[00:06:20] Mike Grubler I mean, the discipline itself, as you mentioned, is in itself a successful discipline within hospitality and lodging, but it’s relatively new. I mean, we’re coming from the days where Motel 6 and Super 8 had the revenue strategy printed on the sign outside. And so, what has changed? Is it just the availability of the data and the insights?

[00:06:44] Kerry Mack I think the availability of the data. I think the distribution channels. I think the types of people that travel now. I think the reasons for people travelling. I think the places people travel from and why they travel. I think the length of time people travel, right? I think there’s, you know, a whole bunch of reasons that have caused all of these segments and these new segments to sort of come about, right? I mean, you think about 25 years ago, you travelled for business or you travelled for leisure, but your leisure travel was like your once-a-year big vacation that you planned a year in advance. So, it was a very structured two segments that you priced for, right? You priced for the road warrior, corporate traveller or the seven-day vacation traveller. Those were really the two segments. And now, there is the driving-last-minute domestic traveller. There’s the international seven-day traveller. There’s the last-minute international traveller. There’s the project business for corporate travel. There’s the one-night corporate traveller. There’s local negotiated travellers. There’s leisure. There’s... You name it, it exists. So, there’s segment upon segment upon segment. And each has a different need, a different price point, a different hotel experience that they want for their different stays. Which is also why I think the brands have been so successful in, you know... Why one time, you might want to stay at a traditional Marriott and another time, you might actually want to be at an Autograph and then, another time, you might be loving a Moxy experience, right? That there is, you know, you might be the same person, but travelling for different reasons and wanting a different experience. 

[00:08:51] Mike Grubler And so outside of the revenue manager’s crystal ball, which I think is issued on their first day, what are the data? What are you looking at? How do you determine what the right segment is to fill that hotel on that day and that season, and that day of the week at the maximum revenue potential? 

[00:09:11] Kerry Mack Yeah. Well, there’s definitely a lot of data, and there’s definitely some truth to paralysis analysis. So, you have to first know what’s most important for your type of hotel. And what spending time on is going to get you the most return, right? So,  if you are a big group hotel and corporate hotel, then you might be spending a lot more time looking at Agency 360 and at some overall corporate travel demands, patterns and focusing on that in Demand 360. If you are a leisure hotel, you might be focusing a lot more on Expedia data and Expedia pace and your wholesale partners, and how they’re pacing and what they’re telling you, right? So, the great thing about the travel industry is there’s actually a ridiculous amount of data out there. You could actually spend days upon days just gathering data and looking at it and plotting it in Excel and re-plotting it in Excel, and trying to figure little pieces of nuggets of information out, but where are you going to get the most bang for your buck? So, figuring out what is the most profitable piece of business for your hotel and, you know, what clients are most attracted to your type of hotel. And that’s the data you go after. And that’s what you look at. 

[00:10:51] Mike Grubler So much of that is based on the demand. You know, what you’ve built as your base for the upcoming period as a hotel. How are you thinking about your competitors within the market, and how are you understanding what’s going on with their hotel? 

[00:11:09] Kerry Mack So, competitors is an interesting topic, right? You’ve got who you think your competitors are, and then you’ve got who the customers think your competitors are, which are always not the same people. So, I have to say, I do like one of those tools in Expedia where they say, ‘Who do you all think our competitors are?’ Because that’s who. When they don’t choose us, that’s who. That’s who else they’re booking. And that’s really eye-opening sometimes, right? Sometimes, directors of revenue get stuck in this, ‘Well, this is our STAR report and these are our competitors. And this is all we look at. And that’s all we care about’. And it’s like, just because you’ve decided that five years ago on a piece of paper, that might not actually be your best path in life. So, yeah, it is really important to figure out who you compete with for what areas of business, but also, who the general public perceives you to be in the marketplace. And who they are comparing your pricing to. And this is a heavily branded world in this day and age, especially in the major markets. So, you do have to be conscious about what like-type brands are selling, even if you are the newer version of that brand. Or maybe you were renovated more recently? But if you’re a select service brand two blocks away from another select service brand, it’s sometimes very difficult to sell 100 dollars more than everyone else in your brand. It’s just the reality of who you are within a brand. Yeah. 

[00:12:58] Mike Grubler I think we either still do call that or maybe used to call that the ‘Who Ate Your Lunch?’ report at Expedia. 

[00:13:05] Kerry Mack Yes. 

[00:13:06] Mike Grubler And you mentioned brands versus independents. I know Highgate‘s portfolio covers both. Are there different stakeholders involved in the revenue? Are there different goals to achieve whether the hotel is flagged or perhaps asset-managed or owned? 

[00:13:26] Kerry Mack No. I mean, for us, there is not. You know, we have always felt that you do what is best for the building and the hotel, regardless if we own it, if we asset-manage it or if we’re just the manager. I think that everyone who works for Highgate has always felt that way. We love some of our branded hotels because they’re brands, and what the brand can drive is absolutely phenomenal. And we love some of our independent hotels because of their personality and their fondness, and their flair and their stories behind them. And there is great parts of both of them. You know, there are certain parts of cities and submarkets where you really do need a flag. Without a flag, it really is difficult to drive business. And there are certain buildings that really lend themselves to being just a charming, wonderful, lovely, independent hotel. So, that’s right, that’s like... The great thing about travel is exploring both of them. 

[00:14:38] Mike Grubler Right. And I know that Highgate also has a good-sized portfolio in the vacation rental space. 

[00:14:45] Kerry Mack Yeah. 

[00:14:46] Mike Grubler Is that a bit different? 

[00:14:47] Kerry Mack Yes. Yeah. I mean, this is a newer space for us, and we’re uber-excited about it. We sort of love this whole idea that there’s this whole other travel model of four-, five-, six-, seven-bedroom homes in these... We’re managing for a company where they’re buying homes in really pure leisure destinations, focusing on big multi-generational family stays. It’s very interesting. It is. I feel like it’s a little bit like, how revenue management was in the late ’90s and early 2000s, that they don’t have as much access to data as we have. And they don’t have as much great technology as we have. They’re just sort of at the beginning of all of that. So, it’s really exciting for us, I think, to be at the beginning stages of what we think is going to happen in the whole vacation rental space. And as it continues to sort of grow and evolve. It’s a fun thing to be involved in. 

[00:15:55] Mike Grubler I want to go back a little bit to what we were talking about with respect to pricing as it relates to compression within a market. And if you have one or two dominant players within a market, you could find yourself either in a race to the bottom on the one side, or perhaps a rising tide that lifts all boats on the other. 

[00:16:19] Kerry Mack I like to be in the rising tide, but go on. 

[00:16:23] Mike Grubler How do you work together as a market to ensure maximum revenue potential but then, even zooming out, are there ways as an industry that we can be thinking about looking at tools differently or working together in a different way? 

[00:16:41] Kerry Mack I think one of the great things the technology has done for us and that data has done for us—and how you’ve seen revenue management evolve over these past two decades—really sort of was Covid. That was the first big shock to the industry, where there was actually not a race to the bottom in ADR. And I think it was because of how far the revenue discipline has come and how far revenue management systems and technology had come. So, even in some of the markets in those dark, dark days where demand was pretty bad, there was not a race to the bottom in ADR like we saw in those financial crisis years and in those post-911 years, and in those other really tough years that we had in other cycles. So, I don’t get as worried about the race to the bottom any more, because I think that a lot of revenue... I think revenue management has been around long enough that everyone realises you don’t have to race to the bottom, that a massive race to the bottom is not going to drive demand if there’s not demand, right? You can drive demand in certain circumstances by promotions and targeted lowering of rates, but dropping your rates to nothing when there’s no demand is not going to make people come.

[00:18:13] Mike Grubler It is interesting because the data represents certainly the science behind revenue management. But then, the human instinct almost represents the art of it. And so, how do you see balancing those two? 

[00:18:25] Kerry Mack Yeah. You know, I always say that the art part comes to more of the longer strategy of a hotel. You know, how you’re sort of planning the next month or something like that, right? Not necessarily in the day to day. But if you’re taking a hotel and you’re saying, ‘I want to shift from this segment to that segment’ or ‘I really want to work on getting this channel mix better from more direct business or this and that’, you know, how do you do that? Right? Like there’s a million different ways in the hotel business to get from A to B. Are you slightly inflating your rate so you can do a deeper promotion, but winding up getting the same rate you want? Is it that you’re buying two nights and getting one free and winding up at the same rate that you want? Is it that you’re doing a rate and giving XYZ credit? Right? Like there’s a million different ways to net the same rate that you want to get to, but selling it in a different way. And it’s the same thing with looking at shifting segments. That’s where the art of revenue management comes in. You know what number you want to get to, and you know what market penetration you want to get to and that your hotel should get to. And the art of it is coming up with the different strategies to get there. And if you know the first three don’t work, what are the next three to get to? 

[00:19:55] Mike Grubler And among the million different ways of getting there, we can add an exponent to that probably when we talk about personalisation, or there’s been a lot of talk lately of attribute-based pricing where someone may want a balcony, someone may want a lower floor, someone may want a pink Hello Kitty fridge in their room. And how do you think about magnet? You know, expanding on the million different ways to get there into really infinite ways of accomplishing the goal of revenue management? 

[00:20:29] Kerry Mack Right? Yeah. I mean, that is where I have to give kudos where it’s due. I think that Expedia is doing a great job in displaying attribute pricing in a great way. And I think where we as an industry have struggled with this is our technology: our property management systems, how our website technology displays it, how we’re sort of saddled with how room types and rates display on booking engines. And it’s big and clunky. And as much as you love to add all of this because it’s great and people do want it, how do you add it in a way where it’s not so completely overwhelming to a consumer? Where it doesn’t look like you’re trying to charge a 5-dollar difference for 30 different things in a hotel with 15 different room types, right? So, I think part of the struggle has been, yes, we want to get there, but how is it actually sold and displayed publicly to consumers? And then, how does it actually flow back into our systems to guarantee them these items? So, I think we’ll get there. But, you know, hotel technology is always a little bit behind the rest of the world. 

[00:21:56] Mike Grubler You know, that’s okay. The core of hotels is taking care of the guest, right? So, leave the technology to those whose core function it is to do the technology. And we will leave taking care of the guests to the hotel operator. It can’t be a podcast without mentioning artificial intelligence. And so much of the predictive nature of revenue management is analogous to what we’re seeing AI doing in other parts. So, how are you looking at it, either to augment the strategy or to really leverage artificial intelligence and the day-to-day function of revenue managers? 

[00:22:34] Kerry Mack We love the idea. We wish it would actually speed up on what we think of as some of the more tedious portions of our job, right? I mean, the fact is, there’s still a lot of annoying data-entry stuff on the back-end systems of revenue management that we’re all plagued with. And while a lot of systems are getting better with AI tools and sort of feeding things, it’s really not perfect. And there’s still a lot of manual intervention to get that stuff going. So, we would love areas where AI would be able to catch rate coding mistakes or market segment mistakes without us having to actually catch them, right? Because bad data in is bad data out in revenue management systems. And really, the only way you catch them is for someone to actually manually still catch them in this day and age, right? So, how great would it be if someone had the AI system to just fix that stuff, right? Or if the AI or if an AI system could fix—instead of just basic stuff, saying, like, ‘Oh well, you’re off pace by this day or by this day’—obviously we can tell when we’re behind pace, it’s right on the screens. You can see you’re behind pace, but it’d be nice to know why we’re off pace exactly. Or when we got out of pace or how many days in advance we were out of pace or a little more context to it, right? To us, what would be, like, great AI features...If AI could take the basic stuff that we could see right now. But if it could quickly explain to us what it is, as opposed to us doing the hunting and pecking that... We eventually find out what it was, what rate code it was, what group it was, what DIS it was, right? But in the real world, you’ve got to go to five different systems sometimes to find this stuff. So, to me, I think that would be some quick wins for the revenue world. 

[00:24:43] Mike Grubler Almost like an anomaly detection. 

[00:24:45] Kerry Mack Yes. Yeah. 

[00:24:47] Mike Grubler You mentioned bad data in is bad for revenue management. Assuming the data is good, are there ways of making it better? Are there blind spots within the data that exist today? Or are there areas where you think, ‘Man, if I just had this piece of data’. 

[00:25:06] Kerry Mack Yeah. I mean, we don’t really know a lot about our guests. I mean, in general, unless you’re, like, a loyalty member of a loyalty programme, you really don’t know anything about a guest. You know their first name and last name, and sometimes you know where they’re from. But most of the time, you don’t. So, as much as you want to do things for our guests and personalise for them when they check in or say ‘welcome back’ or do this or do that... Sometimes it’s almost impossible for the front desk to be able to do that—because the way hospitality technology is set up is there’s no way for us to know if Joe Smith has stayed with us before, if he’s booked three different ways. right? If he booked through GDS once and through Expedia once and through my hotel website once, there is no way to connect him because he has a common name, Joe Smith. And the system can’t pick up that he’s the same person. So, it actually almost detracts from what hospitality’s supposed to be. The whole, you know, ‘Welcome back’ and ‘We’re so happy you’re here’. And ‘Thank you for choosing us again’. You know, we’re not going to fault him for booking different ways, but it’d be nice for us to know who these people actually are and why they keep choosing us, and maybe a little bit about them. 

[00:26:35] Mike Grubler Would that change how you price for that guest if you knew that they were loyal to you or, potentially, maybe you knew they were loyal to someone else? 

[00:26:47] Kerry Mack I don’t know if it would change how we would price, because we really do price based on market demands. It would change, I feel, offerings on services or what we might sort of offer upon check-in, right? That if you are checking in to a hotel and you do have specials going at the hotel, if there’s an upgrade special going on—or if you’re in a situation where you have to give free upgrades to people anyway, or if you know that this guest has maybe stayed with you before but has also stayed at one of your hotels in another market—maybe you tell them, ‘Hey, I see that you’ve actually stayed with us quite a few times at our Chicago hotel. Just to let you know, they’re running a special next week’. Like, it just sort of helps the whole process of hospitality and conversation, and whatnot. But it sort of becomes a very transactional process when he’s just checking in as Joe Smith. 

[00:27:47] Mike Grubler There’s always that thing where it’s like... There’s nothing worse than checking into a hotel where you stayed a week last month, and the person says, ‘Have you stayed with us before?’ 

[00:27:56] Kerry Mack Right. Yes. 

[00:27:58] Mike Grubler There are some who do it well. They have great CRMs, but you’re right. Depending on where they book, there could definitely be a challenge in connecting ‘Joe Smith’ to ‘Joe Smith’. 

[00:28:11] Kerry Mack Exactly.

[00:28:12] Mike Grubler So, I know that you’re an adjunct professor at NYU’s school. I’m curious for all the eager revenue managers that are out there. What is one nugget of wisdom that you impart that you just see the light bulb go off in their little heads? 

[00:28:30] Kerry Mack Ha ha. You know, I tell them that they should always ask questions. They should never be afraid, as a revenue analyst, to ask questions, because the fact is there is a lot to learn in revenue management. There’s a lot of systems, there’s a lot of partners. It’s a complex distribution network. There’s a lot of PMS systems. There’s a lot of segments, right? And you are never going to be able to learn it all at once. So, you should always ask questions. And you should never be afraid to say, ‘I don’t know’ or ‘I’ve no idea what you’re talking about. Can someone please take the time to explain to me what that acronym means, or what the segment means or what this report is that I’m even looking at? Because you’ve just totally lost me’. You know, when I was first in the industry, I really had no idea what GDS was. I was a reservation manager, and then I was sort of thrown into revenue management because that’s what reservation managers became. And then it was our first consortia RFP season, and I was like, ‘What the heck is GDS?’ And I called my TravelClick rep and I said, ‘Yeah, you’re just going to have to come over and tutor me for three hours because I really don’t know what this is’. And he did. He came over and tutored me. And that’s how you do it. 

[00:29:47] Mike Grubler You brought up the segments that you look at in the revenue management space. Do you look at them differently by time period? Are there some that are more valuable to you than others? Some that are just a backfill strategy to get heads in beds? 

[00:30:05] Kerry Mack Yes. For all. Correct. Yeah. No. I mean, it depends on the market. It depends on the hotel. It depends on the time of year. It depends on... You know, when I teach, I always say that you take a segment like government. In 90 percent of the markets in the US, it’s a backfill segment that you actually don’t pay attention to. But you take a market like DC, or Tallahassee because it’s the state capital of Florida, or Albany because it’s the state capital of New York. It’s a pretty serious segment. You treat it just as seriously as you would a negotiated segment, right? So, it really is dependent on the market. And dependent on the time of year. 

[00:30:53] Mike Grubler Within that, though, is every dollar equal? 

[00:30:56] Kerry Mack Every dollar is equal as long as it’s making you gain a RevPAR share on STAR. 

[00:31:03] Mike Grubler And RevPAR is the function of, well, I’ll let you explain it. But as I understand it, it’s occupancy and the revenue achieved based on the total number of rooms that you have. 

[00:31:13] Kerry Mack Right. Occupancy times ADR equals RevPAR. 

[00:31:16] Mike Grubler For those that have not gone to the Tisch School of Hospitality yet. Thank you so much for joining us, Kerry. This was a great conversation, and I’m looking forward to seeing you in New York later this week. 

[00:31:30] Kerry Mack I’m looking forward to seeing you. 

[00:31:31] Mike Grubler But I know where I’m travelling next, as of tomorrow. But how about you? What are you looking forward to? Where are you travelling next? 

[00:31:38] Kerry Mack Oh my gosh. Well, I just came off of a massive 2023 travel year. Oh my gosh. I think I took, like, 12 different leisure trips and a gazillion business trips. So I actually have not mapped out 2024 yet, but there is a family cruise in the works. There is, I believe, a tentative trip to Italy. There is usually some sort of Caribbean island in there. And then after that, we’ll see from there. 

[00:32:15] Mike Grubler Well, I hope to see you soon on Expedia, so that you can earn and redeem your OneKeyCash for all of your travels in 2024. 

[00:32:25] Kerry Mack Good plug.

[00:32:31] Brandon Ehrhardt Mike, great interview. Awesome to hear her talk about Highgate. They have such a broad swath of coverage in the hospitality industry, whether it’s chains, independents and vacation rentals. What were your key takeaways from that conversation? 

[00:32:47] Mike Grubler Well, we covered a lot, and it was surprising to hear how much ground we were able to cover. I mean, her take on AI is really interesting. I think there’s just so much talk about it right now. It’s kind of bleeding into every aspect of our lives. But her ideas on how AI can help with the tedious data clean-up. And the idea that ‘bad data in equals bad data out’ is a true principle of revenue management. So, imagine the impact on that kind of clean-up within the industry, and how it would give revenue managers the space for focusing on the true revenue strategy, rather than getting bogged down in the details. 

[00:33:23] Brandon Ehrhardt Yeah. And I mean, I totally agree with you. Like, gaps in data are going to exist everywhere. And the quicker that you can solve for that, the better your strategies can be informed by what you’ve observed. And I think that’s a great opportunity for us at Expedia Group to be thinking about that together with our partners. You know, where can we create this seamless process for hotels and vacation rental owners in the back end to identify who travellers are, and how we have a relationship with them. And we have that today in a number of different categories, right? But, Mike, from your perspective, how should we be leaning into this? 

[00:33:59] Mike Grubler Well, I think from Expedia’s perspective, there are so many ways that we’re enabling partners to think about—whether it’s expanding their reach or augmenting their marketing strategies to attract the right customer. I’m thinking specifically about our Media Solutions tools, Accelerator, offerings like package deals and our optimised distribution programme that we offer to our partners. We heard a little bit about how there’s some art to revenue management, and tools like these really are the different brushes that enable one to paint their own revenue management masterpiece, Brandon. 

[00:34:36] Brandon Ehrhardt It sounds like a lovely painting, something much better than what Bob Ross would do. It’s great because I think at Expedia Group, regardless of where you are as a partner, we have a revenue insight tool for you. So, if you’re a vacation rental host and you’re considering listing your property on our platform, there’s actually a rate automation tool that uses market demand data and other insights to recommend a price so that as a partner, with one click, you can opt in to this automation and we’re going to be managing the rates for you. On the hotel side of the house—more complex with more different room types—we have a number of tools and insights within our web Plus platform where you can look and see what your competitors are offering, which includes mobile and Member-Only deal rates. You can get opportunities to leverage products that you mentioned, like Members-Only deals, because you’ve identified there’s an opportunity to be more competitive in your market. And so, I think just knowing where to go as a partner is critical. And I think, Mike, you’re going to back me up here, but that first step is always going to be with your account manager. 

[00:35:44] Mike Grubler Your account manager: they’re local, they understand the market in most cases. So, they also will have a great revenue mind to them. And then, a lot of these tools are also in Partner Central, Brandon. So, you’re just a couple of clicks away from really discovering all of these new tools. 

[00:36:03] Brandon Ehrhardt Indeed. And one thing I’m going to hit on before we say sayonara to this episode is: we’re continually improving those modules as well. I know within the RevPlus tool, one of the things that we plan to bring in 2024 is micro events, right? So, everyone knows when their citywides are. But you may not know that there’s an under-12 soccer tournament happening that’s going to impact your hotel. And when you have 12 different teams booking, that’s obviously a revenue opportunity that you want to capture. So, our tools continue to evolve. As Mike and I mentioned, talk to your account manager, check out Partner Central. If you’re a vacation rental host, I implore you to try the right automation tool. We’ve seen partners have great success with their revenue uplift when they’ve let market demand insights kind of inform their rate strategy. So, an awesome episode. Mike, I got to ask you, we asked Kerry about her upcoming travels. Anything on the docket? 

[00:36:58] Mike Grubler Well, it’s almost like you read my mind with that under-12 soccer tournament. I got a ten-year-old on the travel team, so I’m sure we’ll be finding some games in a state near us soon. 

[00:37:09] Brandon Ehrhardt Excellent. And the hotel partners are going to find that event in RevPlus, coming soon. Great conversation. Thanks for taking us through it with Kerry. We appreciate you stepping in, Mike. 

[00:37:20] Mike Grubler Happy to do so, Brandon. Any time. 

[00:37:22] Brandon Ehrhardt As always, let us know what you think of the podcast by emailing us at PoweringTravel@Expediagroup.com. That’s PoweringTravel, all one word, @Expediagroup.com. We also have a new form on the website that you can fill out easily. You can find that at partner.expediagroup.com. If you have a few seconds, be sure to rate and review the podcast on the platform of your choice. Helps people like you find our show. Thanks for listening. We’ll see you next time on Powering Travel podcast, brought to you by Expedia Group.