Commercial Strategy: Growth, Growing Pains, and Goals
If you’ve been working in the Hospitality industry for a while, then you’ve probably been watching the “commercial strategy” journey unfold. It’s a hot topic at every conference, across industry publications, and – I’d be willing to bet – in meetings at your own organization. I fully agree that it’s an important conversation to be engaged in (as evidenced by our prior reflections on the topic), but I’d like to address a few new questions I’ve heard hoteliers raise in relation to the subject recently.
- We can agree we should all be working towards it, but how do you know when you’ve achieved commercial strategy within your organization?
- What roadblocks should we be looking out for, and how do we navigate them?
Are We There Yet?
There’s no X marked on a map that will let you know when you’ve reached your commercial strategy destination. Realistically, it’s a moving target, but there are signs that your organization has successfully moved into this new way of working.
First, let’s take a second to define commercial strategy. At its core, commercial strategy is a shift away from marketing, sales, and revenue management operating as siloed functions, and instead intentionally working as one collaborative team with the goal of maximizing profitability for the hotel. Yes, each group still has its areas of expertise and ownership, but overall goals and strategic initiatives are aligned. Lori Kiel, Senior VP of Revenue Management of Pyramid Global Hospitality and a leading commercial strategy expert, wrote a great article that delves into this definition even further and helps you visualize the sales and marketing funnel through a commercial strategy lens.
More tactically, here are a couple of clues that would suggest you’ve achieved at least some level of commercial strategy within your organization:
- You or your boss have “Commercial” somewhere in the title
- Your organization has a Commercial Executive team that includes leadership from key functional areas; they meet regularly and make decisions together
- Revenue managers are no longer expected to just bring data to revenue meetings and report out performance, but instead collaborate on forward looking strategies and tactics at recurring cross-functional meetings that include marketing, sales, and distribution
If this feels reflective of your current way of working – congrats! That’s a huge step, and one that many organizations are still working to achieve. But now that you’ve made it there, I wouldn’t be surprised if you’re wondering: what comes next?
Growing Pains
Industry leaders have been touting the benefits of achieving this level of cross-functional strategic alignment for years. The potential upside is undeniable, but that doesn’t mean that this new way of working is without its challenges.
The feedback I consistently hear from hoteliers is that, yes, teams are working more collaboratively than ever, and that’s great! The revenue management, sales, and marketing teams are increasingly seeing more overlap in their jobs – and while that’s theoretically what we all wanted, it also feels a little muddy and uncomfortable. The question of ownership often arises, and it can be difficult to navigate without feeling like we’re trying to go back to a more siloed way of working.
Take, for example, the idea of Total Hotel Revenue Management. This approach to revenue management, which is widely growing in popularity, focuses on maximizing all streams of revenue as opposed to just room revenue. And while the approach is labeled as “revenue management,” it really requires the entire commercial team’s combined efforts to work. The decisions the revenue team makes will influence marketing campaigns. Those marketing efforts affect the deals the sales team is working. And all these decisions will impact the guest experience team on the ground.
So, again, we return to the question of ownership. How do we work collaboratively while still effectively making decisions and not playing too much in one another’s sandboxes, as it were?
This may seem like an over-simplified solution, but I really believe that something akin to a RACI matrix could help here. If you’re unfamiliar, a RACI matrix breaks down who is Responsible, Accountable, Consulted, and Informed for any given task. A RACI – or really any framework that helps establish who is ultimately responsible for any given task – can help guide internal conversations within your organization. The goal is to find cross-functional alignment, particularly in those areas where jobs naturally overlap.
Ultimately, collaboration can’t mean that every team has 100% ownership over every decision that’s being made. Working together while clarifying swim lanes could go a long way to ease tension and provide clarity while your organization adjusts to this new normal.
Looking Ahead
Our industry is still in the thick of this commercial strategy evolution. Wherever you are on this journey – just starting to explore the idea, in the midst of establishing your commercial team, or starting to settle into a new way of working – keep going. Continue to encourage collaboration between your revenue management, marketing, and sales teams. Adapt your strategies as you learn from your counterparts. It is naturally going to feel messy, and all growth comes with a healthy dose of discomfort. But this shift to commercial strategy is what will help make things like Total Hotel Revenue Management a reality, and your organization – and your bottom line – will thank you.
Tess McGoldrick is the Senior Vice President of the Travel & Hospitality vertical at Revenue Analytics. In this role, she leads cross-functional project teams to develop high-impact products that provide organic revenue growth for her clients. Having started her career at Revenue Analytics, Tess developed an expertise in Revenue Management from the best in the business. Tess's experience includes ensuring client satisfaction is achieved with all product implementations, from business process improvements to forecast predictions to actionable pricing recommendations.