Revenue Management: Optimizing Income Streams Across All Avenues
By Loulu Lima Principal, LL Consulting | September 27, 2015
As I write this article, we are on the heels of HSMAI ROC and HITEC here in Austin, TX. What an amazing learning experience it has been; industry colleagues discussing Revenue Management and how to take it to the next level while keeping it simple.
It used to be that revenue management was just about room revenue and how to make each distribution channel add incremental revenue to your bottom line. Now we speak in terms of revenue strategy, optimization of the entire house. Industry leaders are discussing newer terms such as: Total RevPAR, Profit RevPar or GOPPAR, Net RevPAR, Total ADR, etc. and questioning the cost of acquisition, who is tilting the scales now, where does group fall into this new landscape, etc.
The Art and Science of Revenue Optimization today is to sell to the right customer, at the right time, for the right price, through the right channel, for the right cost. There was a time when the channel and cost was not as much of a priority as heads in beds were. It was about the relationship you had with a distribution channel to get you the most volume. Even the cost of distribution was addressed as the cost of doing business. Now as we dig deeper into the P&L statements, we focus on maximizing the house through achieving the highest Total ADR we can get.
RevPAR by definition is revenue per available room. Total RevPAR focuses on entire house revenue. This includes all F&B outlets, meeting space and any leased space as well. Profit RevPAR or GOPPAR is based on gross operating profit before expenses and Net RevPAR is determining your cost of acquisition for that guest. Boy can this get complicated for strategy and ownership. At the end of the day, you report on what is important to the hotel - what is taken to the bank.
What you take to the bank is as important as how your team at your hotel helps acquire it. Does every staff member feel as if they are part of the revenue strategy? Do they realize that their contribution helps the hotel profit? Training courses like HSMAI RO2WIN and HEDNA U provide training to non-revenue mangers and staff on how they are part of the revenue team. Different companies like TSA Solutions work with your front desk personnel on identifying upsell potential as the guest has arrived.
TSA Solutions works closely with the property to maximize revenue during the moment of check in, and in addition provides a full-service approach, including an ongoing process of team members training, consultation and technology to ensure the guest is matched with the room that best fits its needs. Some RMS systems like NOR1, works with your hotel to alert the guest before they arrive (via email or SMS) to see if they would be willing to pay for an upgrade; playing on the guest's excitement for the upcoming trip.