Relying On Revenue Management

By Larry Mogelonsky | November 23, 2020

Perhaps the worst repercussion of the lockdowns and the cessation of travel has been that hotels have had to part ways with their teams. It’s intensely saddening that we’ve had to furlough so many good people, but my hope in writing this brief story is that you can realize that this may not be the best strategy for the trying times ahead for hospitality.

I’ve known members of the senior team at Newport Hospitality Group (NHG) for nearly two decades now, always admiring their commitment to developing thoroughly knowledgeable and hardworking teams to oversee their managed properties. As a hotel management and development company with over 50 properties in its portfolio spread across the Eastern Seaboard, their exposure during the height of the pandemic was as high as most other hospitality organizations.

But rather than suspend revenue management activities in a time when bookings were not likely or even possible, NHG saw an opportunity to ramp up its regional sales efforts, getting a step ahead of the competition. In part because of this, the company has been the beneficiary of significant portfolio growth, adding 11 hotels since the start of the year.

Prioritizing revenue management during this past spring’s hectic series of events meant that the company gave more support in this area to its managed properties than ever before. In contrast to numerous other organizations, NHG maintained a strong sales team, even adding members for certain territories. This ongoing ‘bench strength’ then allowed the company to quickly formulate concrete plans for pursuing emerging segments like extended stays, smaller isolated groups sold strictly through ecommerce, new GSA or corporate contracts, displaced workers and transient guests on the lookout for bespoke packages.

In speaking with Wayne West III, President of NHG, about the program they have set up to grow hotel revenues in spite of Covid, he commented, “During the initial phases of the pandemic, our focus was on postponements and renegotiating contracts to keep the business. While we soon realized that delaying a room block by 30 days over and over just didn’t make sense, it nonetheless helped us to hone a system that involved significant daily contact with our managed properties and clientele to block and tackle rates. We were delivering, and still are for many hotels, updated hot sheets three times per week that outlined available discounts and comparisons to the comp set.”

Hence, a key advantage to having more boots on the ground in the revenue department has been that it facilitated a more personal and transparent structure of communication with ongoing clients so that properties managed by NHG would remain top of mind for when business activities return to normal. Having the resources to stay proactive—even if it’s just a brief update conversation talking about the latest sanitization measures and with no direct push for the sale—has proven to be very farsighted in that clients have subsequently come back to open discussions about bookings for 2021.

A specific example of an NHG-managed property that West emphasized as a story of success was the Candlewood Suites Fayetteville. This unassuming 114-room flagged hotel in North Carolina that is strategically close to both Fort Bragg and Pope Army Airfield has had record occupancy numbers throughout the pandemic, has grown RevPAR and is far ahead of its annual budget. While much of that business has stemmed from military-related guests, the work that the company’s revenue team performed back in March and April to determinedly revise corporate rates gave the property an overwhelming leg up versus the competition that has persisted to this day.

The lesson through all this, especially for owners, investors and REITs, is that the best way to establish a more viable path to long-term profitability is by staying fully engaged with both your teams and your customers, even when the dominant trend is to hunker down and close off operations.

To conclude, it is important to highlight that such forward-thinking approaches to management don’t appear overnight. As part of its commitment to proper succession planning, NHG has understood that treating associates well throughout the pandemic has led to less unease amongst frontline staff which then echoes through to better overall guest service. In an instance of leading from the front, when an employee sees the GM helping clean rooms or wipe down restaurant tables, it really helps to solidify the team dynamic, lift spirits and bolster retention.

Ultimately, we are all looking for solutions to help maximize bookings from all segments for 2021, but this cannot be done without the right people in place to harness the power of grassroots customer relations. So, give some thought to looking at how you can stay fully engaged with all your hotel teams, especially in the revenue or sales department, and perhaps even hiring more managers as a means of generating more top-line cashflow.


Larry Mogelonsky

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