Library Archives

 
Kelly  McGuire

Revenue management and marketing really are two sides of the same coin. Each department holds key pieces of information about demand that, when integrated, result in critical insight about demand patterns, product preferences and purchase behavior. Unfortunately, employees in these two closely related functions do not always work well together. Misaligned goals and poor communication result in situations where marketers, with a goal of generating demand, sends out discount promotions that dilute rates during peak periods. While revenue managers, trying to maximize revenue, close off promotional rates meant to encourage stays from the most loyal guests. These conflicting activities damage revenue performance and guest relationships. Read on...

Kristie Dickinson

Lodging experts have written numerous articles on revenue management aimed at addressing specific tactical issues on pricing, distribution and measuring results for those "inside" the operation. By contrast, this article is intended for the "outsider" – namely individuals closely vested in hotel performance, but not directly involved in daily operations…hotel Owners. While the art and science of revenue management should be left in the hands of the property management and asset management teams, here are some key considerations which may be helpful to hotel owners in evaluating the role and effectiveness of revenue management and understanding the influence it can have on hotel performance and overall asset value. Read on...

Scott Roby

Rate dilution has continually plagued the hotel industry; it provides a temporary fix to increase occupancy and sometimes increases market share. However, it also has the potential to incur long-term damage to a property and its reputation among consumers. When properties take a reactive approach and lower rates without a larger strategy behind that discount, they run the risk of losing loyal customers willing to pay full price – price cannibalization. Hotel management must remain proactive and work collaboratively across property teams to influence the property's rate strategy and avoid the rate dilution war. Following, note several best practices in property revenue management. Read on...

Motti  Tadmor

While rate dilution provides a temporary occupancy fix for properties it has the potential to cause long-term damage to both the property and its reputation among consumers. Hotel management must remain proactive and work collaboratively across property teams to influence a property's rate strategy and avoid the rate dilution war. When management works with all departments that could provide insight, including marketing, operations and sales, teams they can generate a proactive strategy based on in-depth market knowledge. While each hotel does not have an on-site revenue management team, every property does need a proactive, targeted plan. Read on...

Jean Francois Mourier

The hotel industry can benefit from the adoption of stock market principles in the area of revenue management. Because of the many similarities between the product sold by hotels and the products traded on various exchanges by financial professionals, many of the same theories and tenets apply. The industry must make some fundamental changes in the perception of its core product, and recognize that as a perishable, uniform item that is subject to the forces of supply and demand and the sale of which is difficult to forecast, rooms are as much like options and commodities as anything else. Once this change in perception occurs, stock market principles will find acceptance among revenue managers, general managers and owners in hotels across the world. Read on...

Stan van Roij

"How can I maintain rates in a downward market, and how can I avoid a price war?" is a question that is asked over and over again, and although plenty of answers have been given over the last few years by many people, the industry never ceases to ponder this dilemma. By no means do I claim to know it all, however in my experience there are a couple of simple, and in most cases, obvious things to keep in mind that do help to avoid a price war and that do help to maintain rate levels. Read on...

Ahmed Mahmoud

Pricing is more than a calculation: it is the process of monetizing your enterprise's value in the marketplace. It also helps you define your profitability, which has an affect on the rest of your hotel reflected in Revpar and GOP. At its core, good pricing strategy will enhance your enterprise's overall marketing and business strategy. Read on...

Michael McCartan

Competitor rate data should not be about price wars but used to effectively position your product to optimize the value of your offering. Consumers are not just looking for cheaper deals; they want a good deal. Gathering the right business intelligence will help you manage your rates according to market conditions without affecting the value and prevent your rates from damaging important OTA relationships. In this article we explain how you can use pricing data to manage competitors and your contractual obligations to OTAs. Read on...

Paul van Meerendonk

Progressive hoteliers spend significant time analyzing their properties and identify areas where revenue potential can be expanded through packaging a range of services. While areas such as food and beverage, spa facilities, conference facilities and even additional leisure options such as golf courses, make up a hotelier's overall 'Asset', often overlooked is the role hotel technology can play in helping to package and promote offerings that expand beyond room rates. Read on...

Kelly  McGuire

Broadcasting deeply discounted rates through widely visible channels is the best way to start a price war. Competitors have faster access to price information than ever before, and with improvements in technology allowing more rapid price changes throughout all channels, no sooner have you made a change, then you could find your market responding. As soon as that happens, you've lost your opportunity to steal market share and reap the volume benefits that were supposed to offset your discount. Read on...

Chinmai Sharma

While we understand that pricing can create demand and move share within a competitive set of hotels, it is well documented that indiscriminate discounting will not create additional demand but dilute existing revenue streams. RevPAR variance at a hotel - both positive and negative - has a multiplier effect on its profitability and thus it's important to understand how much increased demand will you really need to offset the impact of an ADR drop. Here are a few steps you should consider and questions you should ask yourselves before jumping down the rate spiral in hope of capturing that elusive incremental demand. Read on...

Bill  Kotrba

The hospitality industry has always been a fertile ground for price wars. This industry ― indeed the entire travel industry ― is one of high fixed-costs, low marginal-costs and price transparency. That means when one hotel cuts prices, other hotels react quickly, typically matching the lower price to avoid losing customers. The thinking is that it's better to put a head in a bed ― at a low price ― than not at all. During a recession, the situation becomes more desperate, as hotels slash prices in an attempt to stimulate new demand or gain market share. Every dollar of revenue is vital to cover the high fixed costs of building and maintaining properties. Read on...

Bonnie Buckhiester

Dealing with price wars is clearly the nemesis of many hoteliers during a recession - with aggressive and often predatory pricing being deployed in many markets. The truth is that when demand wanes, 5-star hotels steal from 4-star, 4 from 3, 3 from 2, and so on. So what is a General Manager to do when price becomes the weapon of choice? Of course the very first move is to manipulate business mix, not price. But managing mix is foremost a strategic maneuver, and decisions must be made over longer horizons. If you're already embroiled in battle you need to start by asking 2 questions? "Are you selling your product for less than the customer is willing to pay?", and "Are you creating products that don't sell?" If the answer is "yes" to both - it's likely you have a pricing problem. Read on...

Natasa Christodoulidou

In the travel competitive arena, hotel executives have to deal on an every day basis with various challenges of distributing their room inventory. These challenges include Internet-only rates, distressed room inventory web sites (such as Priceline and Hotwire) and an increasing number of OTAs and Meta sites such as Hotels.com, Kayak.com and others. In order to distribute effectively the room inventory, a deep knowledge and understanding of the distribution channels as well as the impact of e-CRM and social media is required. One challenge is determining the combinations of distribution channels and the optimal number of hotel rooms to be offered for sale through each channel. Read on...

Brandon Edwards

There are two ways to increase profits - raising revenue or lowering costs. Hospitality employers often miss opportunities to lower costs by missing valuable tax savings attributable to hiring incentives. The federal government provides businesses with tax credits for hiring members of disadvantaged groups. This often represents a larger share of a hotel's staff than one would imagine. A member of a targeted group can be as simple as someone who lives in a designated area to one of the 40 million plus recipients of food stamps. Overall, a hospitality employer can expect between 15% and 25% of new hires to qualify for tax credits. Here is a rundown of the major programs to look at for 2011... Read on...

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Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.