Mr. Juston ParkerThe basics of Revenue Management begin far before the guest comes. As Warren Buffett stated, "Forecasting rain doesn’t count, building arks does?"
When does a guest book? The answer most give is, "when they want to stay". The truth of the matter is they book when the time is right for them. Traditional marketing gets all the information in front of the guest and hopes that when the gust books they choose you! This shotgun approach leaves many properties unable to track true conversion on their efforts and wasting money on trying to get guests that never stay. By looking at true patterns, one can put the value product in front of the ideal guest at they time they are interested in booking, thereby creating an easy environment for the guest to book. In addition, since this guest is getting what they want, not only is conversion higher, but the ADR is as well.
So, how do you know when is the right time to get before your guest? The key is micro-segmentation of the guest profiles and searching out what they value.
Segmentation of the Guest
Traditional thought dictates that a guest segment falls under the same line items of the P&L. Corporate, leisure, group, SMERF, etc, are what the industry continues to see as segments. You really need to ask yourself a few questions about your guest to find out that their segment really is. What does my guest look like? What does my guest value? What do I have that is a value to a specific guest? These are all questions you need to answer in segmentation. Remember, "price is what you pay, value is what you get". The guest wants value, and value is not always about the price.
An example in segmentation is pet friendly hotels. There is an estimated $250 Million dollars spent yearly on pet related travel. If your property does not allow pets, are you going to advertise in "Dog Fancy" magazine? No! You don’t have something that the pet bringer values. You want to target your best fit guest. Find out what you have of value and then market to the guest that values it. This is much easier and more cost effective than just looking for any guests!
Micro-segmentation drills even further into the guest profile to meet their needs and what they value. By strategically looking at your guest histories, you can see what guests booked 14 days out, for a specific time frame, paid a minimum ADR, spent a minimum in ancillary revenue, and even had dinner in the restaurant and ordered a bottle of house white wine.
As you have identified that specific segment of guest, if you put an offer before them that offers all they look for, your chance of converting that guest is greater and the ADR and ancillary revenue that guest spends is higher. Because conversion is easier, and because, you are targeting specific guest profiles, your marketing costs are down, thereby your profitability is up! Something all like to see.
How do you find all this information? There are several ways to capture and review this type of information, but looking at two specifically, we can understand more what the guest of today is doing. Social Networks and technology are the way to uncover what our guest really looks like and when they are planning to book.
Social Networking - Web 2.0
Social networking and web 2.0 have become catch phrases for the year. Since Time elected "You" as the person of the year, this is a great indicator that the world of 2.0 is here to stay. In order to understand how to use this to your advantage, you must first understand what Web 2.0 really is.
2.0 is really just where the user is in control. The user on the web has the ability to manage, control and use content to their choosing. The phenomenon of 2.0 really came from the belief that people wanted to see better information, not just the stuff forced in front of them. Recently Forrester Research found that only 7% of people trusted traditional advertising. With that research, they also discovered that nearly 47% of people trusted the "review" or opinion of another like minded individual in making a decision, this number grew higher in the travel arena.
So, what does this mean? It means you can look at the social sites like Gusto.com and see what your customer looks like. Look at who posts info about your property. Look for what else they enjoy doing. Look at their profile, when do they like to travel. Look at "where they are going" if you are in that category, capture the guest. Sign up and become a member as yourself and as your property. This way, you can see what like minded people are doing.
Capturing and using this information might be slightly time consuming, but well worth the return on investment as you can inexpensively find out what your guest looks like and when they are likely to book.
Technology
Many properties think that they have all they need to know in their PMS systems. This is only partially right. Our PMS has tons of great data, the challenge is that properties don’t know how to use it effectively, or for that matter, how to access it. Most properties now sign up for some type of data warehousing system with IDT and LMG being two of the largest in the US. These systems download data at the end of the day and then you are usually given a monthly data report on what your guest apparently looked like. The data is raw and most often showing booking window of the past, revenue spent (no breakdown) and MSA of the guest. The call to action is up to you to find more detail and if you are lucky, you can get a campaign out to the Zip Codes or E-mail addresses that meet a specific MSA. This action is usually expensive and the ROI simply is not there are conversion is very low at best and tracking is usually ineffective.
Today, there are better systems to capture and use this data. Systems such as the Amateo CRM system takes that data to the next level. Through understanding the guest better and knowing their habits, what they value and when they usually book, the ROI on these systems is greater that most properties can imagine. Many properties can see improvements in the Millions of Dollars if they use and apply the system. When the data is downloaded at the night audit, the system cleans and organizes the data. In addition, in not only looks in to the PMS, but into the outlets and group systems. This data can then be queried to find a specific segment of guest, micro-segmenting. By finding history of guests, combining it with patterns, and what the guest values you can put the offer right in front of them at the time they are wanting to buy. Higher conversions, higher yield, and greater ROI.
Bringing it all Together
By looking into where the customer is booking and the timeline they want to buy, you can create the patterns you desire buy drilling into what you need and then finding that guest and giving them what they are looking for. When any consumer is given a value, they will buy. Using all the data available to capture the correct data and use it to your advantage will make you a successful and profitable entity.
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Juston Parker, President and CEO of Parker Hospitality Group, Inc., is an experienced performer in the hospitality industry. He began his career in hotel reservations and has extensive experience in all areas of hotels from operations, sales & marketing, to food & beverage, banquet & conference services. Throughout his career Mr. Parker has developed and nurtured a passion for creating top line revenues and strategically growing businesses, through new and innovative revenue management strategies. His analytical approach to revenue management has resulted in increased revenues, even in challenging times. His drive for cost of sale and pricing has impacted a wide variety of businesses which relied on his expertise to increase top line and bottom line revenue. As a published author on the subject of Revenue Management, Juston has been interviewed and/or quoted on CNN, Yahoo Finance, and Fox News, as well as featured in publications around the world ranging from HSMAI, to Thailand Hospitality, University of Florida, Event Solutions to name a few. Mr. Parker can be contacted at 303-499-2443 or Juston@ParkerHospitality.com
