Next Generation Revenue Performance Benchmarking for the Digital Economy
THE HOSPITALITY DISTRIBUTION WORLD as we know it is in a near constant state of change. This has never been more true than in the past several years. Expedia acquired Travelocity, Orbitz and then HomeAway. Booking.com, a massive distribution platform, is now offering technology solutions, such as PMS and revenue management, to independent hotels. Metasearch platforms are expanding instant booking offerings to keep customers on their sites. Booking Brands, such as OTAs and metasearch, have become gatekeepers for online travel shopping causing the Stay Brands, traditional hotel companies, to pay much more for access to customers. The cost of sales in the 1990s of about 5 percent to 10 percent of room revenue has shot up to 15 percent to 25 percent and continues to rise.
How does a hotel manage this challenging new environment? What are the metrics it should track to sustain profitability and thrive? The traditional RevPAR metric doesn't account for this new and substantial cost of sales and therefore often doesn't reflect a hotel’s profit contribution. This new world of sky-rocketing acquisition costs, calls for a next generation set of benchmark metrics to evaluate hotel revenue performance.