Will Loughran
Denver-based hotel management company Richfield Hospitality in recent weeks promoted senior vice president of sales and revenue strategy Will Loughran to president of the company, a position vacant since former president Greg Mount earlier this year left to lead Red Lion Hotels Corp. Loughran's move from the revenue management side of the business to a senior leadership role is somewhat unusual for a hotel company, he said. Eventually, however, it could become the norm. "Revenue management people, by and large, often are sort of controlling and don't want to give all the information out, but there are some brilliant minds out there," he said. "It's as close as we get to the science part of our industry. For years, they've said revenue management folks eventually are going to be in leadership positions." Business Travel News lodging editor Michael B. Baker recently spoke to Loughran about his company's revenue management strategies and how they are affecting relationships with corporate business. An edited transcript follows.
BTN: What business travel volumes are your properties seeing?
We are coming off of our most successful quarter we've had as a company. One of the segments that led the way was the business travel segment. A lot was medical-project-driven. For the first time in at least four years, group room nights exceeded the prior year. It's all small meetings, not big convention stuff, and the year over year we saw wasn't super-sexy, but it was growth, so looking at those segments, that was huge news for us.
How have you been attracting those smaller meetings?
In every hotel, you have revenue management, a director of group sales and two or three sales managers, depending on the size of the hotel. You look at that model, and you have the revenue manager handling 80 percent of the business in the hotel and this huge selling apparatus selling 20 percent, so your cost ratio is just really different. I'm not saying it's wrong or bad, but it's different. What we've gotten smarter about is really working strategically with our brand partners and trying to make sure that we're being the squeaky wheel in the environment to work with the brands, because they're getting incredible volumes of group business and are trying to distribute it across their platforms. As franchisees, we don't always manage that as efficiently as we should.
We've also put our concerted effort against our partners like Cvent, who collect group leads. We're combing quarterly, going through roll-up reports that show us the number of group leads we sent to hotels and their response rate. We're working with them on the positioning within their company, to try to improve how we look in the system. We also actually started shopping our guys more steadily, secret shopping. I get a report every month. We do a campaign to see how difficult it is to get a hold of one of our sales managers, and we've really improved the speed and what it takes to get to a manager and how fast we can reach that client on the very first call.
Is part of the difficulty the pure volume of requests for proposals you get from Cvent and similar suppliers?
It's volume, and it's that sometimes the leads come from multiple sources. A Marriott national salesperson might get the same lead that goes through Cvent and a convention and visitors bureau. The sales manager gets one and ignores the other channels. Ideally, they'd pick the lowest-cost channel. Sometimes it's our own undoing, and we have sales teams deployed in strange ways. Someone says, "I'm just the association person, and that lead was for a society." We do silly things like that, so we have to make sure that the process is being taken care of and things aren't slipping through the cracks as we discuss how people should be deployed.
Which markets are faring the best?
They aren't the traditional markets you would think. We have a Doubletree in Burlington, Vt. Vermont was one of the first entities with which they said they were going to go in and do test pilots for federal health care reform. We have a Sheraton in Chapel Hill, N.C., that has two universities close by as well as a great medical facility, so they are seeing some of that project business come and go. In Rochester, [Minn.], near the Mayo Clinic, we have several hotels, and they're experiencing the same business. It's markets I wouldn't call major markets that we're benefiting from.
Seeing as you come from a revenue management background, what are some of Richfield's strategies around that?
We have a sister company, Sceptre, that is really a technology company. The main component of Sceptre is a reservations technology company, and that company currently is in 3,500 hotels around the world. In that environment, we also sell revenue management services to folks who want that with our reservation system, and the revenue management gets provided back into Richfield Hospitality. That gives us a leg up as far as sophistication and keeping the blade sharp on how to do revenue management. That's kind of our key differentiator.
What are some things you can do with that?
In most revenue management systems, it's still weighted on history. We have a tool with which we actually take what consumers are saying about us online—we call it consumer sentiment—and we aggregate that into data points. Then, we take all those public rates that are out there and we juxtapose those against each other and against graphical analysis, drawing a comparison with what people are feeling about you and how you're pricing. If your customers are saying this is the greatest hotel they've ever stayed at, but you're pricing like you're number three or four, is there an opportunity to change that? The same can be true the other way around, if you're pricing like you're number one and everyone's telling you you're a solid fourth. Is there an opportunity to drive your revenue by fixing service or being more candid about your pricing? That's an example of tools on the innovative side we're working on to marry those data strengths.
What about the transient RFP process?
The process is a little archaic. Everyone knows going in that everything about it is wrong. It doesn't often reflect seasonality in a realistic way. It needs to evolve and develop. I recall meeting with a guy that was in management in a company, and his brainchild was to come in and mandate that everyone use Priceline. He said hotel folks don't understand pricing, and I can get into that hotel for $70 and your public rate is $180, and I never want them to pay that. That's fine, but it's very inconsistent. It is imperative that we satisfy that need, but we also need to get smarter about doing it, on both sides. If you're looking at a heavily seasonal market, they may charge $70 in their low season and $320 in the high season, and it's hard to do the math for your business volumes to see $120 flat is the right price. We need to improve some of those environments.
The brands are doing a nice job of aggregating the spend and looking at the percentage discounts. The travelers, with their preferences, are driving a lot of it. If I'm a card-carrying loyal member of one hotel brand, I like to stay there and put my points to work and stay in that kind of hotel because it meets my amenities and travel needs. I don't appreciate getting pushed somewhere else. Eventually, if I have to, I do.
What's your development strategy?
We're focused on third-party management contracts. Over the past several years, we've been focused on buying single hotel opportunities as we go along. Currently, we have two or three opportunities from an investment standpoint that we're looking closely at. Those always take a little while to get through the cycle. On the management side, we're looking to attract a number of contracts. We've got the operation capacity to do it. We've got great systems and great people, so we can accommodate the hotels. We're just looking at mutual beneficial relationships. We'd like to grow to 50 hotels within the next couple of years, and right now, we're sitting at 18, so we're trying to be very aggressive.