markets where warmer than anticipated weather this winter has negatively affected demand so far.

With the anticipated increase in corporate and group business, upper-upscale and upscale hotels will likely experience higher growth in RevPAR this year. There are several variables in 2024 that could impact demand, such as warmer winter weather, the presidential election, or another series of Taylor Swift concerts. Regardless of anticipated or unexpected events, 2024 will likely be the first year since the pandemic’s start that hotels can accurately predict the demand, compare their performance year-over-year, and experience a degree of normalcy in operations.

Below in regular font are recent articles that I am quoting from the following sources; Future Partners, Deloitte, Hilton, American Express Global Business Travel, CoStar/STR, US Travel Association. The comments in italics are my perspectives on these relative to what I see and believe.

  • Perceptions of economic pressure and uncertainty are starting to impact travelers' mindsets. This is real and an election year that will likely be unlike any we have seen before will amplify these concerns.
    • The exception appears to be that affluent, urban, and younger travelers are more optimistic about their current financial situation and will likely continue to prioritizing travel. We have been told to revise our target demo to Millennials and Gen Z for a while and if you have been doing it you are ahead of the curve, if you have not, you are woefully behind.
    • Worth noting that this last sentence applies to AI as well. If have are avoiding it you will be behind the pack organizationally as well as individually.
  • Many travelers plan on blending work and leisure to extend their time away. Remote work continues to be a premium in our commercial space. The talent is now requiring the flexibility of work/life balance key to their compensation. Additionally, properties must provide business solutions; wi-fi, printing, etc. that make work easier for those blending their travel.
    • Blended travel has boosted demand for extended stay hotels. Make sure regardless of your hotel type that your hotels boasts the amenities that make it easy for blended travel. One of the things things that I think about is that I get an Instacart order to the hotel if I am staying more than 1-2 nights. As long as the hotel has a fridge in the room this suits me perfectly without the need of an extended stay hotel. How can you use something as mundane as the typical in-room fridge to appeal to this audience?
  • Spending on in-person experiences…remains a priority. Additionally noting that this is a trend particularly for Gen Z and Millennials. I love trends because they frequently tie in if you pay close enough attention. So to the point of the first bullet I offered Gen Z and Millennials are the target demo of '24 and in order to appeal you have to market to their sense of adventure and need for experiential travel.
  • Millennials see to maximize their benefits the most when booking with 67% prioritizing loyalty programs when planning travel. Highlight your loyalty programs. If you are with a brand, use the brands marketing materials. If you are not, partner with a credit card company like Amex to promote.
  • With regards to group 8 out of 10 global meeting professionals are optimistic about the health of the meetings and events industry. 77% expect meeting event attendance figures to continue improve and return to 2019 levels by 2024. The onus of your room revenue growth should be in group revenues for 2024. The key to the strategy is to do the research to understand what is booking NOW versus relying on history.
    • Over the last year corporate and association group demand has returned more strongly than transient. #FACTS

While Revenue Management has come a long way in the last decade and especially since the pandemic, I expect some things to stay the same and some to change dramatically in 2024 – in a good way. Things that I don’t see changing this year, unfortunately, will include areas like poor data quality leading to bad forecasts and missed opportunities, lack of coordination between Sales – Marketing – RM at the property/corporate level resulting in subpar market share and general lack of control of onward distribution of hotel rates and content on various channels leading to poor transient rate efficiency.

At the same time, I see unprecedented change coming this year in automation and use of AI in all aspects of travel. The amount of data points available for Revenue Management have never been greater which has led to the need for automated RM systems to ingest more data as well as run continuous optimization cycles for recommendations. CRM systems have finally come of age and technology is helping personalization of marketing offers for travelers in a big way. New technology will make retailing and merchandizing of rooms and non-rooms attributes a lot easier leading to a significant increase in price points and incremental revenue.

All these developments in turn will have a downstream impact on distribution channels and overall plumbing capacity of the tech eco system forcing RMs to play a larger role in the commercial organization. Here are some additional tips for the RM community for 2024:

  • Traditional market segments are getting blurred. Work from anywhere and Bleisure concepts are here to stay and are reshaping travel patterns.
  • Focus on data integrity and purpose of visit starting from the source channel down to the front desk entry level to get a better handle on your business and also to show some love to your automated RMS so it’s not garbage in – garbage out.
  • Stop measuring against 2019 as the benchmark year. Travel trends have changed significantly. Use trailing 12 months for forecasting and optimization purposes.
  • Own onward distribution of your hotel rates on various channels. It’s your business to know what is being sold where and under what conditions.
  • Technology is evolving fast and becoming more affordable. Use new age commercial optimization solutions that can give you timely and actionable insights.
  • Take an active role in understanding ROI of all marketing activities, sales team performance and allocation and technology investments by your hotel or corporate team that impact your world.
  • And finally - RM is both art and science. If all RMs in your comp-set have similar tech and RM systems – only your skill and understanding of your business / market will make or break your RevPAR index.