Background:The hospitality industry is enjoying its longest expansion and healthiest growth in decades, yet there are some troubling trends beginning to surface that threaten profitability and overall performance.One of these trends is that net room revenue--i.e., revenue that remains with the hotel after accounting for distribution costs (OTA commissions, traditional agency commissions, and other distribution expenses)--has been declining steadily over the past several years. For example, U.S. hotels earned roughly $155.2 billion in guest-paid revenue in 2017 but paid an estimated $25.2 billion to acquire guests in the form of OTA commissions and other distribution costs, retaining significantly lower net room revenue of $130 billion (Kalibri Labs). Revenue capture--i.e., net room revenue that remained with the hotels--declined from 84.9% in 2015 to an estimated 83.5% in 2018 (Kalibri Labs).The overall growth in occupancy and RevPAR that many hoteliers have been enjoying for the past few years cannot possibly compensate for "the loss of wealth" in the form of steadily increasing distribution costs via the OTA. Hoteliers need to increase direct bookings, which come at a much lower cost, and improve overall direct vs OTA distribution ratio.Integrated Strategy: The Missing Piece of the PuzzleOne of the main reasons for the troubling trend of decreased revenue capture and profitability in spite of stellar economic performance is the lack of integration, coordination, and singular focus and purpose among the core revenue generation teams at the property or hotel management company: The Revenue Management (S&M), Marketing Team (MT) and Customer Relationship Management (CRM) teams. Quite often these teams function in a rather disjointed fashion, leading to missed revenue opportunities, over dependency on the OTAs, alienated loyalty members, and worsened profitability.Many times, the property RM, S&M and CRM teams operate in isolation from one another, without close coordination. In some worst cases, they are even in competition with one another to sell the same rooms. In other words, the left hand-- one team--does not know what the right hand--the rest of the teams--is doing, to the detriment of marketing efficiency and price integrity and ultimately overall revenue generation, profit, and owner's ROI.Case Study 1:A luxury hotel in New York City launched a spring-related multi-channel campaign, including a value-add and a 15% off advance booking discount. The ad formats included a Limited-Time Offer interactive application, website promo, content marketing, SEO, SEM, online media and retargeting, social media, email marketing and PR. The budget for the campaign was well over $100,000, and the projected returns, based on results from the previous year, were for a minimum 12:1 return.A week into the Spring Campaign, the digital marketing agency of the hotel noticed a 30% off discounted offer for the hotel on the OTAs, valid for the same stay period and without the advance booking restriction. After the agency alerted the hotel, it was determined that the Spring Campaign promotion had not been communicated well internally to all revenue generation teams, which had led to the RM team launching a parallel OTA discount campaign.The result? Wasted precious advertising dollars and missed much-needed incremental revenues.Case Study 2:As part of the CRM marketing automation and loyalty marketing, the CRM team targeted members of the guest recognition program with a "10% come back" marketing campaign to fill in the upcoming slow season at the property. After the CRM team received complaints from a number of members of the recognition program that they were seeing a 25% discount for the property on the OTAs for the same period of stay, it was determined, after some internal back and forth, that both the CRM and RM teams had been working in silos and without alignment of their efforts, which had led each team to pursue different promotions for the same stay period to fill property's occupancy needs.The result? Seriously aggravated members of the guest recognition program, guest retention under serious jeopardy, and unrealized revenues from repeat, loyal guests.Sound familiar?Ed Watkins, a hospitality industry veteran, described the current situation in a recent LinkedIn post: "I think there are still too many GMs, owners and DOMs who don't appreciate the need for close coordination between revenue management and marketing functions. The tide is turning but not fast enough. More education is required."The Highly Fragmented Hospitality RealityTraditionally, RM, S&M and CRM operate as separate teams with their own goals, technology tools, databases, vendors, and more.One glaring example of this highly fragmented approach is keeping past guest engagement efforts (CRM) in a silo from new customer acquisition and marketing efforts. For example, looking at independent hotels, less than a third of hotel guests on any given night are repeat guests, while two-thirds are first-time guests. This means that the reality General Managers and DOSMs face every day is having to fill about 70% of their rooms on any given night with brand new guests that they know very little about while trying to ensure they have a pleasant and meaningful stay. Furthermore, once the property has acquired this new guest, when the guest walks out the door, if they're not engaged with marketing automation and guest retention initiatives, there is no guarantee this guest will ever stay at the property again. This results in a vicious cycle that affects the bottom line.Here are some stark examples of today's fragmented approach:Revenue Managers vs Marketing Managers: RM has been the science of analyzing the property's past, present, and future performance data, comp set pricing, plus past and projected macroeconomic data, citywide convention and major events calendar, etc. Revenue managers rarely have the tools and data access to take into consideration CRM data, including guest RFM values, website user behavioral data and digital marketing data, etc.As industry professionals, revenue managers and marketing managers are cut from a different cloth: Most revenue managers are data-driven and very analytical, whereas most marketing people are much more intuitive and creative. Based on their different decision-making types, more often than not, when looking at the same data, they do not arrive at the same conclusion, resulting in vastly different approach to the same situations. Since the traditional career paths for both positions are very different, this is an industrywide issue.Hotel Website: The property knows their guests intimately: their home address, credit card number, what they ate or how many drinks they had last night, and more. Yet, when these same guests visit the hotel website, in most cases they are treated as complete strangers. The property's revenue generation teams, including RM, S&M, and CRM teams rarely have the tools to align the website data with their day-to-day operations and decision-making process, and as a result rarely align their efforts with the website manager or outside vendor.Data Islands: The property customer data lives in multiple "data islands" that do not talk to each other: PMS, CRM, CRS, Social Media, Web Analytics, Marketing Data, BI, etc. Very few properties and hotel companies can boast a single view customer data with live data feeds from ALL touchpoints with the traveler.For example, in most instances, past guest data (CRM data) is not being utilized to engage and retain past guests, when making pricing decisions, or to target new guests and sharpen the focus and reach of the property's digital marketing campaigns, in order to acquire new guests that are similar to past "ideal" guests. Quite often different teams at the property use different sets of data in their day-to-day operations, creating a total "data integrity mess," which directly affects the property's guest acquisition and retention efforts.RFM: Practically non-existent capabilities to identify the property's "ideal" guests--those with high RFM (Recency, Frequency, Monetary Value)--and engage them throughout their hotel planning and booking journey, and throughout the customer lifetime, as well as use this knowledge to acquire new best guests.Technology & Digital Marketing Silos: The hotel uses a myriad of vendors that do not talk to each other, and in many cases do not even know each other: one for CRM, a second for the property website, a third for SEO, a fourth for SEM, a fifth for online media, and so on. Recently we encountered a boutique hotel brand that was using 28 different vendors for their digital marketing!Often, hotel marketers manage the property's digital marketing campaigns without taking into consideration past guests' CRM data, preferences, stay and booking behavior, which prevents the property campaigns from reaching the right guest. Revenue managers often fail to capitalize on these insights for key pricing decisions.CRM Data not talking to Intent Data: Knowledge from past "best" guests is not being used to identify marketing personas and target lookalike audiences, thus significantly expanding the marketing reach to acquire new guests that are similar to your best past guests and are in market, i.e., planning to travel to the property's destination.These are just a few examples of how data and digital silos are revenue blockers that hurt the bottom line, decrease customer engagement and retention, and increase OTA dependency.Dr. Cindy Heo, an associate professor of revenue management at Ecole Hoteliere de Lausanne (EHL), describes the current siloed approach in revenue management and the existing fragmented customer data situation in the industry: "Revenue management used to focus primarily on setting room prices and optimizing room inventory. Revenue managers should not just crunch RMS numbers but need to understand guests' selection behavior, consumer psychology, and their competitors' strategies by analyzing various pieces of information. RMS cannot, therefore, be the only toolkit for a revenue manager, because customer data reside in different hotel systems."Tying RM, S&M and CRM together with a 360-degree approach that engages, retains, and acquires guests throughout the customer journey is not only more efficient and more effective at driving direct bookings, but it is incomparable in growing the bond with your customers and their lifetime value.Obviously, There Is a Need to Break Down the SilosToday's travel consumer's hotel planning and booking journey has become increasingly complex in this multi-device, multi-channel, and multi-touchpoint digital landscape. In fact, according to Google, the average consumer engages in 38,983 digital micro-moments in just under two months. The average travel consumer journey takes about 17 days, and the average visitor goes through eight research sessions, 18 site visits, and six clicks before making a hotel booking (Google Research).As consumers remain digitally connected throughout these micro-moments before making a booking, each touchpoint presents an opportunity for a hotel to build a brand connection, influence intent, win the booking, and be there for every step of the journey.In light of this complex digital landscape, hotel marketers should engage online travel consumers throughout their complex digital journey and can no longer afford to have a fragmented customer engagement and acquisition approach.With the proliferation of the Internet and online commerce, and more recently of mobile devices, the travel planning process has become increasingly complex, forcing hoteliers to find an integrated strategy to engage, acquire, service, and retain travel consumers across multiple digital touch points and across all digital channels and devices. This new complex travel customer journey constitutes a singular planning, conversion, and retention lifecycle that requires a singular (read: seamlessly integrated) approach. It does not tolerate silos in technologies, services, and engagements.The mobile channel imposes new challenges to the property and demands coordinated, real-time pricing and marketing reaction to the volatility of the marketplace. And we already live in a mobile-first world. Mobile devices dominate the travel planning journey: 40% to 50% of desktop bookings worldwide are preceded by a click on a mobile device, and 94% of leisure travelers use multiple devices (mobile, tablet, desktop) when planning and booking travel (Criteo).Today over 59% of hotel web visitors, 51% of page views, and nearly 27% of bookings and 24% of room nights are generated from mobile devices, including smartphone and tablet.To summarize, here are the main reasons prompting the convergence of RM, SM and CRM into one cohesive team:The overwhelming shift to online distribution and online customer engagementsThe exploding mobile channel and the need for lightning-fast pricing and marketing decisionsThe ever-increasing complexity of the customer lifecycle and the emergence of the digitally-savvy travel consumer.The need to lessen overdependence on the OTAsThe Solution: An Integrated Revenue Generation TeamThere should be a single-minded team at the property: The Revenue Generation Team, consisting of the RM, S&M and CRM specialists, working together to acquire, engage, and retain guests; optimize performance; and increase revenue, especially direct bookings.Marcela Trujillo, VP of Revenue at Menin Hospitality in Florida, recently commented via a LinkedIn post: "At Menin Hospitality, revenue and marketing work hand in hand and always have. This must be done to drive direct bookings. It is incredibly effective and indeed crucial to the success of any asset."What should hoteliers do proactively to accelerate the change to an integrated Revenue Generation Team? Here are just a few of the organizational, financial, technological and philosophical changes and action steps needed:Hotel Management and Franchise ContractsHotel owners' management contracts with Hotel Management Companies and franchise contracts with major hotel chains should use "Total Gross Operating Profit" (after OTA commissions, traditional agency commissions, and other distribution expenses), and not "Gross Room Revenues" as the measure for calculating management and franchise fees. In this way, every revenue-generating employee and team at the property would be evaluated based on the net room revenues collected by the property (Gross Room Revenue minus Agency/OTA Commissions).Organizational ChangesA new role is needed at the property or hotel management company: Revenue Officer or Revenue Optimization Officer, overseeing the integrated Revenue Generation Department at the property, small or midsize chain, or hotel management company. The Revenue Optimization Officer is not an accounting or finance major position, but a role for a cross-functional leader, versed in all three disciplines: RM, S&M and CRM. The example of Menin Hospitality recited above is commendable and should be examined and followed by hoteliers across the globe.Education and Professional Development The whole hospitality educational and professional development system needs to be re-thought and adjusted to create cross-functional experts who are intimately familiar with all three disciplines: RM, S&M and CRM. Existing RM, S&M and CRM employees should be incentivized to get certifications and attend professional development courses in the other disciplines as a prerequisite for their career advancement. For example, existing Revenue Managers should be trained in digital marketing and CRM to better understand the complex customer journey; meanwhile, hotel marketers should study revenue management to better understand the revenue implications of everything they do.Technology InvestmentsThe hotel needs to invest in technology that allows alignment of and cooperation among the RM, S&M and CRM specialists from the Revenue Generation Team. This is call to action for the hotel tech community: New technology tools and platforms, especially platforms utilizing AI to crunch Big Data, are urgently needed to enable the cross-functional cross-data silo alignment among RM, S&M and CRM!The independent property, small or mid-size hotel brand can start small by working with their existing vendors on cross-functional connectivity, or when considering new technology solutions, to evaluate the cross-functional capabilities of the vendors. Hoteliers should ask themselves, "How can we incorporate our digital marketing and CRM data into our pricing decisions? How can we use revenue management analytics to sharpen the focus and ROI of our digital marketing campaigns? How can we utilize our knowledge from our RFM data into our new guest acquisition efforts?"Industry examples of such cross-functional technology applications include: NextGuest Technologies' Guest Engagement and Acquisition Technology and Marketing Platform, combining digital marketing, website, and CRM data into one cohesive marketing and personalization platform; and Duetto's Revenue Management System (RMS) that includes in its algorithms data from customers' spending habits, preferences, and lifetime value, as well as external data from the property website Review Data and sentiment analysis.Here is how Marco Benvenuti, Co-founder, Chief Marketing and Strategy Officer at Duetto describes the company's cross-functional capabilities:"Duetto's analytics platform ingests data from all of the property's systems -- booking engine, PMS, CRS, CRM, property website and user pathing behavior and combines this "owned" data with third-party data such as social reviews and intent data to deliver accurate information to systems all along the booking path.Hotels can use this trove of guest data to form a more modern and tailored Ecommerce strategy, starting with a more user-friendly and personalized booking experience. This data helps hotels make more profitable pricing decisions, and a better booking experience will help capture demand on your least expensive channels."Revenue Optimization IdeationThe Revenue Generation Team and its RM, SM and CRM specialists, under the guidance of the Revenue Officer, should brainstorm and have an Annual Revenue Strategy, outlining major markets that need focus or improvement, sales, and marketing (seasonal, multichannel, ad hoc) campaigns needed to achieve the revenue goals, etc. Every quarter the team should brainstorm and come up with an updated Action Plan for the next three quarters. Every week the team should meet to discuss the current property performance--including occupancy, ADR, RevPAR, and revenue needs--and map out concrete tactics to optimize revenue.Optimization of the Marketing Mix An integrated Revenue Generation Team can finally achieve the elusive optimization of the property's marketing mix, i.e., the 4 P's of marketing: Price, Product, Promotion, and Place. Only by working together can the team devise the optimum pricing, product offering, and distribution channel strategy that can bring the best results. There should be collaboration when answering questions such as: Should we offer the spring multi-channel marketing promotion to the OTAs? How do we tackle next month's occupancy need due to group cancelation? How do we improve weekend occupancy? Through this collaboration, action plans can be implemented across all revenue-generating channels.PersonalizationPersonalization is not only proven to increase bookings and other key performance indicators; consumers now expect hotel offerings, pricing, and content (textual and visual) to be personalized to their concrete needs and preferences. A recent survey by eMarketer showed that 85% of Internet users expect personalization, and 75% of consumers get frustrated when it's clear that companies are not personalizing content (Janrain). Clients that introduce personalized content on their website see uplifts of 40%, 50%, and even doubling of conversion rates.The Revenue Generation Team can devise a robust personalization strategy for guest acquisition and retention that includes all aspects of the guest journey: from marketing and website engagements, pricing and channel management, personalized offering and pricing based on RFM and LTV values, to product offerings and CRM retention and loyalty marketing initiatives. Industry examples include: HEBS Digital's Smart Personalization Engine, which allows the property website to target visitors based on their demographics, feeder market, website pathing behavior, or affiliation to a particular customer segment or loyalty program, with unique promotions and relevant textual and visual content; and Duetto's Personalized Loyalty Pricing, which involves positioning and promoting room rates and offers to customers based on their spending habits, preferences, and lifetime value.Multi-channel Marketing The Revenue Generation Team should coordinate the marketing efforts of the property to be operated using the multi-channel marketing approach. With one cohesive marketing campaign, and the same cohesive marketing message (read: promotion) pushed across all potential touch points with online travel consumers (hotel website, SEO, SEM, GDN and online media, social media, PR and email marketing), hoteliers can build stickiness and traction across channels and devices and dramatically increase revenue.Today's complex multi-touch consumer behavior is what makes multi-channel marketing campaigns the most effective way to address concrete business needs, increase reach, and boost bookings and revenue for the slow season or need period.These campaigns can be structured around the property's seasonality as well as specific business-needs (i.e., need to fill weekdays vs. weekends, occupancy needs, group cancelations, seasonal slowdowns, etc.), and also target specific high-value segments.Conclusion: There is no doubt that today's complex travel customer journey requires an integrated strategy to engage, acquire, service, and retain travel consumers across multiple digital touch points and across all digital channels and devices. This necessitates a single-minded team at the property: The Revenue Generation Team, consisting of the RM, S&M and CRM specialists, working together to acquire, engage, and retain guests; optimize performance; and increase revenue, especially direct bookings.