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.

1. Identifying

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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Coming up in February 2019...

Social Media: Getting Personal

There Social media platforms have revolutionized the hotel industry. Popular sites such as Facebook, Twitter, Pinterest, Instagram, Snapchat, YouTube and Tumblr now account for 2.3 billion active users, and this phenomenon has forever transformed how businesses interact with consumers. Given that social media allows for two-way communication between businesses and consumers, the emphasis of any marketing strategy must be to positively and personally engage the customer, and there are innumerable ways to accomplish that goal. One popular strategy is to encourage hotel guests to create their own personal content - typically videos and photos -which can be shared via their personal social media networks, reaching a sizeable audience. In addition, geo-locational tags and brand hashtags can be embedded in such posts which allow them to be found via metadata searches, substantially enlarging their scope. Influencer marketing is another prevalent social media strategy. Some hotels are paying popular social media stars and bloggers to endorse their brand on social media platforms. These kinds of endorsements generally elicit a strong response because the influencers are perceived as being trustworthy by their followers, and because an influencer's followers are likely to share similar psychographic and demographic traits. Travel review sites have also become vitally important in reputation management. Travelers consistently use social media to express pleasure or frustration about their guest experiences, so it is essential that every review be attended to personally. Assuming the responsibility to address and correct customer service concerns quickly is a way to mitigate complaints and to build brand loyalty. Plus, whether reviews are favorable or unfavorable, they are a vital source of information to managers about a hotel's operational performance.  The February Hotel Business Review will document what some hotels are doing to effectively incorporate social media strategies into their businesses.