11 Jul 2011

7 Social Media Tips for Revenue Managers

Revenue managers will have to watch RevPAR by room type much more closely due to the hyper-details consumers get on-line

Value score on sites such TripAdvisor are useful indicators of whether or not to push higher prices

Cross-comparing social media metrics to market share performance will help hoteliers benchmark where they stand amongst the competition

Deploying an effective social media program at the property level can be stressful for a hotelier. However, it may be a necessary step to stay afloat in the industry.

“Social media is here to stay. Hotels that do not have an active plan will be left behind and lose market shares, especially if you’re an independent,” said Bonnie Buckhiester, president of Buckhiester Management Limited, during HSMAI University’s “The Impact of Social Media on Revenue Management” webinar last week.

Forty-eight percent of consumers combine social media and search engines in their buying process, according to data released by Social Media Today. This leads to an acceleration and amplification of information on the Internet, where shoppers research and obtain information very quickly and then broadcast their findings to connections on social media sites.

Those findings, in turn, impact the booking behavior of other consumers. In an Econsultancy survey cited by Buckhiester, 90% of online shoppers said they trust recommendations from people they know, while 70% trust opinions of unknown users.

Revenue managers can leverage this influence to drive business and increased bookings. Buckhiester outlined seven key components of a strong social-media program:

1. Product alignment
Buckhiester stressed the importance of knowing value scores on websites such as TripAdvisor. Most hoteliers are familiar with where they stand in the rankings, but value scores provide pricing signals. If a hotel has a higher value than its competitors, it’s revenue manager should be pushing higher prices.

Consumers are getting hyper-details about hotel guestrooms before they even check into hotels. Some hotel sites even allow guests to see the view from each room online. When the consumer has hyper-details such as these, revenue managers will have to watch RevPAR by room type much more closely.

2. Competitive benchmarking
“Social media is changing the whole way we approach benchmarking,” Buckhiester said. Websites such as Chatter Guard and Market Metrix help revenue managers manage and understand what is being said about their properties online. The new metrics to track and evaluate are reviews on online travel websites, videos, Facebook fans, Twitter, photo shares, bookmarks and blog entries. Buckhiester also suggested cross-comparing social-media metrics to market share performance.

3. Strategic pricing
Consumers are intrigued by new retail concepts that offer members-only deals, flash sales, group buying and auctions. The key is to focus on value instead of price. There are websites that show consumers exactly what they are getting for the price they are paying. Value seekers will pay more if they are getting more and then move on to social-media networks to spread the word about the great value.

If revenue managers decide to start a social-media initiative involving pricing, it is imperative they have sufficient staff to handle questions as they start coming in.

4. Demand forecasting
“We have to have better forecasting skills. We have to have a regimen that is more rigorous. And we certainly have to be very careful about how we time our pricing decisions because the consumer has, in some cases, more information than we do,” Buckhiester said. When it comes to forecasting, accuracy is key, and most hotels will have to deploy revenue management software systems, she said.

5. Business mix manipulation
“I’m not seeing dynamic business mix management at medium- and short-term levels,” Buckhiester said. Rate conflicts will intensify with social media being as dominant as it is and with flash sale sites connecting to online travel agencies. The goal is to manage business mix strategies and change messages rather than rely on prices with last-minutes sales. Doing so will create a more profitable hotel.

Putting an emphasis on market share forecasting will help in the process. Using historical and demand data to forecast future RevPAR and then projecting that into the marketplace is like having a STAR report in advance, Buckhiester said.

6. Distribution management
Buckhiester cited a New York Times article from February 2010 that reported the average person made 21 visits to websites before finally booking a trip. Mobile phones also are giving consumers unprecedented options. Hilton reported that 70% of business via mobile phones is same-day. Better-informed consumers and shrinking lead times mean hotels need to fence pricing more precisely.

7. Optimize ROI on social media
Revenue managers should question their resource choices and allocation of time. They should evaluate what they are wasting time doing now and what they could be doing with a social-media plan in effect. Buckhiester emphasized that hotels should be connecting to their communities at a local level.

Employing a social media champion, as well as a revenue management champion will help to ensure a successful campaign, she said.

This article first appeared on HotelNewsNow.com on 7th July 2011.