Patrick Bosworth, co-founder and CEO of Duetto, is a tech-savvy guy with a skillset encompassing profit optimization, pricing, forecasting, mix optimization, distribution, budgeting, customer segmentation, and loyalty marketing, just to name a few. Given the breadth of his expertise, LODGING touched base with Bosworth to discuss his thoughts on the state of the industry.
What are you noticing now about how the industry is performing?
I know everyone is worried about another recession because of the cyclical nature of the industry, and we are seeing higher expenses—especially labor costs—raising concern that revenue isn’t keeping pace with rising costs. However, among our own clients, there are few definitive signs of any meaningful slowdown. This may be because of what they are—innovators—but we hope it is also because of our help. In any case, they continue to have solid growth and are outperforming their respective markets—some of which are much stronger than others.
What does it take to stay afloat in a more challenging environment?
The key to keeping up while costs are rising, is, of course, expense control, but beyond that, hoteliers need to become as skilled as possible at getting the right customers—i.e., the ones that drive the most profitability—and to command the highest rates. It’s really during more challenging times like these that things like revenue management, distribution, and digital and loyalty marketing become more important. Anyone can put up decent numbers in a growing market. It’s when things become tighter, like the period we’re entering now, that the companies that are executing most effectively begin to shine. Those that invested in the right technology during the good times stand to fare better and gain greater market share in an environment where both supply and demand are strong.
What trends are you seeing specifically in revenue management?
In my opinion, adoption of revenue management technology is far lower than I would have anticipated; somewhere in the neighborhood of 70 to 80 percent of hotels globally are not yet using a system. While this is a massive potential market for our services, companies that didn’t invest when times were good may find it hard to make room in their budgets for it now. I’ll be interested to see if companies that see their profitability or top line begin to erode decide to prioritize revenue management even with tighter budgets. Revenue management is just too complicated and labor-intensive for even the smartest person to manage with an Excel spreadsheet. You can already see that companies strong in revenue management outperform their top sets or their markets, but I think that that delta widens during more challenging times.
Why do you suppose hoteliers have been so slow to get onboard with revenue management?
Those of us in the field do wonder why so many owners, managers, GMs, and so forth do not make it a priority to become more knowledgeable about revenue management. It’s not that they’re not smart or sophisticated enough or even that they’re overly focused on cost. I’ve come to believe that we as revenue professionals have actually done ourselves a disservice by making it so complicated, by describing it as this very arcane world driven by a completely different way of thinking and processing and implementing technology. For a lot of good reasons, hoteliers have become very skeptical of that type of message. They’ve already learned the hard way that things like in-room technology, kiosk type technologies in the lobbies, and fancy new marketing software didn’t deliver on their promises.
What will it take to increase adoption of revenue management technology among resistant hoteliers?
Smart owner-operators focus on having the right assets for that market, for that segment of customers, maintaining that aspect well, and providing a solid service experience. Knowing this, we in revenue management are beginning to realize that to attract hoteliers to revenue management, we need to simplify the process so that even the least tech-savvy owner or operator can realize tangible, immediate value while using it to help them make decisions, to simplify problems, and to reduce complexity. The focus needs to be more on day-to-day blocking and tackling and becoming more operationally efficient, more consistent, saving time, and giving people a greater sense and peace of mind of control.