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Revenue management in today's online World



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    We are stundents from the college and we're making a work about trends to hotel management. And we liked you work. So it's possible for you to send to my email your work, because we want to use it, but we will use your name of cause.Thank you ve ry much for your time

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    Inês Cardoso
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  • 1. Revenue Management in Today’s Online World Online Revealed – Toronto – May 2007
  • 2. Introductions
    • Victoria Edwards
    • Over 25 years travel, tourism, hospitality
    • Hotelier, entrepreneur
    • University of Victoria, University of British Columbia, DuBrulle French Culinary Institute
    • Board of Directors HSMAI
    • Advisory Board AHLA certification program
    • Co-founder/co-owner Buckhiester Management
    • Creator of REV RoadMap™
    • Buckhiester Management…
    • Founded in 1995
    • Client base - hotel & resort companies
    • N. America, Europe, Caribbean
    • Offices - Seattle, Vancouver, Washington, DC
    • Products: REV RoadMap® & REV olution® (rooms, F&B, Golf, Spa)
  • 3. Who is in the room today?
    • Industry
    • Hotel
    • DMO
    • other
    • Role
    • Sales/Marketing?
    • Corporate level?
    • Property level?
    • Revenue Manager?
  • 4. Objectives
    • Better understanding of the interdependent nature of demand creation/capture/management
    • Overview of how evolution of the online world has impacted RM
    • Provide some suggestion & tips for your RM practice moving forward
  • 5. Topics
    • Functional areas & business process
    • Evolution of Distribution
    • Impact on RM practice
    • First line of defense – your website
    • Measuring Performance
    • If I were in your shoes….
  • 6. Three Inter-dependent Disciplines Demand Management CRM (Demand Capture) Demand Creation
  • 7. Revenue Management as a Business Process REV RoadMap® Product Definition Competitive Benchmarking Strategic Pricing Demand Forecasting Distribution Management Business Mix Manipulation
  • 8. Traditional Reservations CRS Connect to GDS + 800# PMS Property Voice Reservations GDS Travel Agent Reservations Manager
  • 9. Distribution Management - Present CRS Central Reservation System GDS Global Distribution Systems Onward Distribution Proprietary Website IDS Internet Distribution Systems PMS Property Management System DORM Director, Revenue Management
  • 10. The “Mechanics” of Onward Distribution Four ways that Internet sites receive hotel information & rates. Switch Reservations Smaller websites GDS Extranet E-Mail
  • 11. GDS Powered Websites Travelocity, GetThere, Site59 Trip, Cheaptickets, Lodging, Orbitz, ebookers, Collegetravelnetwork (retail version) Expedia, Hotwire, Lodging, Priceline OneTravel, Vacation, opodo Booking Engine Onward Distribution
  • 12. Switch or Data Base Powered Hoteldiscounts, Yahoo, AOL, 180096hotel, Travelnow, Lowestfare Placestostay, Gotrooms, yahoo, USAhotelguide TravelWeb, Hotwire, Travelscape, TravelHero, CNNtraveller, (over 1,200 sites) Booking Engine Onward Distribution
  • 13. Technology
    • “ Internal”
    • PMS
    • POS
    • RMS
    • Sales/Catering
    • CRM
    • Hotel website
    • Web booking engine
    • CMS (channel management systems)
    • “ External”
    • CRS
    • GDS + connectivity
    • IDS connectivity
    • Group/meeting websites
    • RFP websites
    • Rate Shopper systems
    • CGM Customer Generated Media
    Source: HSMAI De-Mystifying Distribution
  • 14. Reservation Sources – Major Hotel Brands 2006 38.3% +20% ‘05 35.6% +5% ’05 26.1% -1.5% ‘05 Source: TravelCLICK April 2007
  • 15. Internet Source Breakdown - Major Hotel Brands 2006 81.4% Source: TravelCLICK April 2007
  • 16. Hospitality Revenues Generated by the Internet
    • In 2006, 27-29% of all revenues in hospitality would be generated from the internet.
    • Another ¼ of hotel bookings will be influence by the Internet, but done offline.
  • 17. Hospitality Revenues Generated by the Internet (cont’)
    • In 2006, 54% of all internet bookings in hospitality are projected to be direct to consumer (B2C) via hotel owned websites.
    • By 2008, the direct portion of online bookings is expected to reach 62%.
    • Are you ready for this dramatic channel shift?
    • Source: Hospitality eBusiness Strategies
  • 18. Evolution
    • Tech Impact on hotels
    • Seamless /Transparent distribution
    • Rate Integrity
    • Economy – commoditization
    • Education has not kept pace
    • Lack of technology integration and data integrity
    • Segments begin to blur
  • 19. Evolution
    • Tech Impact on Guest
    • Better educated/well traveled
    • Commoditization sets dangerous price references
    • Poorly defined value prop & mismanaged fences = lack of rate integrity
    • Increased use of 3 rd party providers
    • Distrust set stage for social networking
  • 20. Travel 2.0
    • Evolutionary stage of internet development in tour & travel segment
    • Shift from supplier-side control, static content to consumer driven/controlled dynamic content
    • Includes consumer driven content social networking, highly interactive content, interfaces & mash-ups
  • 21. Travel 2.0
    • Emphasis is on value & experience rather than price
    • Seamless combination of content from multiple sources in a single experience
    • Examples –, Trip Advisor, Travel Zoo,
  • 22. Travel 2.0
    • Types of T2.0 Sites
    • Blogs: travel blogs include video and written
    • Wikis: consumer driven guides or reference info
    • Reviews: primary purpose is to over marketing unbiased review of hotel, restaurant, attraction
    • Mashups:combines content from more than one source into integrated experience
  • 23. Site Sample
    • Mash-ups: Gusto, Travelbud, Triporama, TripHub
    • Blogs: YouTube Travel, Travelistics,
    • Reviews: tripadvisor
    • Wikis: wikitravel,turn here, IgoUgo
    • Groups: groople, meetingsonline
  • 24. Demand Creation
    • In 2007, a remarkable 68% of hoteliers will be shifting their budgets from offline to online marketing activities, representing a huge shift from traditional methods.
    • The top three Internet marketing formats hoteliers believe produce the highest ROIs are website optimization, Search Optimization + Organic Search, and website re-design.
    • Source: Hospitality eBusiness Strategies December 2006
  • 25. So why should you care?
    • Potentially impacts all aspects of RM business cycle
    • Product definition
    • Competitive benchmarking
    • Pricing
    • Forecasting
    • Mix manipulation
  • 26. Product definition
    • Matching User needs to Product
    • Defining Hotels Segmentation
    • Inventory Stratification
    • Product Utilization
  • 27. Competitive Benchmarking
    • Market supply & demand
    • Qualitative & Quantitative
    • Positioning by segment
    • Positioning by channel
  • 28. Pricing
    • Rational – identify most valuable segments
    • Shift from traditional models –cost to market and market to value
    • Drivers of Price reference
    • Consistent application of fences
    • BAR & derivative pricing
  • 29. Who Determines Price?
    • #1 Truth: Customers drive prices
    • Price References:
      • Product line price influences
      • Past price influences
      • Purchase context influences
      • Prices of similar items
      • Cost-based influences
  • 30. The Price Triangle Fair Price (Rate of the Day) Corp Meeting – no rooms Price Volume of Sales (duration of day parts & number of covers) 0 295 $405 “ Retail” Demand – Customers seeking fair price “ Premium” Demand – Customers willing to pay higher than fair market price e.g. Incentive Group “ Discount” Demand – Customers seeking lower than fair market price e.g. Association Dinner
  • 31. The Price Triangle
    • Customers determine where they fall in the price triangle
    • Based on demand, different every night
    • The fair price for each segment of demand is the price that yields the maximum revenues from the balance of occupied function space (or outlet seats) per day part and average check for that segment
  • 32. Why create BAR rates?
    • Move from opaque to transparent channels
    • Poor understanding of Rate Parity vs. Rate Integrity
    • Commoditization of product through poor rate structure management
    • Blurring of market segments online
  • 33. Forecasting
    • Unconstrained rather than constrained
    • Micro-segment
    • Forecast accuracy by day of week
    • Trend analysis
    • Role of history
  • 34. Forecasting Free and Accurate Airfare Predictions Find out if you should buy now or wait.   Learn More
  • 35. Mix Management
    • Quantify performance
    • Look at Index Balance
    • Leverage opportunities based on segment demand
  • 36. Trends in Group Business
    • Leisure group travel segment – fastest growing segment will be small gatherings of up to 9 rooms
    • By 2008 total small leisure group segment will grow at twice the rate of other groups
    • Corp meetings with less than 25 attendees projected to increase by 13% between 2006-2007
    • Sarbanes-Oxley continues to force companies to tighten controls on travel
  • 37. Trends in Group Business
    • Components of large meetings (e.g. RFP, housing management) will continue to move online
    • New entrants into market as well as intermediaries will push need to consolidate portions of group & meetings lifecycle
    • Big gap between supplier perceptions of needs of buyer and consumer/planner expectations
  • 38. Why is Mix Manipulation So Important?
    • Asset management versus business management
    • Diversification of risk
    • Managing yield from the bottom up
    • Return cycle to equal levels of profitability much easier
  • 39. Distribution
    • Distributed work force & Travel 2.0 continue morph the distribution landscape
    • 3 rd parties intermediaries & new entrants such as groople getting into group game
    • Lowering distribution costs & capturing demographic data
  • 40. Hotel Website
    • Purpose
    • Attract – targeted traffic to your web site.
    • Retain – keep traffic on your site & returning to your site. Eliminate opportunities for “disconnect.”
    • Convert – succeed in having visitors take a desired action.
  • 41. Proprietary Website
    • Key Considerations
      • User experience/design – especially w/ booking engine
      • User needs vs. Site objectives
      • Navigation and architecture
      • Search engine optimization
      • Link popularity
      • Meta tag review
      • Content review
      • Web traffic analysis
  • 42. User Experience & Design
    • When reviewing your site’s “look and feel” consider visual application of text, graphic page elements and navigational components.
    • In a website, user experience is governed by the user’s interaction within the website.
    • How successful is a user in fulfilling his/her goals? Is the experience difficult? Or is it smooth?
  • 43. User Needs vs. Site Objectives
    • Ensure that the user’s needs and the site’s objectives correspond
    • Externally derived goals for the site usually determined via user/demographic market research are not in conflict with the business, creative and other internally driven goals for the site.
  • 44. Search Engine Optimization
    • A web site efforts to be ranked high on a listing by virtue of appropriate copy writing and links to & from other complimentary links
    • Search engines such as Google & yahoo! Use spiders to look for site based on the keywords used by an individual
  • 45. SEO Tools
    • Google PageRank - Page rank is an indication of a page’s popularity and relevant content. It is established by the number of quality pages with links targeting the site pages.
    • Link Popularity - indicates how many links are targeting the site. Linking is critical to page rank..
    • Reciprocal Linking Program - increases the number of links pointing into the site.
  • 46. Website Metrics
    • Marketing
    • KEI – key word effectiveness index
    • Page Rank
    • Link Popularity
    • Traffic Analysis
    • Revenue Management
    • Visitor to Book ratio
    • Visitor to Look ratio
    • Look to Book ratio
  • 47. Metrics
    • Then
    • ADR/RevPAR/Occ
    • ADR/RevPAR/Occ Index
    • GOPPAR
    • EBITDA
    • Comp Rank
    • Now (all of the Then +)
    • Contribution/segment
    • Contribution/guest
    • RevPASH
    • RevPSF
    • RevPACV
    • Look to book
    • Key word density
    • Page Rank
    • Forecast accuracy per segment per day
  • 48. Strategic Mistakes
    • No clear eDistribution strategy
    • No trained distribution expert (viewed as clerical work)
    • Lack of knowledge of connectivity (how CRS “talks” to GDS, how GDS “talks” to Internet)
    • Lack of knowledge of functionality
  • 49. Strategic Mistakes
    • Senior management underestimates complexity, labor intensity of managing sources (“just do it” mentality)
    • Underestimating impact of staff turnover
    • Unaware of distribution options
    • Rev. Mgr. tactically strong, strategically weak
  • 50. Tactical Mistakes
    • Rate loading errors: loaded but not active, rates not loaded, wrong rates, inappropriate rate display order
    • Inaccurate property data, not checked (HOD)
    • Improper use of stay controls turning business away
    • Contribution reports tossed, source under performing
  • 51. Tactical Mistakes
    • Not understanding what travel agents or consumers see
    • Adding too many sources at once
    • Not completely understanding product line difference between self and comp set
  • 52. If I were I GM Today….
    • Ensure that team is working together to obtain balance between demand creation/demand capture and demand management
    • Review current product offering in term of user needs
    • Check for inventory stratification opportunities
    • Check “Review sites/Blogs” to see if guest benchmarking aligns with your comp set
  • 53. If I were I GM Today….
    • Ensure that team can articulate the difference in value proposition per product compared to comp set
    • MUST fully utilize 3 rd party reports – STR, Hotelligence,Future Pace
    • Ensure pricing structure recognizes most valuable segment
  • 54. If I were I GM Today….
    • Is relationship between BAR rates and derivative pricing understood by team?
    • Chart segment pricing against comp set to ensure reasonable positioning
    • Are forecast based on unconstrained demand? Are they granular enough?
    • Do you measure forecast accuracy & trend by day of week and segment?
  • 55. If I were I GM Today….
    • Are indexed balanced? If not what shift in mix is required to achieve balance?
    • Make distribution plan part of annual business plan process
    • Ensure team is aware of segment versus source costs
    • Have website audit conducted by outside source to look at design functionality & web optimization
    • SEO – measure look 2 book, KDI, page rank, traffic analysis monthly
  • 56. Reference Sites
    • www.seochat
  • 57.
    • Questions?
    • Comments?
    • Thank you for your time