Rooms revenue optimization has taken the lion's share of revenue management focus with RevPAR being the primary benchmark to measure success. However, as revenue management practices evolve, customer buying patterns change, and operating costs rise, RevPAR alone cannot be relied upon to provide a complete picture of the hotel's operation. TrevPAR and GOPPAR are emerging as more reliable benchmarks of an operation's overall performance. In determining these benchmarks the application of revenue management principles across other profit centers such as meeting space, and food and beverage is gaining momentum, paving the way for Total Revenue Management. However management teams are finding that traditional performance targets frequently miss out on measuring profitability, and driving revenue management strategies across departments can mean a complete shift in business processes, and re-evaluation of team performance targets. Whilst challenging, aligning performance targets and creating benchmark metrics provide a good foundation on which to base a total revenue management strategy. READ MORE
HOTEL BUSINESS REVIEW
October FOCUS: Best Practices on Maximizing Revenue Management
Best Practices on Maximizing Revenue Management
This month's feature articles...
The internet era of empowered consumers and pricing transparency has forced Revenue Management (RM) in hospitality to evolve from an application of airline-based yield management to a demand generating role that is critical to top line growth. This evolution has resulted in new price optimization capabilities that have gone from concept to industry standard in just three years, and in tighter integration between Revenue Management and Marketing to create personalized packages and promotions. In this era of big data, RM innovation will be imperative to winning in hospitality. READ MORE
Most hoteliers list more than one type of room for sale on OTAs, most often with different prices for each. Pricing by room types makes perfect sense in the offline channel, where your reservations agent can explain the differences between each room type and where consumers are less likely to be comparison-shopping. But by pricing your rooms by room type on the OTAs, you could have a negative effect on your revenue. This article examines what makes pricing by room type so ineffective and specific suggestions on the best practices for pricing rooms in the online channel. READ MORE
With hundreds of distribution channels and many more to come, what is channel management all about and what should be your primary objectives? These are the deliberations of our revenue management and WindsurferCRS leadership teams at a recent Sceptre Hospitality Resources innovation meeting. Together we came up with three things hoteliers should know about channel management: Know the Facts; Get Connected; and Monitor Costs. READ MORE
- Revenue Management
- Consumer Reviews in the Digital Age: How to Drive Incremental Revenue From Your Guest's Feedback
In the digital age guest feedback is becoming even more important, as recent research suggests that not only does social media have a relationship with lodging performance, but that it also impacts the behavior of consumers. Hoteliers need to make sure they are not only asking their guests for feedback in the traditional manner, though guest surveys to help improve a properties offering, services, but they also need to monitor social media for unsolicited feedback through reviews and ratings so that they can help determine their property's pricing power and pricing strategies in the future. READ MORE
Like forecasting, distribution and inventory management, pricing is an integral part of the revenue management process. The challenge facing most properties is how to go about setting prices that support stated organizational performance targets. This article explores the six foundational building blocks that should be carefully considered before attempting to establish a pricing strategy. READ MORE
- Revenue Management
- The Growing Number of Channels Leads to Growing Complexity of Revenue Management and a Need for Convergence Among Disciplines
The hotel distribution landscape is complex and ever changing. It is an elaborate web of disparate systems and integration admired from afar and challenging even for those involved in the day-to-day management of a hotel. Revenue Management is one aspect in particular that is vital to understanding and managing this intricate web. And it cannot be done alone or in a silo. The following discussion brings to the surface the issues relative to channels that a hotel management team must be aware of in creating a revenue management strategy and how the growing complexity of channels in travel make this a converged effort across many hotel disciplines. READ MORE
Whether underwriting an investment for a distressed hotel, conversion opportunity or a traditional transaction, assumptions surrounding revenue (and profit) potential will serve as the key drivers validating price and investment returns. Naturally, market conditions and historical high/low performance benchmarks are reasonable indicators of the strength and resiliency of a given market. However, investment returns are not predicated on market strength alone, but rather the value-add financial performance achieved through improving a hotel's position and subsequent performance within a market. In short, every good deal has an investment story which must be uncovered to determine future upside. READ MORE
Revenue management is no longer just about gauging and setting the right price - it's about creating value and generating demand. Revenue management is as much about marketing to the customer and delivering ongoing quality service as it is about giving a good deal. So what is this new art of revenue management and how does it impact a hotel's product and its value? Here we talk about revenue management in relation to the various channels and their importance as well as the impact of online content, guest reviews, digital marketing and loyalty programs. READ MORE
This time of year, we are used to creepy, scary things - but your card processing costs shouldn't be one of them. However, card brand interchange fee increases in October are used by many processors to hide other charges that needlessly inflate costs and contribute to the gradual, dangerous rise of cost creep. If not monitored and managed properly, cost creep can cost hoteliers thousands of extra dollars each year, making it imperative that you understand what you are paying for - and why - and how you can control expenses. This guide offers practical tips on how you can manage various factors that exacerbate cost creep, and determine if you are being tricked or treated (well) by your payments processor. READ MORE
Revenue Management is critical to optimize an Organization's price (and value). What is its state-of-the-art and which should it be, by now? Is it just a function of Revenue Managers? Is it the sole function one needs to optimize for sustained price increases? Are Organizations really getting it as to price optimization, in a broad sense? What other bodies of knowledge are core to maximize enterprise and economic value through pricing? In a time of Big Data, a new holistic vision, brought under Revenue Management automation methods, should arise to elevate the industry to even more sophisticated levels of competitiveness through pricing. READ MORE
Rooms revenue management (RM) has been around for the past 25 years, has been widely adopted and has led to rooms revenue increases of 3 - 5%. Rooms RM systems and practices have increased in sophistication over the years as hotel operators and consulting companies have sought to fine tune the way in which they maximize revenue. READ MORE
- Revenue Management
- Pricing as a Strategic Tool: How Revenue Management Can Support Business Strategy
As revenue management has demonstrated success and gained visibility, the discipline has begun to evolve from a tactical, day-to-day inventory management function to a more strategic role. With revenue management systems bearing the burden of calculating pricing, revenue managers are now tasked with performing more ad hoc analyses. The temptation is to simply let the revenue management system do its job - deliver revenue maximizing, daily pricing decisions. However, by just following system recommendations, hoteliers might be missing out on some important opportunities to leverage price as a strategic tool to support longer-term business strategy. READ MORE
The question of employee motivation is a decades old one that seems to elude many companies. Fortunately or unfortunately, this can make or break a business. Science has given us new information on how to motivate and retain staff. This new data will be the method you can use to reduce your overhead and increase your profits. One company featured increased their net income by 94% because they were open to a new way of running business. Google's employees invented Gmail in their regularly scheduled free time. Seems counterintuitive doesn't it? It is not though. Companies just have to change their mindset. READ MORE
Many first generation revenue managers have been taught demand is a correlative function based on market place or external compression. At the same time, we've been taught rational pricing is the consumer's desire and willingness to pay for goods and/or services. What makes the Hospitality industry different from most other industries is variable pricing based upon demand factors. READ MORE
Total Revenue Management - thinking beyond the hotel room as a singular inventory towards optimizing all potential inventories and points of sale. Focus is now on the idea of 'Profitability per Acquired Consumer (PROFPAC). Not every consumer in a hotel is a staying guest, so how do you manage and capitalize. Have the airlines cracked this and what can the hospitality industry learn from their experiences. READ MORE
- Revenue Management
- Learnings From Leftfield: Revenue Management Lessons Retailers Can Teach Hoteliers
While on the surface, hoteliers and retailers may seem very different, these two industries actually have a surprisingly amount in common. No it's not that both work long hours, deal with often challenging customer situations and have to do it all with good grace and a smile on their faces. But they do share the same business goal when it comes to revenue management: having to maximise revenue from limited inventory over a fixed time horizon by selling to customers with different needs. READ MORE
How can connectivity maximize revenues and minimize costs for hotels? This insightful column by Thomas W. Storey, President of Hospitality for SONIFI Solutions (formerly known as LodgeNet Interactive Corporation), offers compelling suggestions on how hoteliers can use their in-room entertainment and connectivity systems as a way to earn incremental revenue. Hoteliers can customize their in-room packages, based on their property type. They also can target different types of travelers and offer in-room entertainment and high-tech options that will keep their guests happy and turn them into repeat business. And this all means more profits and better occupancy, ADR and RevPAR. READ MORE
With a variety of many new forecasting tools and technologies at our fingertips, the role of the revenue manager has become much more involved and creative in finding the right mix of business to ensure the optimal revenue goals of a hotel. Through utilizing reports, knowing the hotel's customers and communicating with the hotel team, today's revenue managers are a valuable resource in planning optimal market segmentation and establishing a recovery strategy if the unexpected occurs. READ MORE
In this article, Drew Salapka, Director of Revenue Management for Atlanta-based Hotel Equities, draws on more than 15 years of hospitality experience to present tips from an insider for creating and executing strategies to leverage revenue management efforts. On a daily basis, he works with more than 15 different hotel brands to maximize revenue and grow the firm's portfolio. Although he acknowledges the benefits of brand research and reports, he also suggests reaching out to OTAs and utilizing all resources available. He also reminds the reader that relationships are the most important factor in the process. Personal relationships must be developed and nourished between the revenue manager and everyone with whom he works. The hotel business is first and foremost a "people business". READ MORE
Recent Features ...
September 2013
Hotel Group Business: Cautious Optimism
August 2013
New Developments in Hotel Food and Beverage
July 2013
Hotel Spa: The Biggest Challenges
June 2013
New Trends in Hotel Architecture and Design
May 2013