Mar 24, 2020

A toolkit for revenue managers navigating global crises like COVID-19

There’s no sugarcoating it: Casinos everywhere are shutting down. It certainly is a shock to the system. Things changed rapidly and we are all facing a world that’s much different than it was just a few weeks back. It’s unprecedented — but remember that it’s temporary. The industry is resilient and has adapted to challenges and made it through global shocks in the past. It won’t be easy but it can be done.

These unprecedented challenges require creative thinking — and a nuanced approach to crisis management. We can certainly look to the past for guidance but we must also assess this specific situation for tactics to navigate it.

Take a deep breath. This too shall pass. To get through the next few months, here are some tactics for casino revenue managers to navigate this unfolding global crisis at their hotel.

 

Dealing with a shutdown

“Prepare for the worst, hope for the best” is a crisis management truism especially apt for this crisis. The most pressing task is to deal with a shutdown by collaborating with colleagues and quickly assessing the next right move, timing and tone.

Tactics

Collaborate openly

  • Your competitors are also hurting, as are your local communities. During the shutdown, schedule regular virtual meetings with revenue managers from other brands, as well as local tourism organizations. Keeping those lines of communication open is essential, as it will take a group effort in the months (and possibly years) ahead to regain momentum. These lines of communication become even more important as most are working remotely. Use video conferencing to maintain that personal connection and don’t let remote work prevent deeper collaboration.

Daily meetings with marketing and sales

  • As operations pause, marketing, sales and revenue should hold a virtual meeting every day. This is a fluid situation that requires equally-fluid responses. Coordinate efforts with sales and marketing to avoid duplication and amplify results. Encourage judgment-free brainstorming and a test-and-learn culture that does what it takes to get the organization through this tough time. Organizations that work closely together to implement a shared strategy will come out of this stronger than those without a clear direction or cohesive approach.

Dive into historical data

  • We are all keenly aware that this is a situation beyond anything faced before. Nonetheless, it can be instructive to look back at historical data to understand how your specific property responded to other downturns. Dive into your data to see how historical demand dipped during the post-9/11 downturn and after the financial crisis or natural disasters like a hurricane. Then, cross-reference your property’s revenue management tactics to see what worked and what didn’t. Try to uncover any helpful insights that can inform your approach as you push through the closure.

Isolate the crisis

  • A closure is an unprecedented event. Smart revenue management systems ensure that future forecasts are not adversely affected by anomalous data during a downturn, so you can remain as accurate as possible when things return to “normal.” Consult with your vendors to understand how to accurately reflect the reality of the situation within your various revenue and business intelligence systems.

Pull the right reports

  • During this period of uncertainty, you’ll want to pull the most useful reports for management. Cancellations are an obvious report to run, but short- and long-term forecasts powered by machine learning are ideal, so in situations where the ST forecast is more meaningful, it automatically captures that. Also, ensure your RMS puts measures in place to avoid “bad data” during the downturn from adversely affecting the accuracy of future forecasts. Use your RMS’s forecasting reports to spot recovery the moment it is happening, so your hotel can return to a position of power in the market.

 

Take advantage of hibernation mode

After shutdown comes hibernation. This is the time to conserve energy and take advantage of the closure to improve processes, nurture relationships and lay the groundwork for eventual re-opening and recovery.

Tactics

Review short-term forecasts daily

  • While you will not be updating your rates as often in hibernation mode, you nonetheless need to ensure your RMS forecasts to reflect the latest trends in source market demand, guest cancellations and future bookings. Short-term forecasts will help you quantify the ongoing impacts on your property and have an accurate picture of where you stand.  Yes, it’s going to be depressing but there’s no use in hiding. Try to stay positive and use this as fuel to build the business back up in the coming months!

Maintain a top-of-mind presence

  • In survival mode, deep and swift cost cuts are facts of life. Even so, work to retain some level of marketing expenditure to keep top-of-mind with core demographics. Collaborate with marketing and sales to keep your casino visible with both casual gamers, frequent guests, VIPs and valuable corporate accounts.

Brainstorm new revenue streams

  • Your physical spaces may be shut to visitors, but perhaps you can use that space in other ways. For instance: many casinos have large IT departments with a variety of skills related to content creation, live streaming and event production. Perhaps you could offer IT consulting for event organizers holding virtual events. Not every conference has a strong grasp on the technical needs for such an undertaking; discuss the opportunity with your IT team to see if you could find work to keep staff engaged and also bring in much-needed revenue during the shutdown. Another potential opportunity is around conference organizers who canceled their events, in transitioning those contracts to virtual events;  there won’t be any associated food or beverage, but you could still preserve some of the high-value IT tasks. Get creative! There are no wrong answers — only ideas that need to be tried and tested.

Experiment with new marketing tactics

  • There are more eyeballs than ever before on the internet;  figuring out how to stay relevant is paramount. If there’s a silver lining to all of this, it’s that consumers are especially receptive to brands that engage them with quality content. With so many people at home, live streams are popping up everywhere; from actors to musicians to everyday people, live streaming has become the shared collective experience. Spend time on Instagram, YouTube and Facebook to determine if your hotel-casino can offer something to this conversation, and if so, how best to create content most relevant to your core demographics. Now is also a good time to examine the gaming experience at your property to deploy post-recovery, focusing on items like what you offer new players, point earning and redemption for existing players,  gifting programs + analytics, how your customers can get involved with the property and technology you provide, the unique features of your property they can enjoy while gaming, plus other ancillary components. Re-evaluate your competition and what their guest experience looks like from all these aspects.

Communicate early, communicate often

  • Shutdowns and isolation shouldn’t mean disappearing completely! Take this extra time and reach out directly on a 1:1 basis with critical contacts.  These are your VIPs, your corporate travel managers and your conference organizers. Reach out personally and offer a kind word of support. The tone should be empathetic and by no means promotional. You should simply send your regards and offer help, should it be needed, or should they wish to reschedule or postpone plans with your hotel.  Again, this is not a sales pitch; it’s about maintaining relationships and staying top-of-mind. Contacts will remember those who showed honest and authentic concern.

Refresh your technology

  • Obviously, expenses are being slashed and new projects put on hold. Even so, certain properties may want to take advantage of the drop in both foot traffic and web traffic to refresh your technology. Are there any revenue-enhancing projects that you’ve been putting off, such as launching a new website, implementing a new loyalty technology, standing up a new CRM,  or installing modern slot machines with customizable connectivity and built-in revenue optimization tools? Well, now could be the time to get them done — especially if you can show how the upgrade will position the property for more revenue upon re-opening. For instance, earning more revenue per guest by adding new upsell modules to your website or personalizable slot experiences on the gaming floor.

Revisit other crisis plans

  • We hate to say this but you also must be prepared for a parallel crisis — especially for casinos that may soon be facing hurricane season or other seasonal risks. Now is the time to adjust your revenue strategy for those types of crises to reflect the impacts of the global pandemic.

 

Prepare for re-opening and recovery

As your property emerges from hibernation mode, build a phased recovery plan that ramps up slowly as the casino reopens. Do this in collaboration with all relevant teams so everyone is aligned and ready to hit the ground running as a cohesive unit.

We recommend three phases of varying lengths, determined by the date of reopening and how long it takes for the business to gain momentum:

Re-opening

  • Reassure people and show what’s being done to ensure safety: thermal screenings, spacing between patrons at tables and F&B, 24/7 cleaning rotations, staff health screenings. Encourage loyalty visits with targeted packages that won’t affect public ADR. Consider full-press on loyalty, including comped rooms to get guests on property, spending money and sharing their experience on social media. Maintain a cautious marketing tone and work with sales on direct outreach to large groups/conferences.

Ramp-up

  • Shift marketing to be a bit more aggressive and focus more on fun/escape messaging. Work with marketing on influencer campaigns. Work with sales on outreach to conference organizers and meeting planners, moving from the largest to the smallest opportunities.

Recovery

  • Full-speed ahead. Resume familiar revenue management strategies. Adjust strategies to account for any changes in segments, inbound markets, passenger demand data, or other data, such as the speed of economic recovery.

Tactics

Get your marketing ready

  • Due to the unprecedented nature of the global health crisis, your team will need to have lots of meetings around the right tone and pace for reopening. So start planning your marketing strategy right away! Build out your budgets, craft your re-opening promotions, draft your campaign creative and construct your channel plan. You’ll want to get eyeballs on all of these things so that they are accepted and approved far in advance of reopening. Develop plans for:

Mass-market

  • Initial campaigns should focus on drive markets. So many people will be cooped up and ready to get out of the house — and yet, likely still reluctant to fly. Give them a reason to jump in the car and get back out in the world! To attract casual gamers, emphasize opportunities that give them more chances to win and more ways to play. You’ll also want to emphasize meaningful offers, such as generous point redemptions, higher levels of points earned, and bundling other on-property amenities (such as food and beverage vouchers or 2-for-1 buffets, once restaurants re-open).

Loyalty

  • Your direct outreach during hibernation mode should pay dividends here. As you reopen, reach back out to those very same contacts and give them a clear plan of action for what they can expect in the weeks and months ahead. Next, refresh your menu of promotions to provide fodder for your loyalty member outreach. Then, dive into your loyalty CRM and build “we’re open for business” campaigns, personalized to each segment.
  • We also suggest building two campaigns, an initial outreach campaign that tests the waters and gauges interest. If the initial campaign is less successful than expected, then launch another campaign with more aggressive offers and lucrative packages. As you build out these packages, keep in mind that they should fit within your total revenue management strategy. Even with the downturn, you want to maximize overall revenue; so carefully consider which packages correlate with which segments.

Regional differences

  • If you’re working for a company with multiple casinos, be sure to create a marketing plan for each property. Even if those casinos are in the same region, there are likely nuances for your most valuable guests.

Adjust your comp set

  • A helpful reminder: your comp set is flexible, not static.  During the ramp-up phase, watch your competitors closely. Not everyone will be as strategic as your organization, so change your compset based on who is relevant and navigating this unprecedented re-opening phase with intelligent, precise pricing strategy. Those are the ones to benchmark!

Monitor demand data

  • Create daily demand reports to share widely. These should include demand data at both the property and market level, as well as relevant data, such as passenger traffic, booking windows, comp set pricing intelligence and other travel trends. During reopening and ramp-up, this report is the “single view of the truth” to support a cohesive and unified strategy.

Account for shifted business

  • Flexible cancellation policies mean that many guests and events were given credits rather than refunds. You’ll need to account for this shifted business in your forecasts, as these reservations will take up space and thus affect your revenue strategy.

Look to Macau

As we’ve said, this is an unprecedented situation. To put this in perspective, this is the first time since the funeral of US President John F Kennedy in 1963 that the Las Vegas strip has been dark. So there aren’t really many case studies here.

The only place to look for insights is Macau, which recently came off its own 15-day closure. While it’s too soon to judge how quickly business may return to normal, given the continued global spread of the virus, it does underscore just how difficult the situation is: gross revenues of casinos in February fell 87.8% year-on-year and March likely hitting an 80% drop over last year. One bright spot is that analysts report VIP activity performing better during this period than the mass market.

To prepare for what’s ahead, how these casinos reopened:

  • Mandatory use of face masks
  • Body temperature checks at entrances
  • Rearrangement of gaming tables and seats for social distancing

Obviously, these conditions would have significant impacts on revenue forecasts —  especially if there are fewer tables and slot machines available. Nevertheless, the phased reintroduction of public access to casinos is to be expected. Prepare accordingly!

Everyone is experiencing a stressful time and we must all remember to communicate from a place of kindness! 

We know the times are incredibly difficult. Uncertainty, coupled with community health concerns and plummeting revenues, makes it really hard to do business today and plan ahead for tomorrow. The only course of action is to adjust quickly to this new reality, dig in for the long haul, prepare your staff for the tough road ahead and build resilience across your operation wherever possible.

We may not know exactly when the outbreak comes under control and business resumes. But one thing is certain: this too shall pass. The hospitality industry has survived other major global crises and we will get through this one as well.

For over 20 years, our technology and strong relationships have helped hotels weather crises so that they come out of downturns stronger than ever. We’re in this together. To find out more about how we can help your hotel, contact us today.

Now go wash your hands!