Finding, Qualifying, & Optimizing Rate Efficiency
By Liz Uber Vice President of Revenue Management, Pillar Hotels & Resorts | September 23, 2012
Revenue Management is finding the right mix of business, at the right time, and at the right price to maximize revenue. As the revenue management discipline grows there are new tools that help us in ensuring we are driving as much revenue as possible. One of the ways we analyze this is to look at how efficient our rates are, using a rate efficiency report. Rate Efficiency looks at what retail rates are selling for and how much you might need to discount those rates to find additional negotiated or leisure business. A Rate Efficiency report also assists Revenue Managers in identifying what business is the most valuable and whether they should target more of that business.
There are three steps to identifying the right mix of business and therefore achieving Rate Efficiency. The three steps are identifying your consumer, qualifying your consumer, and optimizing the hotels consumer mix.
Determining what type of business is in your market is the key to finding rate efficiency at your hotel. The first step is to figure out what pieces of business are available in your market. Parking lot shopping is an easy way to identify what consumers are available in your market. Parking lot shopping involves having a hotel sales associate drive through a competitor's parking lot, early in the morning or late in the evening, looking for company vehicles, out of town vehicles, or government vehicles. This gives the hotel a quick insight on who is in their market.
Being an active member in the Convention and Visitors Bureau (CVB), Local Chamber, or Rotary Club gives the hotel firsthand knowledge of what is moving into or out of the market, while offering great leads on who to pursue as potential consumers. Hitting the streets is one of the best ways to identify what is in your market. Often this is the most difficult to find time for, however, it can also produce the biggest rewards. I would encourage every hotel to conduct at least one monthly sales blitz of your market. A sales blitz can be something as simple as tagging a bag of popcorn with a quick note, "Give Hotel Uber a call if something 'Pops Up.'" This makes it easier to get through the gatekeeper and determine who the decision maker is.
The World Wide Web is one of the most helpful tools in finding potential pieces of business. By simply searching your competitive sets' phone number you can sometimes identify information such as, what groups have rented out Meeting Space at the hotel or if there is a wedding block in house. Visiting the comp sets respective websites also might provide some insights, as many hotels will list which companies they work with closely.
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