Building a Roadmap to Revenue

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Building a Roadmap to Revenue

By Dorothy Creamer, Editor - 09/09/2016
G6 Hospitality (www.g6hospitality.com) parent company of Motel 6 and Studio 6, plus Latin American brands Hotel 6/Estudio 6, has established itself as a leader in the economy segment. The company is enjoying 50+ years of success by building upon its core principle of “providing a consistent product: clean comfortable rooms and terrific service.” Since being acquired by The Blackstone Group in October of 2012, the company has embarked on an ambitious mission to transform its digital ecosystem through a complete overhaul of technology platforms and processes.
 
“The work we have underway, has put us well on the path of transforming the organization from a purely operating company to a hybrid operating technology company,” Lance Miceli, executive vice president & chief marketing officer, says.

While Miceli is mindful to say that G6 would never fully evolve into a technology company, he does credit the careful and thoughtful investment in technology for guest-facing demand platforms, on being able to not only bring the business current, but contemporary. Now Miceli and his team are looking to maintain that momentum, keeping the demand enhancement platform up to par with guest expectations.

A core component of G6 technology and its digital demand enhancement path was the reworking of the company’s revenue management. The result was a proprietary system christened G6ROW, an acronym for G6 Revenue Optimization Workspace. In an exclusive  interview with HT, Miceli shares the details on G6ROW, and how G6 is embracing a digital future.

HT: The restructuring of an entire digital eco-system is no easy feat. How did you set out to tackle this?

LM:
It began with the full review of the demand ecosystem as it existed at the time. We outlined what we wanted to develop and build, plus the measures for success to determine how we were tracking. Once we established those KPIs, we focused on developing commercial relationships with third party distribution engines  and built direct connectivity to them so we could distribute inventory in real-time and have rates and inventory shared directly with channels. At the same time we were putting a program together for the new brand.com site which was built on a responsive code base with a mobile-first mentality. That was built and launched in the 4th quarter of 2014 and had a full feature set by 1st quarter of  2015. Only after those first two steps were complete, did we then turn our attention to rebuilding the revenue management suite of products, a process which began in late 2015 and wrapped up full MVP deployment in the spring of 2016.

HT: Can you go into some detail on the specific platforms that are housed in this new revenue management system?

LM:
There are two unique, yet fully integrated components of the G6ROW platform. First is the rate administration piece. A revenue manager or hotel owner can go in and manage their property’s BAR (best available rate), do work on rate plans, set up charges, room types, etc. All the various functionality that usually has to go to into different systems is embedded in one responsive code base. The system is also mobile-enabled, so the revenue management team and franchise partners are no longer tethered to a PC on property. They can manage a specific property’s pricing and revenue management strategy from a phone, tablet or laptop halfway across the country. The first level was built to be a cloud-based functional engine to enter rate types and do the “block and tackle” running of hotels from a revenue management standpoint.

Second, is the revenue optimization component which is actually a business intelligence tool in line with rate administration. This component pulls in competitive feeds every day and within the day for a hotel’s competitive set as defined by Smith Travel Research. The system pulls in published rates and also offers managers the ability to write conditional logic into the rules to enable demand-based, dynamic pricing. The system will analyze a number of different factors through algorithms and make recommendations based on competitive market conditions.

HT: What was one of the major challenges your revenue managers were facing that you hoped G6ROW would alleviate?

LM:
Revenue managers needed better visibility and speed. Through working with partners like TravelClick, we are able to get competitive feeds in for competitive rates. We also have proprietary approaches to get market level information. All data has integrity and can be pumped into the system we co-developed with Above Property (www.aboveproperty.com) with a cadence that allows us to analyze and respond swiftly. Over time, what has changed is the complexity of channels that are available to hoteliers and how hoteliers manage rate mix across various channels in near real-time. That’s where technology has become an enabler, but you still need to get the right people in place. Through proof of concept work, we defined the process manually — then mapped it out in an operating platform model, and finally built the technology. Often, when people are not pleased with the outcome of a technology deployment, it’s because they select a solution thinking it will be a panacea for all ills. In the absence of the right people and a clear roadmap, however, it’s not going to yield the benefits that it could. You have to do the hard work first.  

HT: What are some of the capabilities you built into the system that you felt you couldn’t find in an off-the-shelf solution?

LM:
The way most revenue management systems function is that an algorithm calculates what ought to be done and it just happens. The challenge with that is that it is always based on history and the system’s suggestions are past-looking and not forward-forecasted. It’s also machine logic with the absence of any human interaction. G6ROW is different because revenue managers will receive alerts such as “prices at two properties have increased — consider this action.” The manager can then go into the system and move to the next rate level or decrease the rate if they want to try to steal share, and adjust accordingly. There are certain events that a machine wouldn’t be able to see or predict, but a human would. Another benefit is the ability to view and manage pricing plans for multiple days/locations as well as property performance metrics in a dashboard. Managers have all the required information in one consolidated place with one intuitive user experience to help dynamically yield pace.

HT: Data and analytics are a vital component of all facets of operations. How does G6ROW tap into insights to ensure revenue managers are making the right decisions?

LM:
The system is designed to be reliant on both past and current, but in-line visibility into data. G6ROW is engineered so we have visibility into the history of the property, plus on-the-books business, rate type compositions, and price position. Then when we bring in the competitive piece, we rely on a rules-based engine, based on human expertise that allows the system to automatically recognize triggers and send alerts to revenue managers who can then determine if action is required. There is a high-touch component to revenue management, and there is truly an art and science to what revenue managers do. Systems can only get you so far.

HT: What impact are modern distribution channels having on hotel revenue management?

LM: 
The management of demand pace is being affected as channels continue to multiply. The challenge for revenue managers is how to balance demand flows by channel with a careful eye towards protecting competitive price position. Our price strategy is always competitive to the street corner population that we trade with, and as demand flows through different channels at different velocities, the team is challenged with making sure to have the right price in place for the day that the guest will give us permission to charge. Revenue managers have to contend with other markets to inform price position factors that are driving the deceleration and acceleration of that demand.

Expedia, Booking.com and our metapartners are investing their marketing dollars in driving demand through channels on behalf of all their partners. As they lever those investments up or down, it throttles the demand. We find ourselves in the position at each hotel and each day having to monitor that work by channel while at the same time watching the over-arching demand factors in a given market, driven by guest and market to inform price position. It’s become a multi-faceted challenge that is not isolated to OTAs. It’s the redefinition of the demand environment.

HT: How do you see G6ROW helping to manage this?

LM:
The workspace is engineered to be very fast, comprehensive and accessed across a multitude of platforms. It positions revenue managers to get the right degree of visibility into channel contribution, pace, market demands and also competitive components that are in the market. It’s the delivery of actionable information at the right time for skilled revenue managers to be able to execute a decision based on what is the best price for the hotel and for that guest so we optimize the market share.

HT: How does G6ROW help franchisees with revenue, and how “hands-on” are you at corporate?

LM:
Motel 6 is now well-positioned in the economy lodging segment because we offer a best-in-class platform for our franchisees. The rate administration component of the product platform is something that our franchise partners receive as part of our demand enhancement platform. The revenue optimization component is an opt-in software license offered on an annual subscription basis.
   
We’ve established an infrastructure behind a powerful and consistently communicated brand and are in good stead for continued growth and performance. The trick is how to continue to evolve the demand generating platforms while still protecting the sincerity and integrity of an iconic brand from a personality standpoint.    

Enabling the Digital Customer Journey  
Lance Miceli, EVP & CMO of G6 Hospitality, IDs three key areas of G6 Hospitality’s digital enhancement platform

Booking:
We think about the reasons that people travel in a disciplined way. We’ve assessed that a guest’s journey is not necessarily to see the inside of a hotel room.  So we built in tools like restaurant and festival recommendations as well as navigation tools that are embedded in the property display. We want to reduce friction that guests encounter online when they have to go to three or four places, so we consolidated that down into one well-engineered experience. While we may be amenity-light on-property, we are able to offer guidance and information as we believe these are tools that guests appreciate and make a stay/experience more special.

Mobile app:
We will be releasing a more intuitive version of the Motel 6 mobile app, “My6.” The guest has given us permission to be downloaded into their phone and we take that very seriously. We have to provide a better experience, better functionality, and a reason for someone to allow us that access and for them to continue to use it. My6 will accommodate all brands operated by G6 Hospitality and guests will be able to search based on GPS and sign up for a profile using a single sign-on and social if they desire. Specific rate types will be offered through the app and guests will be able to manage stays from their phone in a more streamlined way. The app will also have in-app messaging (SMS promotional in-feature messaging based on guest history and search preferences) plus embedded mobile payment functionality.

Responsive, mobile first website:
Our goals for the redesigned website included improving page loads and increasing quality scores, but we really wanted to improve conversions and optimize revenue contribution. We saw terrific gains in conversion rates, with an increase on mobile (+65%) and desktop (+59%) and our total conversion rate lift was +59% versus prior performance levels.