Friday’s webcast on “Preparing for the Recovery”from Cornell Center for Hospitality Research and SAS was somewhat of a wake-up call for me. It made me realize that our industry, hospitality and gaming, will not just magically sail into the recovery. (OK, to be fair, I certainly suspected this, but I was reminded of how much work is left to come!) It will be an uphill climb. I heard Bill Carroll, Senior Lecturer Cornell School of Hotel Administration, equate it to hiking the Grand Canyon. We’ve made it to the bottom, but it’s still a long way to go to get back up to the top. Here are my top five takeaways:

1. The path to recovery will vary: It was pretty clear through the discussions in this webcast that the recovery will vary globally. Some markets are seeing clear signs (Singapore), others are still waiting (Las Vegas). Further, industry segments will vary as well. Echoes of the AIG effect, for example, will continue to impact the luxury segment. Destination gaming markets will be slower to recover than the locals markets. I was encouraged to hear Doug Hesley, Corporate Director of Revenue Management at Norwegian Cruise Line, say that he's seeing customers booking farther out and spending more. Unfortunately, we are a lagging industry, so these signs are just the beginning of a long road ahead. I also think it's important to understand what we mean by “recovery.” PKF Consulting – Hospitality Research Group is forecasting demand increases through the year – a good sign of a turnaround. Bill mentioned, though, that we’ll still see price declines in 2010. Supply will increase slightly this year as well, so this means occupancy will be even or down. Operators need to understand what each of these signs mean for their business and how to react to them.
2. The strong will survive: Or should I say the smart will survive. This is pretty obvious, but worth mentioning. The panelists all talked about the revenue management function being just as essential during recessions as during boom times. Yes, the industry had to react to price pressures in ways they wish they didn’t have to. Yes, pressures from owners created conflicts between rate integrity and occupancy. But those who took a thoughtful approach to EVERY decision they made, even those they were forced to make, are the ones who will continue to thrive in the new economy. Sherri mentioned the Cornell study that showed that those firms that stayed at the top of their competitive set in price, beat out in RevPAR those that were dropping rate in favor of occupancy – both in recessions and peak periods. Maybe these hotels had to drop rate, but they still maintained a premium over their market – and it worked. Jan mentioned that there is a lot of “distressed” inventory out there – run down properties in bad locations. Properties in bankruptcy and foreclosures right now are probably NOT properties that should have been in business. Investors and developers also need to be “smart” about how they make decisions – just because it’s cheap doesn’t mean it’s good! Jan deRoos made some interesting points about having the courage to renovate, rebuild or redevelop when necessary. Michael Vinci, from Harrah’s Chester, reminded us that any capital investment must generate an ROI, even more important advice when capital markets are so tight!
3. Be proactive, not reactive: I heard this over and over again from our industry experts and the panelists. The panic days when the bottom fell out of the economy are over. Yes, we’re still suffering, but smarter operators are looking forward, and being creative. Being proactive does not simply mean actively sourcing alternate demand sources, developing creative promotions or forecasting demand in advance and setting prices intelligently. It means taking a step back to think about and document what happened during the recession right now. The executive team needs to pull together and talk about what decisions worked and what didn’t, and develop a forward looking plan for the climb back out. Those managers that look at the recession as an opportunity to reevaluate their internal business processes, reevaluate their customer segments, and reevaluate their service offerings will emerge in a much better position than the ones who continue to just put out fires. This is certainly difficult for those firms operating on shoestring budgets with skeleton crews, but well worth the effort and time. Operators must consider the long term implications of short term decisions. Corin Burr, Owner and Founder of Bamboo Revenue , mentioned that this RFP season resulted in many contracts whose conditions were less than favorable to the hotel. This was a necessary short term strategy, but I’m hoping it was made with an eye to the long term implications – and with the understanding both with the customer and the sales team that these concessions were certainly temporary. We have started to train our customers to expect “recession level” discounts and incentives, and I’m afraid the gaming industry in particular will have difficulty in “retraining” their patrons to expect a different level of incentive in exchange for their play. Now is the time to get ahead of this problem.
4. Social Media will influence the recovery in ways we probably don’t understand yet: OK, I’m cheating with this statement, since I had the advantage of spending the day with the panel (and believe me, this was a GREAT opportunity). We spent a good deal of time off camera talking about emerging trends in social media. It’s pretty clear that customers are greatly influenced by these channels, and will continue to be so. What is not clear is how revenue management will interact with these channels in the future, and more importantly how hotels can monetize these interactions – tune in for more on this topic in our April 16th webcast. SAS in particular is doing some really cool things with social media analytics, which I’m excited to share during that webcast.
5. This will be revenue management’s finest hour: Bill Carroll coined this phrase, and I think it’s very appropriate for this current discussion. Revenue management is a much more mature discipline in the hospitality industry than it was during the last few global downturns (the Asian Financial Crisis and the recession following 9/11 come to mind). Revenue managers are much more entrenched in the organization than they have ever been before. The growing implementation of analytic solutions enable more and better access to the information needed to make critical decisions – and the revenue managers know how to interpret this information. General Managers now rely on the revenue management function to keep a pulse on the business. This positions the revenue management functions to lead organizations through the downturn and into the recovery. Philip Schaetz, Vice President of Revenue Management and International Operations at Hyatt Hotels & Resorts mentioned during the webcast that revenue management and sales and marketing must continue to work very closely together, and I anticipate that this collaboration will thrive and grow into the recovery. Organizations are recognizing that demand generation and demand control are two sides of the same coin, and are leveraging information from both departments to make the best possible decisions about discounts, promotions and even service offerings. Forecasting models will be adjusted to better account for unexpected events that impact demand. Technology will enable tighter integration of revenue management and marketing, and analytics will incorporate new streams of data into the pricing decisions. SAS and IDeaS are working on some exciting new developments in this area, that you will all hear much more about in the months to come.

What are your thoughts about what the industry has learned through this recession? What do you think will change going into recovery? I would love to hear your thoughts!