Guest: Vivek Bhogaraju, Director, Revenue Management Systems, Expedia
Time: 34 mins.
Episode Transcript
Glenn:
Hey, everybody, and welcome back to The Hotel Tech Podcast with me, your co-host, Glenn Haussman. Of course this wouldn't be The Hotel Tech Podcast and all of its amazing goodness if I didn't have with me my incredible, awesome co-host, Mrs. Estella Hale, who's the Chief Product Evangelist with SHR. Of course that stands for, Scepter Hospitality Resources, and I love myself some Estella because she is so smart, so interesting, so engaging and one of the top tech minds in our amazing hospitality district. Hey Estella. How are you today?
Estella:
I am doing great. Thank you so much Glenn. I'm honestly just so thankful for really receiving so much that we have from the podcast so far, from the guests, to the audience, to the feedback, and just want to thank everyone that listens. Everyone that participates on the show and everyone that emails us with ideas of what are the next topic that they want us to tackle, that really allows us to reach out to our very relevant and very great minds that we have on our podcast. Just like the one we have today.
Glenn:
Yes, absolutely. For sure. I got to tell you Estella, I'm having so much fun. I've had the most incredible Winter and now we're in the Spring traveling all over the United States, even some places in Europe. And everywhere I go people are telling me that they're listening to the show, that they're learning from the show and fortunately enough that they're loving the show. Mostly you, Estella, but they're absolutely loving the show and they accept me as part of this as well. I'm having so much fun relaying all of this great information to you and we are going to keep it going on throughout this entire year.
Glenn:
I know I, for one, I'm really excited. We're working out an opportunity for us to be at the HITEC Conference this coming June in Minneapolis. I can't wait to actually be there in-person, bringing The Hotel Tech podcast to light in the venue.
Estella:
Yeah. Very exciting.
Glenn:
So let's get on with today's show. We have a great guest today coming all the way from another part of the world. I think he's in Switzerland and I'm talking about, Mr. Vivek Bhogaraju. He's the Director of Revenue Management Solutions with Expedia Group. Vivek, welcome aboard.
Vivek:
Thank you. Thank you for having me. It's great to be on. I've heard many of your podcasts and it's a kind of surreal that I'm on this one.
Glenn:
I know how you feel, kind of surreal I'm on this one too. So Vivek, this is great and it's kind of fun to have someone like you on the show because Expedia is kind of like that boogeyman out there and I spent the last few years trying to help hoteliers understand that you're valuable, that you're important, that you're helping hoteliers all over the world make profitability. Today we're going to talk a little bit about how you consider revenue management. Some of the issues that you see are being in revenue management, but most importantly telling us something that might make us uncomfortable with revenue management, but that we absolutely have to hear.
Glenn:
So I think the first question I have for you Vivek, before we get into the specifics, is where are we as a state of revenue management in the hospitality industry. What are your expectations for um, how people could be successful for the smart revenue management platform.
Vivek:
Great. So I think we are at a crossroads in where we think about revenue management, but all sort of new management adoption and understanding. And here's why. So revenue management technology is not new, right? It's been around for close to about 30 plus years. If you go back and think about when are the first off the shelf tools that are available, software as a service or whether they were given off as a license. But when was technology available? It was 30 years back, and very recently about probably close to last year when we did a market survey here at Expedia, we found that less than 3% of hotels globally use revenue management technology. That is shocking. 00:04:19].
Glenn:
Three Less then 3%, what?
Vivek:
Less than 3%. Three precent is probably what the stat we put out. But actually the number is lower than that. And that sounds astonishing. It sounds shocking, but it also is an opportunity. It's an opportunity for everybody to think through and say, what has worked, what has not worked? How can we really impact our hotel partners and how can we help hotels make better decisions? Now, if I were to tell you that revenue management technology is just one indicator, of whether you call it maturity, or whether you call it progress, or whether you call it the state of revenue management industry, but every hotel makes a decision, every day, on what to press, how to compete, how to grow, right, and how to beat their budgets or performance indicators or reach, their financial objectives.
Vivek:
So all these decisions are being made for the vast majority of hotels close to 97% but they're made without using data driven decision making, without using scalable techniques such as technology and you know, sophisticated practices that might help hotels to make better decisions. So that is astounding. But also I see it as an opportunity. I see it as an opportunity for us to fundamentally rethink what we can do differently so that the next time you're talking about this, the numbers are dramatically different.
Estella:
Thank you, Vivek. I actually recently read an article that you authored on Phocus Wire in January of this year, which I recommend to our entire audience to look for a download at '11 Uncomfortable Truths About Hotel Revenue Management.' There, it's really packed with insights, and some of my favorite that you kind of touched on a little bit there is that in hospitality and hotels, every day you reset the clock. Our inventory, what we have, is perishable. It is not the type of inventory that you can sell the next day and can get some value for it. If that night is gone, that inventory has perished. You can no longer go back and sell it again.
Estella:
So taking into consideration from the one side that everyday you reset the clock, you have perishable inventory, but that everyday also revenue managers with or without technology face, that moment, in the morning of, 'Now what?' You know, and for the 97% that do not use technology, as you mentioned, this is a great opportunity to answer that, 'Now what?' Every morning when they come in and the clock is reset. But how about those that have some form of technology, data, and something in front of them, some dashboard or something.
Vivek:
Mm-hmm (affirmative).
Estella:
But they're still facing that question now. What? What? What if there's no valuable insights there?
Vivek:
So I think the way to think about this is it is a hyper intensive and competitive team sport. I don't think there is a better team sport than revenue management. Think about hospitality technology or just they talk about general in travel.
Glenn:
Are you including cricket in your speech [crosstalk 00:07:39]
Vivek:
I know Glenn, I knew that Glenn had to come up with that. But, if you think about, you know, winners and losers but also about gainers and if you think about, you know, how competitive that can be, it is competitive, so it can be brutal. But at the same time, the way I look at this is, you have an opportunity to start a fresh, every single day.
Estella:
Mm-hmm (affirmative).
Vivek:
And if you think about a hotel today, no matter where you're located, right, whether you're in Americas, you're in Europe or in Asia, or the middle East, no matter where you're located, if you have an opportunity every day to become 1% better at what you're doing, whether it is data analysis, whether it's competitive intelligence, whether it's making timely decisions, whether it's making sure that sales marketing and revenue management are aligned. I think you have an opportunity to make a difference, and that's what I find so exciting because yes, it's stressful. Yes, every day the clock resets, but guess what? Tomorrow morning, the closet block resets and you start a fresh new game in terms of how you think about your strategy and how you want to get better at it.
Estella:
Mm-hmm (affirmative).
Glenn:
Okay. So then how our companies is looking in terms of their revenue management strategy, because I'm having a feeling that people are not leveraging the data that they have in order to make the best possible decisions. I think this goes back to the only 3% of people are very focused right now on a coherent revenue management strategy. So what are some of the, the things that we need to start thinking about as the other 97% in order to begin to find success.
Vivek:
So first things first is start small. There is no reason why you can't start small. You can't start in a very finite way in terms of the way you can influence revenue management strategy. It always starts with the unattractive stuff. It always starts with how do you compile data? Where do you get your data from? Is your data recent, is it refreshed on a timely basis? Do you have access to it in a sustainable, scalable manner? And the data points that you are collecting, are they being stored properly? Are we asking the right questions and obviously storing them properly? Often what I see is with implementations of it's sophisticated revenue management techniques, people often not ask these questions and go straight to get me a great looking dashboard. Get me a mobile app. Get me some, you know, super fancy third party data that I can make some wonderful decisions with.
Vivek:
Well it kind of starts with discipline. Revenue management is all about discipline and if you start small, if you ask the right questions. Okay, are we getting the daily data that we need to get about our business? Did we have visibility over it? I'll be able to control it and manipulate it so we can better understand our business. Probably it starts from there. Once we understand our business, then the question we need to ask is where are the gaps? Where are the areas where you can accentuate a strategy or accentuate an outreach so that he can fill in those gaps in terms of the demand that you're getting. So I often, if you ask the revenue management purists that always say start with segmentation. And one of the reasons why they say that, if you think about it, is having a very good understanding of your business.
Vivek:
So you know where your guests are coming from. You know what kind of guests stay at your hotel, what you are competing for, and where you stand in terms of the competitive set. So it starts with these basic fundamental building blocks and then you build on top of it. If I think about one thing that I always kind of, in my recent conversations I've been thinking deeper about, what are the revenue management skills of the future, not for today. Where should we be focusing on? And one of those skills that I feel because of the advent of technology and how I feel this is just going to grow. Technology is going to be more accessible at a cheaper price point, be more cost effective and models have become more and more convenient. I think one of the skills that I see missing, and that's can a very good starting point is how do you experiment?
Estella:
Mm-hmm (affirmative).
Vivek:
A lot of things are unknown in revenue management strategy. You may know your market, you may know your guests, you may know your competitive set, but you do not know the reactions to certain things that you would do. And the only way to do that is in a very nice, small fenced manner, right? You start a small experiment, whether it's a price increase, it's a price adjustment, it's a kind of campaign. Start small. Build confidence. Show results to your colleagues, to your peers so that you can gain allies and support from the rest of the team and then continue to build on things. I sometimes think about these things as CB's, 'confidence, building' measures or 'confidence, building' initiatives.
Estella:
Mm-hmm (affirmative).
Vivek:
That you build some of those things and then you build on top of it. Nobody starts, nobody goes from zero to a hundred you know, on revenue management strategy.
Vivek:
It's an evolution and it's a discipline. But I think it takes persistence because again, when we started this conversation, we talked about the clock resetting, and you have an opportunity to restart and get better at it every single day.
Estella:
And what's interesting about that Vivek is that I love the idea of experimentation, right? And being able to either show success, or failure in smaller, shorter chunks that where you can iterate. But I think what you mentioned first is getting the first building blocks. Is my data stale or is it recent? I can't experiment with stale data. Am I being honest with myself and what I really need? You know, if I'm a destination property and I expect a certain pickup right before a weekend, but the reality is that the data that I have is from yesterday and my competitor down the street might be.
Estella:
I don't know, launching a promotion or lowering a rate an hour before I'm about to leave for the day. I cannot expect the same pickup that I would have that, had not happened. So I love the idea of experimentation once the property has had those basis of the data that they need, but also once they're honest with themselves and what they will be lacking in order for those experiments to be relevant because if not, it might create some bias of just continuing the way they're doing things.
Vivek:
Yep. Completely agree. And you know what, the other thing, which I'm noticing is that we talk a lot about, the numbers broadly, could be discouraging that the vast majority of hotels are not doing anything. Well. What I'm also increasingly finding is that innovation is happening in pockets around the world.
Estella:
Mm-hmm (affirmative).
Vivek:
One of the advents of technology, and data, and the tools that are available is that if you have a sort of intent, and a vision to drive forward, if you have the support from your team. No matter how big you are or how small you are, you can make a difference. And I'm seeing that when I speak to our hotel partners. I see no matter where they are located, how big their size, it could be a standalone hotel with very few resources, but they have been very focused and intentional about it. They're seeing results and those are the hotels that outperform the comp set and they sometimes beat the big, bigger chains and the bigger brands and going off, you know, the fight above their weight level. But that's, that's possible today because technology is a very, very good level playing field. In terms of how you can use some of these tools. It's the practices and the people
Estella:
Yeah.
Vivek:
That kind of empower the technologies and going to push it beyond their one boundaries.
Glenn:
And we are back with the Hotel Tech Podcast and Vivek, just before we took commercial break, I threw you a challenge to give us one great explanation are using a real life case study. You don't have to tell us the names of you're uncomfortable with that of how a company took these initial steps, found some success, and built that confidence.
Vivek:
Perfect. So at one of our hotel partners that I met last year is an independent hotel in Washington DC and one of the unique situations this revenue manager found herself in is that they just came off a brand and the owners decided to de flag and become an independent hotel. Now just think about it, a market, as competitive as Washington D C it's an established market and right in the city center is a hotel that used to be one of the big brands, and had a whole book of business, and a history. And everything behind it and overnight it became an independent hotel with a brand new identity. What an amazing challenge. First of all, to be in, right.
Estella:
Yes.
Vivek:
For that revenue manager to prove herself. But here's what she did. She started incremental. She started very small. She set out a vision and one of the things she did is using comp sets so one of the things she did is listen, we have a historical concept that the brand had with a bunch of brand relevant competitors.
Vivek:
Our owners want another concept where we feel like this is where we are going to fight for our business. This is what our presence is, because we are newly independent, we are trying to create and establish an identity in this market. At the same time we want an aspirational concept of where we want to go in the future and so we're going to have a baseline. You're going to have a present, and then we want to have a future, and how can we make tactical steps, tactical things that we can do every day to make ourselves relevant at the same time make progress on that journey. I think one of the cool things here is there is an immediate realization that this is not going to be an overnight effort.
Estella:
Mm-hmm (affirmative).
Vivek:
It is not a one quarter thing and then suddenly you want to achieve all your financial objectives but it is going to be a journey and that's one of the things that I see the most about revenue managers that all successful.
Vivek:
They are able to align that team on objectives on a journey and say that we are going to make incredible progress. But we are going to make a step at a time and we're going to do a quarter at a time with measurable results, and as soon as we meet those results, guess what? I want more resources, and I want more help from you to achieve greater heights. This is a classic team sport example. But this is also, a very good revenue manager who's probably using today what I would call as another skill, a future skill of a revenue manager, and that is, influence management. Today's revenue manager is not about crunching data, is not...
Estella:
Yeah.
Vivek:
About running models. It's all about that because you have technology to do that and they're smarter and we're getting better at it, but it's about who's going to collaborate the most effectively across cross functional teams.
Vivek:
To align on a widget. So this thought of this Ninja.
Estella:
Mm-hmm (affirmative).
Vivek:
Kind of warrior that I always think about it in my mind is the revenue manager. Is he or she the revenue management ninja that is going to align all these revenue producing functions around the hotel and say, guess what guys? I've got something to supercharge our strategy and our way to do that is using data. We'll make good decisions. We'll make effective decisions and you all are going to help be deploy it. And this hotel had, year-over-year in the first year I met her, it was the end of that transition, it was the end of December last year.
Estella:
Mm-hmm (affirmative).
Vivek:
Double digit ADR, ref bar growth and back.
Glenn:
Wow.
Vivek:
Owner's...
Glenn:
Wow.
Vivek:
Super successful and happy with their decision of de flagging. But essentially she had a financial objective and the brand is getting recognized in the marketplace because they're doing smart guest acquisition.
Glenn:
Mm-hmm (affirmative).
Vivek:
To get people known and into their hotel and they suddenly say, okay, that's the hotel that we recognize, the location matters.
Vivek:
And she used a couple of things. Of course, she is a avid, you know Expedia ref plus users, so I'm going to make a plug here but one of the tapes.
Vivek:
Yeah, one of the things that she's using very smartly, we have something within our tool that we offer market and sub-market occupancy forecasts.
Estella:
Mm-hmm (affirmative).
Vivek:
So in real time we tell hotels what full cost the market is going to end up at a year out and we're also forecasting what the sub-market is forecasted at. So she's using some of these insights to come up with, Hey, here's what my sub-market is at. That's what I'm competing for. But this is the macro level demand that is hitting DC and this DC being a market is very peculiar that depending upon the time of the year, they have different international source markets.
Estella:
Mm-hmm (affirmative).
Vivek:
Capitalizing on some of these things.
Vivek:
Very smart operator. Right.
Estella:
Mm-hmm (affirmative).
Vivek:
And when you would look at them you'd say it's an independent of tell it's a standalone hotel. How is she able to do this? And she's competing with all the chains.
Estella:
Mm-hmm (affirmative).
Vivek:
And she's taking them at both RevPAR index and market share. Right. That's a, that is a credible story. And there are many like that not only in the United States, but I see them in Southeast Asia, I see them in the Middle East, I see them, on top markets for Rev plus engagement all over the world. And I get the pleasure of listening to all these success stories come in. It just reassures me that if you put your mind to it, and if you can rally your team around with it, you can get great results.
Estella:
Oh, that's a great story Vivek and I think really the illustration of it, I can see that, because it's knowing the data, knowing the market and having the vision of where you want to take it. Then allows you to have tools like Rev Plus and say, okay, this is where I want to take it. So how does technology allow me to bridge that, and bring the results that I have for the vision. So I really like the idea of, envisioning this as an influencer. An influencer that will use data technology tools, the power of an OTA, the power of knowing your markets and sub markets and being able to do something about it such as, becoming a successful independent.
Estella:
And so again, we started the podcast by saying that the small number of adoption on technology for revenue management, but at the same time I think this is a great segway into our listeners having set out their vision for the market and what they want to achieve so that, when they evaluate the tools because the adoption is going to go higher, there's only so much data that that someone can analyze. Like this example that you gave, analyze the tools that are there for them based on how they foresee they can accomplish the vision and not use technology for technologies sake. But use technology to help them bridge what it is that they've set the vision to accomplish and they are a little bit of a diplomats to.
Vivek:
Yeah, and I think, you know, one of the common analogies I usually give is think about any revenue management technology provider, right
Estella:
Mm-hmm (affirmative).
Vivek:
if you go and ask them today, no matter who they are, what size they are, how big or how recent they're been at added or how many years they've been at it. You going to ask them today, Hey, among all of your hotel partners that use your tool, do all of them get the same uplift from your technology?
Vivek:
And I'll tell you the answer. The answer is no, it's not. And what is the reason? And what is the difference in that? They all have the same technology accessible to them. They have the similar configuration, they have the same tools, same level of sophistication in terms of the technology available to them. But how come they all have varying results? And it all comes down to how good you are at A collaborating with your team, but also deploying the solution in a way that it works for your business.
Estella:
Mm-hmm (affirmative).
Vivek:
And I think we always underestimate the skill involved in adopting technology, irrespective of the type of technology. You could make the same argument about CRM. You could make the same argument
Estella:
Yes (affirmative).
Vivek:
About reputation. You could make the same argument.
Estella:
Yes (affirmative).
Vivek:
About revenue management, right? The tools are there, the platforms are available, but it is the skill required, how to adopt them and how to make them your own and how to make a team rally around those platforms so that you can get the most from them.
Estella:
Mm-hmm (affirmative).
Vivek:
And I think that is a skill that we need to talk a little bit more about because.
Estella:
Yeah (affirmative).
Vivek:
Guess what our the travel technology ecosystem is only going to get more sophisticated and they're going to be more and more offerings that we need to kind of integrate together.
Estella:
Mm-hmm (affirmative)
Glenn:
So what we're really talking about then is making the smart business decision to put in the discipline to take the time to do this the right way. It's not flipping a light switch, it's filling up a bathtub, which takes a lot longer time. So you want to pull everybody together on your team to be able to understand this, and creative a set of expectations that are realistic. Now for the owners that are out there, we're all being crunched. You're having a harder time pushing rates without smart revenue management, your labor costs are going up, your material costs are going up, everything is getting more expensive out there for operations. So if you're one of the 97% of companies that haven't yet adopted a revenue management strategy, if you put it that discipline, if you put in that effort, if you take the time to do it right, then you're going to be able to get better rates over time, and help cover those expenses that are going up, and create higher sense profitability just by taking the time to do this the right way. So Vivek, is that a correct statement?
Vivek:
It is. And I think you know one of the under talked about skills in all of this is how do you manage technology projects.
Estella:
Mm-hmm (affirmative).
Vivek:
How do you manage implementation timelines? Again, it's one of those things like I started off talking about the data. This is another skill that we don't talk about it a lot. Guess what? Anything that you do today, any initiative around travel or any initiative in a hotel, if you want to talk about it being sustainable, being it repeatable, having it scale there is going to be a play off a technology in there so that it has all those things, and it can be consistently delivered over time. But the nuances of how you deploy technology, how you manage that, how do you do vendor management? How do you think about which technology solution to choose? Because there are multiple choices.
Vivek:
All these skills I think we need to talk about a little bit more because guess what, as important as adopting is. It's also equally important how you make the right choice of choosing a solution that best fits your business and not trying to evolve your business to fit a technology solution that is out there. So you're absolutely right, but I think these, in some ways, some of the things that I was talking about in terms of this.
Estella:
Right.
Vivek:
What I call as the skills of the future, are going to become more and more critical as we make progress here.
Estella:
Yeah, and I think back of the example that you shared, Vivek, really that vision of moving for this revenue manager in DC of that vision of how am I going to move from historic looking back, being a brand,-to predict him, how am I going to predict what I want and achieve for markets and sub-markets? So I again, I think that is the move that we will see into that revenue management excellence. And I love that as such a voice for revenue management for so many years that you're bringing this up and that we all kind of just reinforce these concepts that you're bringing up. So this is great.
Glenn:
Excellent. Vivek any final thoughts before we wrap up today's show?
Vivek:
I think, you know, irrespective of how you're doing revenue management today, I think revenue management is our industry way of saying predictive analytics, right? So irrespective of how you're doing revenue management today, my only appeal to any hoteliers listening today is to say that, use data to make good decisions. Use data to make timely decisions.
Estella:
Mm-hmm (affirmative).
Vivek:
Make sure that you're questioning where the data is coming from. Make sure that you're building a culture within your organization where there is a pride in making decisions using data and making timely decisions that are effective. And so if you think about some of these things, if you start building that culture and if you're building those, start small incremental confidence building measures. I think every organization, every hotel can succeed not only at revenue management, but any technology adoption or any initiative that they choose because they're going to make better decisions, they're going to make relevant decisions, and they'll always meet their financial objectives.
Vivek:
And what more would you want than a marketplace that is thriving, hotels that are making good timely decisions and everybody is exceeding their revenue performance goals. I mean, that is a scenario that we all will benefit from that we all aspire for. I would say anybody who's out there who's trying to make a difference, don't worry about how small the initiative is upfront. Get started and you will see that people will rally around you as they see high quality decisions being made with data and your decisions affecting revenue performance. So get started today. No excuses.
Estella:
Reset that clock.
Glenn:
What a great episode. Thank you so much for being here. I want to thank everyone else being here today. Again, we're looking forward to seeing each and every one of you when we are at HITEC in Minneapolis come mid-June and you can find this show recording and all past episodes of the hotel tech podcasts on SHR's website.
