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Adam Hayashi, VP of Revenue Management & Analytics at AccorHotels, knows about luxury. His career began at the front desk of Toronto’s iconic Fairmont Royal York in the 1990s, where he also met his wife – hence the old railway print of the grand hotel hanging in his living room!

Hayashi, who will be speaking at EyeforTravel North America, soon moved into revenue management. His career path took in IHG, Delta Hotels, Hilton and Westmont Hospitality Group before returning to where it all began, becoming regional director of revenue management at Fairmont Raffles Hotels International (FRHI) in 2012.

In July 2016  AccorHotels completed the  acquisition of FRHI – worth a reported $2.9 billion –  and a few months later Hayashi took on his current role.

With responsibility for the North and Central American markets, Hayashi has a very clear objective – to use the FHRI deal to lead AccorHotels’ charge into the luxury segment in North and Central America.

The stated aim of AccorHotels’ CEO Sébastien Bazin is to become the number one player in luxury globally, and it is not difficult see why. According to a global luxury hotel report from Dublin-based Research and Markets, the luxury market was valued at $15.5 billion in 2015 and is projected to reach $20.4 billion by 2022.

“We’re in an upward cycle and luxury is doing very well,” says Hayashi, who will share more luxury insights in Las Vegas.

North Americans today have greater spending power, airfares are cheaper than ever before and there are numerous distribution channels offering a wide range of luxury products – all helping to make this segment more affordable to a wider audience. The result is that AccorHotels has witnessed record growth for the past seven years, occupancy levels are rising, and so is its market share.

While Hayashi acknowledges that a correction is always a possibility, luxury remains a crucial part of its growth strategy. “Until the FRHI acquisition, North and Central America accounted for less than 1% of the global revenue. Adding 40+ luxury hotels has boosted that number to almost 15%” he says.

At the time of publication Accor has, give-or-take, 4300 hotels globally. Of these, just 210 are luxury hotels that fall under the Fairmont, Raffles and Sofitel umbrella, and yet they contribute over 40% of the global business volumes. “For every one luxury hotel, we get the same fees generated for roughly 17 economy hotels,” Hayashi explains.

Going forward, the group’s luxury portfolio is expected to account for some 50% of the business volume by 2021, with over a third of the revenues from properties in North and Central America. This places it in second place in the luxury space behind Marriott, and just ahead IHG.

AccorHotels continues to grow its luxury and upper upscale footprint with acquisitions and development. With numerous big box hotels in attractive cities, Fairmont and Sofitel are also perfectly positioned for growth in the luxury group and meetings sector, where there is huge potential to drive ancillary revenue.

To advance these ends, it has also acquired Swiss brand Mövenpick and the Mantis Collection, a South African based hospitality and travel conglomerate.

So what tips does a senior revenue manager of a fast moving and forward thinking chain have for others? Hayashi will be sharing more tips in Las Vegas this October but, in the meantime, here is a taster.

Price based on demand and customer demographic

An early lesson came from the revenue and sales managers of a Fairmont hotel in Bermuda.  Hayashi was visiting the property and asked the revenue manager if he could see the rooms. The revenue manager said she’d call the sales manager because “I don’t go into rooms. I price them.”

He explained:

“The revenue manager had the insight to realise that it really doesn’t matter what the room looks like, what her perception of the room is, or mine for that matter. We price based on demand, and the guest we are targeting. In the luxury space, you are selling an experience and services and everything that goes with that.”

Ultimately, it is really about understanding your customer demographic, and how to approach each segment; how to market to them and price the room right.

“It was a key lesson. I stopped looking at demand as a whole and looked specifically at the demand that we were targeting within a market,” he stresses.

Call it tough love, but if a hotel chain has invested $140million in a renovation, rooms need to be priced accordingly.

“So if a guest starts saying ‘this hotel is too expensive now’, then maybe, at this point of time, we have to accept that we aren’t the right fit at this time for this guest. Or maybe, they aren’t our guest during this season, or they are our guest for just a weekend rather than a week-long stay.”

Having said that, with 25 brands across AccorHotels, “we are able to appeal to all guests at different times.”

Focus on total hotel profit optimisation (THPO)

About four years ago, FRHI adopted a total revenue management approach with a programme called RevPro. This signalled a move away from yield management, which was really an airline constructed process based on supply and demand.

“The point of RevPro was to change the way we thought, to approach things differently…It’s very easy to remain stuck in that cycle of asking questions like: how should we price it this weekend, are we making budget, how we are going to forecast.”

These are all common questions that revenue managers ask but for Hayashi, it was about “changing the dialogue, educating people and inviting the right people to sit round the table.”

So, the group went from convening revenue meetings once dominated by the GM to including everybody from the director of food and beverage to the directors of golf, valet services and spa. The idea was to focus on how to truly move the needle by optimising every available space. “There was some really unique dialogue, but also some great ‘aha’ moments,” he says, ‘aha’ moments that revealed how much better heads of department could work together to optimise revenues.

“For example, if there has been a group buyout but nobody is playing golf, why not offer golfing break out sessions, or a golf clinic. On the other hand if the hotel is not full with group bookings, could there be an opportunity for F&B to capture guest revenue in-house by running a pop-up restaurant or bar in one of the empty group areas.”

“It’s about looking at available space and what that looks like in terms of occupancy forecasts. And this shifted the culture of yield and pricing management to thinking about ‘what is the next big idea’ and ‘how can we better use our space.”

THPO considers all ancillary spend, and the revenue that comes with it; how seasonality, length of stay and other such patterns affects the bottom line.

“From a luxury group standpoint, we don’t get the highest average rate in our group segment but we have higher than average spend, the highest ancillary revenue and the longest length of stay, which means the best contribution to profitability.”

He continues: “When you are looking at things from a profit and not a yield management standpoint then you are thinking more about the bigger picture, and more about the bottom line, not the top line. That is good for our hotels, it is good for our owners and it is good for our company.”

Take lessons from the field

This is Hayashi’s first role leading a region, and his first step was to assess what worked and what didn’t. What he found was that very often the corporate engine defines the strategy, and leaves those at the coalface to roll it out.

“This doesn’t always make sense, and does not address needs on the ground,” says Hayashi, and this means that people don’t always buy into a new programme. According to Hayashi, “we didn’t do a good enough job understanding what the region’s pain points were before coming up with a solution”.

Hayashi wanted more input from the field and within six months had set up a revenue advisory committee (RAC), which has a rotating group of five directors of revenue management.

“They assess everything that comes through the corporate office and have the opportunity to vet the programme to pilot the tools, to test reports and offer feedback. As a result, there have been great insights from the field, which [before] we would never have seen.”

By taking direct feedback from the field, and changing direction whenever necessary, there has been much better adoption of RM programmes. After all, people in the field are the users. “If I create a report based on what I need without connecting with the person actually using it, there is already a disconnect right there,” says Hayashi.

And that is the last thing you need in such a competitive environment.

Join us at EyeforTravel North America (Oct 18-19) to hear more from Adam Hayashi, VP of Revenue Management & Analytics at AccorHotels

 This article by Pamela Whitby, editor of EyeForTravel appears as part of the tnooz sponsored content initiative.