“Reset your thinking and see the future of revenue management.” In today’s competitive marketplace, revenue management is an incredibly hot topic because well-conceived revenue strategies and tactics can grow a hotel’s market share and profits significantly . . . making you the hero of the day.

As an early pioneer in airline and hotel revenue management in Asia Pacific, I have experienced tremendous and unrelenting changes in the global travel marketplace. The rapid growth of worldwide wealth has fueled global travel, the explosion of ecommerce and social media has brought a new generation of digitally savvy travelers and with them, the era of big data and analytics. Never has there been a more exciting time in hospitality and its fast evolving discipline of revenue management and pricing, and never has your role as a revenue manager been more strategic yet more complex.

How do you understand these changes in marketplace, technology, and consumers, and the impact that they will have on your business? How will you evolve your pricing strategy to exploit these revenue opportunities to gain competitive share and transform your role from a revenue manager into chief revenue strategist?

Read this book, and take your revenue management game to a new level. In Hotel Pricing in a Social World, Kelly McGuire helps you to understand and navigate these new forces that have swept the travel landscape and changed the strategic nature of revenue management forever. She helps you to develop the knowledge and skills required to stay current and be successful.

I have profound admiration for Kelly, and how she has over the years, with passion and commitment, challenged the old conventions of revenue management and pricing and helped to transform industry thought and practice. Kelly is a revenue management and analytics evangelist to the hospitality and travel industries. Through her research work and leading role in hospitality at SAS, Kelly has been a persuasive advocate for integrating consumer psychology into the discipline of revenue management and pricing, through the application of big data and advanced analytics.

Pricing strategies need to evolve with the changing mind-set of the consumer. Travelers are now self-reliant and resourceful—they research more than 12 websites to plan a trip, trust user-generated content over hotel marketing, compare prices using metasearch, expect instant gratification with 24/7 connectivity and book last minute on mobile devices. Less than 30 percent of travelers have a preferred hotel brand, half of what it was eight years ago, and decreasing still. Consumers are loyal to their needs, not to a hotel brand. Hotel supply has increased exponentially over the past 10 years and players in the sharing economy, like Airbnb, have brought even more private rooms into the market. Choice is abundant, competition is fierce, and consumers have full transparency on the web.

The distribution landscape has also become more crowded, with proliferation of online travel agencies like Expedia, Booking.com, and CTrip, and search players like Kayak, Qunar, and Google Hotel Finder. Revenue managers not only have to craft pricing strategies to account for different consumer needs and price sensitivity, but they also find themselves having to comprehend and manage among direct consumer channels, the online intermediaries, and traditional agreements with wholesale, group, and corporate accounts—each incurring different transaction costs and having different impacts on profitability.

Hotel Pricing in a Social World is timely and relevant. You will learn from Kelly how revenue management systems today should take advantage of innovations in analytics and data visualization to drive more profitable business decisions. It will help you identify opportunities for revenue management to play a larger and more strategic commercial role within your organization. And it will provide you with a compelling vision for the future, where revenue management professionals are encouraged to step out of the box, embrace innovations, and develop a holistic understanding of consumer behavior. I believe that this book will give you the road map to transform your revenue management capabilities and build a sustainable long-term competitive advantage for your company. You will feel energized and empowered to develop critical thinking around key topics influencing our industry:

• How do we take advantage of the explosion of big data in revenue management? Kelly provides some definitions, frameworks, and cautions about how to approach new data sources and new technology options to improve revenue performance.
• Does your hotel’s online reputation impact pricing? Kelly shares her research findings on how consumers combine user-generated content with price to make a purchase decision, and she helps you understand how the impact differs for various purposes of travel.
• What did Peter Drucker mean when he coined the phrase “Culture eats strategy for breakfast”? We all intuitively understand the importance of instilling an integrated revenue culture across revenue management, sales, marketing, and operations in order to achieve truly superior performance results. Here, Kelly helps you to achieve the vision of “intelligent demand management” and provides tips on how to start your organization moving in this direction.
• How do you forecast and manage demand when the prevalence of the mobile culture encourages instant and last-minute bookings? In the book, Kelly shows how changes in consumer behavior are influencing the way revenue management needs to think about pricing. She also provides a framework for applying revenue management to other revenue-generating assets and explores the role of the guest in total hotel revenue management.
• What is the role of revenue management in building loyalty and increasing marketing returns as the marketplace becomes increasingly crowded? Learn the crucial part that revenue management plays in the creation and execution of consumer personalization initiatives.
• How do you develop the right revenue management talent for success in this new future? The book describes the skills and competencies that will be required for the revenue manager of the future, and it helps hotels understand how to attract and retain top talent into the discipline.

Hotel Pricing in a Social World has masterfully combined the art and science of pricing and taken it to higher ground. Kelly has succinctly and powerfully described the winds of change in our industry and provided frameworks, tips and critical thinking to take us into the future. If you are serious about creating and sustaining superior revenue management performance for your organization, this is a must read and must practice. Change favors the prepared, and with the knowledge and skills acquired from this book, you will be ready to succeed and win.

Jeannette Ho

Vice President—Revenue Management,
Consumer Insights and Analytics

FRHI Hotels and Resorts Worldwide

I have been privileged in my role at SAS to be able to travel around the world speaking at events and meeting with individual hotel companies. I have appreciated the opportunity to listen and to advise. Questions, comments, and discussion points from hundreds of conversations are represented in this book. I have endeavored at all times, and particularly for this book, to be respectful of the need to keep specific company business strategy and internal processes private, while providing advice that will raise the discipline as a whole to the benefit of all. Thank you to those who were willing to be quoted, and especially also to those who helped to inform my thinking but needed to remain anonymous.

There are many people who deserve my deepest gratitude for their support and contributions to this book. I must particularly express my thanks to my dear friend and research partner Dr. Breffni Noone. The genesis of the title of this book was a chance meeting with her at the HSMAI ROC conference in Orlando in 2010. Although we became colleagues and friends during the PhD program at Cornell, I hadn’t seen her in a few years. We snuck out of a session to have a chat about how we could maybe do some research together, and that meeting turned into the research I describe in Chapter 4, and eventually the title of this book. The opportunity to work with her on the research has been a great source of inspiration and joy for me. She also took on the role of technical editor for this book during a very busy time, for which I am very grateful. She provided feedback that was critical to the quality of the final version. I also remain thankful to her and her incredibly supportive husband, James, for convincing me to go back to Cornell for my PhD to begin with. If I had not done that when I did . . . well . . . things would have turned out very different!

I am grateful to Jeannette Ho for writing the foreword to this book, but even more so for her inspiration throughout my career (and the careers of many other revenue managers). Jeannette sponsored the function space revenue management (RM) internship in Singapore at the Westin Stamford that led to my honors monograph and first published article with Sherri Kimes. This was a crucial factor in my having the opportunity to work with Sherri during my PhD. It is an honor to continue to have Jeannette’s support today. She is a role model for revenue managers in general, and women in revenue management in particular.

I am also very grateful to Chris Crenshaw, Nicole Young, Tim Wiersma, and Neal Fegan, who also took time out of their busy schedules to review the outline and content of the book for me. Their feedback helped me immensely and the book is much better because of our conversations, and their quotes and case studies.

I have been privileged to work with an incredibly talented and dedicated team at SAS, particularly Natalie Osborn and Alex Dietz, who have been instrumental in shaping much of the thinking that went into this book. I am grateful for your dedication to your work and to the industry—and very appreciative that you have the patience to let me burst into your office to talk over my latest crazy idea or work through my writer’s block. I am also incredibly grateful to Natalie for creating the beautiful visualizations in Chapter 4. She is so very talented in many ways, but her ability to graphically express complicated concepts is particularly impressive. Thank you, Natalie, for making me look good! Analise Polsky, another SAS colleague, assisted me with a lot of the visualization content, including pointing me to the fantastic pie chart in the big data chapter. Suneel Grover worked with me on the digital intelligence content in Chapter 8, helping me to describe the data collection and analytics available to digital marketers today.

Speaking of SAS, I would like to thank SAS Publishing for the opportunity to write this book, and for their support during the publication process. In particular, I appreciate the advice that Shelley Sessions provided during the proposal process, and the support and editing skills of Brenna Leath (and also her therapy sessions over the phone during the last few weeks before completion). I would also like to thank my manager, Tom Roehm, who pushed me to write this book (mostly by appealing to my highly competitive nature by pointing to other SAS authors in our group). Without the opportunity, support, and encouragement from SAS, this book would not have happened.

Big thanks as well to all of the talented revenue leaders who allowed me to share their insights in this book. I know how busy everyone is, so your willingness to take time for a phone call or to respond to a lengthy list of questions in an e-mail is much appreciated. Thanks in particular to those who provided the longer case studies, including Joerg Happle, Ivan Oliveira, Tarandeep Singh, Rich Hughes, Tugrul Sanli, Mark Molinari, Chinmai Sharma, Hari Nair, Monica Xeureb, Lennert de Jong, Maarten Oosten, Stefan Wolf, Rhett Hirko, Brian Payea, and Kathleen Cullen. Thank you also to IDeaS product marketing, particularly Ezra Kucukciftca and Bonnie Hollenhorst, for providing screen shots of the product to use as examples.

I also appreciate the connections and insights my work with HSMAI has facilitated. I have been privileged to serve on the Americas Revenue Management Advisory Board, which has allowed me to spend time with talented and dedicated revenue leaders (many of whom are featured in this book). I have also had the great opportunity to speak at all of HSMAI’s global Revenue Optimization Conferences (ROC) in 2015 in the United States, Europe, and Asia. Thanks to Bob Gilbert, Juli Jones, Ingunn Hofseth, and Jackie Douglas for including me in your conferences and roundtables, and for giving me access to your resources and your content for this book. It’s a great organization and I feel fortunate to be able to be involved! Every revenue manager should join and get involved with HSMAI. It provides great access to knowledge and to networking opportunities around the globe.

I am grateful to my advisor and friend, Sherri Kimes, for inspiring me to get involved in this discipline and for guiding me through the PhD. Your tireless dedication to your students, current and former, and to this discipline, is an inspiration, and I feel fortunate to be a small part of your legacy.

Thanks to Brad Weiss for supporting me, taking my panicked phone calls, and for making me dinner when I was deep in the writing process.

Finally, my deep appreciation to my family, particularly my parents, who have always supported my endeavors.

Kelly A. McGuire, PhD is senior vice president, revenue management and direct marketing for MGM Resorts International, where she is responsible for driving profitable room revenue for MGM Resorts International’s Las Vegas resorts. Prior to this role, she was Vice President, Advanced Analytics for Wyndham Destination Network. She led a team of data scientists and developers who build custom analytic solutions for Wyndham Vacation Rental’s companies and the RCI time-share exchange. Prior to joining Wyndham, she led SAS’s Hospitality and Travel Global Practice, setting the global analytics strategy for these industries, and supporting engagements around the world.