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Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry course
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Tutorial introduction to revenue management for hotels hospitality seminar what is revenue management in hotel industry course

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The main objective of this seminar is to understand the purpose of revenue management in both technological and commercial terms. …

The main objective of this seminar is to understand the purpose of revenue management in both technological and commercial terms.
With this information, a hotel can evaluate, develop and optimize its pricing strategy with the goal of maximizing profits.

Revenue Management is a method of managing sales of hotel inventory by applying yield management techniques.

Basic elements of Revenue Management used to manage inventory:

Historical data – statistics, demand and trends
Forecasts
Price management tools
Overall strategy
Pricing policies

The main factors in setting prices are:

Production costs
Market
Competition
Demand
Product positioning

tutorial Introduction to Revenue Management for Hotels Hospitality seminar- what is revenue management in hotel industry course

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  • What About the options for Hostels and beds. That would be pretty interesting to read about.
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  • Pretty interesting (specially the part of airline tickets, I do research in airports) I think we have some kind of hotel project regarding different expectations when using-booking a hotel beyond the stipulated differences between business/leisure in my Institution if you are interested in exchange ideas.
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  • 1. Introduction to Hotel Revenue Management Earn Moreby Selling the Same Presented by Tomeu Pons 7 May 2013 | Miami Beach, FL
  • 2. Introduction to Revenue Management Presentation The main objective of this seminar is to understand the purpose of revenue management in both technological and commercial terms. With this information, a hotel can evaluate, develop and optimize its pricing strategy with the goal of maximizing profits.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 2
  • 3. Introduction to Revenue Management Presentation Professor: Tomeu Pons tomeupons@gmail.com Collaborating Professor – Turisme Sant Ignasi TSI, Fundación ESADE Fundació Tourism Education Manager – Cibernarium, Barcelona Activa Collaborating Professor – University of Barcelona E- Educated in Hospitality, Marketing, E-commerce and IT Systems in Hotelerí Escola Hotelería UIB, ESADE, La Salle URL and UPC Chief Operating Office – Flamingo Hotelier Previously, Consultant ,Director of Marketing and CEO in companies companies such as The Perfect Hotels, Sercotel, Hotusa and SAPHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 3
  • 4. Introduction to Revenue Management Agenda • Definition • Price • Effects on a hotel • Distribution: direct and indirect • When it is used • Factors • Tactics • Calculating prices • Reporting, statistics and tools • Exercises • Glossary • Exam • NotesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 4
  • 5. Introduction to Revenue Management Definition Revenue Management is a commercial management technique that helps us to sell the right product at the right moment at the right price to the right client. Wikipedia: http://en.wikipedia.org/wiki/Revenue_managementHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 5
  • 6. Introduction to Revenue Management Why use RM? Revenue Management is a strategy we can use in response to: • Increased competition • Increase in channels of distribution • Transparency in prices • Increase in special promotions and discounts • Decrease in expected response time to clients • 80% of sales are influenced by online channelsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 6
  • 7. Introduction to Revenue Management Definition Revenue Management is a method of managing sales of hotel inventory by applying yield management techniques Revenue Management: Commercial management technique that helps us sell the right product at the right moment at the right price to the right client Yield: The techniques, formulas and strategies hotels use to manage inventory, price and sales policies to maximize revenue generated from the sale of this inventoryHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 7
  • 8. Introduction to Revenue Management Basic Elements of Revenue Management Basic elements of Revenue Management used to manage inventory: • Historical data – statistics, demand and trends • Forecasts • Price management tools • Overall strategy • Pricing policies With the above, we can address: • Fixed and perishable inventory • Anticipated sales • Customer segmentationHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 8
  • 9. Introduction to Revenue Management Improve RevPAR and GopPAR RevPAR RevPAR GopPAR GopPAR Increase Increase Increase Increase your your occupancy occupancy Rooms Rooms ADR ADR Maximize Maximize Revenue Revenue and profit and profitHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 9
  • 10. Introduction to Revenue Management Desired equilibrium in response to a changing market Sell at Sell at high prices low pricesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 10
  • 11. Introduction to Revenue Management The Customer The customer is the most important factor in determining price. Each client is different and has their own motivation: • Different motives • Different expectations • Willing to pay different prices • Interested in different products To understand this environment we must ‘segment’ the market, and for each of these segments we must adapt: • Interested in different products • Pricing • Reservation terms • Marketing along the path-to-purchaseHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 11
  • 12. Introduction to Revenue Management The Product The product is another of the key factors. What is it about our product that drives sales? • Hotel • Destination • Experience • Rooms • Services Once we determine this, we can effectively develop our product: Create additional room types? Create a range of price points?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 12
  • 13. Introduction to Revenue Management The Price Although the price seems to be a lever we control, this is completely false: - Price is determined by demand - Prices rise and prices fall - High seasons and low seasons - Years with low/no demand - Channels with low/no demand - Competition, local and international affects demand However, there are techniques and factors that enable us to increase prices.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 13
  • 14. Introduction to Revenue Management The Moment of the Reservation The moment of reservation is a key element in the management of prices and quite often it isn’t take seriously enough It’s an important moment for the customer just as much as it is an important moment for the hotel. Both must work together in the same way. Many techniques exist for both players. Forecasts based on historical data help us a great deal.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 14
  • 15. Introduction to Revenue Management How it was born …Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 15
  • 16. Introduction to Revenue Management Where it was born, how and what need it met…Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 16
  • 17. Introduction to Revenue Management Where it was born, how and what need to it meet These sales techniques were developed during the middle of the 20th century by American companies. Once their information systems were computerized, they were able to apply these methods effectively. Companies could sell airplane tickets at different prices. They realized that different clients, at different times, with different motivations, were willing to pay different prices. To be able to ‘predict’ how much clients were willing to pay for a ticket, they developed ‘Yield’ techniques that allowed them to fixed these prices. It was important for them to computerize and collect information about supply and demand.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 17
  • 18. Introduction to Revenue Management An exampleHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 18
  • 19. Introduction to Revenue Management Variability of industry pricingHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 19
  • 20. Introduction to Revenue Management Evolution of Tourism Pricing Management History of Pricing The total acceptance and integration of the Internet as a major sales channel changed the way hotels price their inventory: 2003 – Some Majors changed to dynamic pricing 2004 – Fixed Consortia pricing disappeared 2005 – Decrease number of Categories and continued change to dynamic pricing 2006 – Some corporate accounts are already dynamic 2007 – BAR is implemented completelyHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 20
  • 21. Introduction to Revenue Management Definition Pricing Techniques to determine prices are developed in the heart of each company. Setting prices can vary depending on the strategy of the company. The main factors in setting prices are: • Production costs • Market • Competition • Demand • Product positioningHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 21
  • 22. Introduction to Revenue Management Pricing Where do prices come from? What are customers willing to pay? $ $ $ $Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 22
  • 23. Introduction to Revenue Management Pricing Techniques to set the prices of a good or a service… Setting of prices can focus on anything from cost of production to consumer demand. From the point-of-view of marketing, an ‘efficient price’ is a price that is close to the maximum price a consumer is willing to pay. In economic terms, it is a price that transfers the most value obtained by the consumer to the producer.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 23
  • 24. Introduction to Revenue Management Pricing – Where do prices come from? In the mind of the consumer, they are comparing different options (substitute products), taking into consideration their budget and the benefits of the purchase (e.g. pleasure). This determines, in their minds, the right price they’d pay. For a company to increase profitability from sales, they must know in each moment what is the approximate maximum price a customer is willing to pay for the product or service. To increase the consumers’ perceived value of our products and services, we must take in to account factors such as product, price, distribution and promotions.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 24
  • 25. Introduction to Revenue Management Pricing – An Efficient Price The efficient price is the maximum consumers are willing to pay. Prices are influenced by multiple factors… But they are only perceived as ‘the right price for me or not’Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 25
  • 26. Introduction to Revenue Management Now that we understand that prices are factors affected by Now that we understand that prices are factors affected by multiple variables and are only perceived as multiple variables and are only perceived as ‘the right price for me or not’ ‘the right price for me or not’ We know we need to work with prices, adjust them and take We know we need to work with prices, adjust them and take advantage of them so they are perceived as ‘the right price for me’ advantage of them so they are perceived as ‘the right price for me’Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 26
  • 27. Introduction to Revenue Management How prices were set and how prices are currently set Without Yield – Prices based upon cost Cost of Desired Cost of Production Distribution Profit $$ $$$ $$$$$ $$$$$ With Yield – Prices based upon demand Cost of Desired YIELD Cost of Production Distribution Profit Pr $$ $$$ $$$$$ $$$$$$ $$$$$$$$$$$$$$$$$$$$Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 27
  • 28. Introduction to Revenue Management Real impact on hotels A hotel has 200 rooms… If they apply RM for each of their rooms and each room achieves an increase of €2, the impact on final results is significant. 200 rooms x 2$ = 400$/day x 365 days = 146.000$ 200 rooms x 3$ = 600$/day x 365 days = 219.000$ 200 rooms x 5$ = 1000$/day x 365 days = 365.000$Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 28
  • 29. Introduction to Revenue Management Real impact on hotels 1 Hotel x 100 rooms x 365 days = 36,500 rooms x 1/3 = 12,166 rooms 12,166 x 3 $ = 36,498 $ 12,166 x 6 $ = 72,996 $ 12,166 x 9 $ = 109,494 $ TOTAL ANNUAL INCREASE = 218,988 $Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 29
  • 30. Introduction to Revenue Management Real impact on hotels Pricing Mix Price Nº of RoomsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 30
  • 31. Introduction to Revenue Management How clients agree to prices…Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 31
  • 32. Introduction to Revenue ManagementConsumer BehaviorHotel Revenue Management Seminar – Miami Beach, FL 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com 32
  • 33. Introduction to Revenue Management Fixed Pricing (static)Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 33
  • 34. Introduction to Revenue Management Booking EngineHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 34
  • 35. Introduction to Revenue Management Dynamic Pricing – ActionsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 35
  • 36. Introduction to Revenue Management Distribution – Direct or IndirectHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 36
  • 37. Introduction to Revenue Management Maintaining Indirect DistributionHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 37
  • 38. Introduction to Revenue ManagementBillboard EffectHotel Revenue Management Seminar – Miami Beach, FL 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com 38
  • 39. Introduction to Revenue Management ImplementationHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 39
  • 40. Introduction to Revenue Management Definitions Revenue Manager: Revenue Management: Yield Management:Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 40
  • 41. Introduction to Revenue Management Corporate PolicyHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 41
  • 42. Introduction to Revenue Management When is it appropriate to apply ‘Yield’ To implement RM we need: • Fixed production of stock/products • Perishable product • Clear policy on dynamic pricing • Ability to update prices quickly • Reservations/sales occur within a time period • Ability to segment the market or groups of customers To manage RM actions, the involvment of Management, Sales and Reservations is required. Their must be a unified vision and mission, and agreed objectives. It’s necessary to collect information about demand: price paid, reservation dates, dates of consumption, quantity of demand, events in the destination or origen location, competitors’ prices, distributors…Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 42
  • 43. Introduction to Revenue Management Main techniques The main RM tools: • Availability management • Categories • Groups • Reservation terms • Auto-Allotment • CTA, Close-to-Arrival • MinLOS & MaxLOS • Upselling • OverbookingHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 43
  • 44. Introduction to Revenue Management How we set prices The key point is to have the ‘right price’. To determine the right price we take in to account: • Value of our product • Customers’ perceived value • Positioning • CompetitionHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 44
  • 45. Introduction to Revenue Management Management of Availability The correct management of availability is one of the most important points of good RM Factors that affect availability include: • Reservation terms • Rates • Reservations not guaranteed • Pre-payments • Categories • Groups • Overbooking • Waiting lists • Peaks and valleys in planningHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 45
  • 46. Introduction to Revenue Management Types of Rates All hotels offer a variety of rate types. The trend is to simplify them into ‘rate periods’ and apply to BAR ‘discount periods’. With the current system we lose competitivity and have to work more hours to organize our work. Rate types: • Published rates on hotel website, Booking… • Negotiated ECI, companies, groups… • Packaged, Expedia… • Opaque Atrapalo, Lastminute • Restricted cancellations, advanced payment, promotionsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 46
  • 47. Introduction to Revenue Management Price Matrix RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90 Creation of numerous published rates that pass from one to the other in function of the level of occupation and expected demand, and we make if from the level of rates that we consider most opportune. ¿What is the BAR Best Available Rate?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 47
  • 48. Introduction to Revenue Management Price Matrix x Occupation Demand Profile Nov - Mar Apr - Jun Jul - Oct BAR BAR BAR Occupation Rate Occupation Rate Occupation Rate Rate Base Base Rate Base Rate 215 230 250 High Demand >75% 205 >85% 215 >95% 235 180 195 215 190 215 235 Moderate Demand 65% 175 75% 205 75% 225 165 180 200 190 190 210 Low Demand 55% 170 65% 175 65% 195 150 165 185 140 150 170 Very Low Demand <50% 110 >55% 130 >55% 150 75 115 135Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 48
  • 49. Introduction to Revenue Management Total Demand, Unconstrained Demand The total demand of a room for a specified day. This figure is independent of the physical capacity of the hotel. For the total registered demand for a product, it’s useful to have a system that permits ‘on-request’, including when all rooms are already sold. This demand will allow us to calculate the “Last Room Value”, or how much somebody is willing to pay for the last room in our inventory.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 49
  • 50. Introduction to Revenue Management Segmentation of the Market/Consumers Market segmentation is the study of consumers and what their different motives may be for choosing our hotel. This allows us to to create different segments or groups of consumers according to their motives for the visit. To know these motives we must be able to analyze ways to increase the demand in each of these segments. We also must know the segments of our competitors and the destination in general to make comparisons.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 50
  • 51. Introduction to Revenue Management Segmentation of the Market/Consumers In order to investigate the segmentation of the market and consumers, we must collect data: • Duration of stay • Motive for the stay – source and recipient • Motive to choose hotel • How long in advance did they book hotel • Revenue per room • Revenue per client • Distribution channel where booking was madeHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 51
  • 52. Introduction to Revenue Management Price Elasticity Price elasticity measures the effect changes in price have on demand. Sometimes an increase in price causes a significant decrease in the demand and in other instances only a slight decrease. Elastic Demand Inelastic Demand • High competition • Low competition • Standard services • Differentiated servicesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 52
  • 53. Introduction to Revenue Management Segmentation of the Market/Consumers Example:Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 53
  • 54. Introduction to Revenue Management Demand Forecasting Investigation based on a calendar that allows us to know the demand that our product will have in the future. The objective is to forecast the periods of low demand and stimulate sales, as well as to know the periods of high demand in which we can increase rates. Use Google Calendar to collect all of the events that can influence consumption. This tool is easy to use and available to all of the team.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 54
  • 55. Introduction to Revenue Management Demand Forecasting Forecasting consists of the estimation and analysis of future demand for a specific product or service using inputs such as historic sales, marketing estimates and promotional information. Price Waterhouse CoopersHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 55
  • 56. Introduction to Revenue Management Demand Forecasting To be able to forecast, it’s necessary to know historic consumption data, referring to: • Consumption weekdays • Consumption during events: conferences, festivals… • Consumption during vacations • Clients – Business or Leisure • Changes in demand It can be easy to make a forecast. If you can, also make a forecast about your competitors and about the destination. This document will allow you to know the number of arrivals and departures, occupation by room and possibly revenue from other non-room sources. It’s a great tool to define internal objectives.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 56
  • 57. Introduction to Revenue Management Objective of Forecasting Why do we make forecasts? • Measure demand • Forsee falls in demand • React to low demand • Define commercial strategy • Apply rates • Restrict sales • Control costs • Control commissions • Financial planning • Human Resources planningHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 57
  • 58. Introduction to Revenue Management Forecasting: Behavior Patterns of Reservations Booking Pace The booking pace must be monitized for the current day and future days to ensure alignment with the forecast and to be able to react to any deviations from the forecast that occur. DailyPick-up The daily pick-up, and the ability to follow the rhythym of reservations must distinguish individuals and groups.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 58
  • 59. Introduction to Revenue Management Pick-Up The pick-up is the figure that tells us today how many confirmed reservations we have for a specific day. This figure shows us in a detailed way, by day or room type, the % already sold. This figure allows us to guide our decisions to increase or maintain rates for a specific day and what we must already apply today. The ideal is to be able to analyze and act daily, in all distribution channels, with this information.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 59
  • 60. Introduction to Revenue Management Pick-Up Difference in the number of reservations between one date and another. Example: Reservations made yesterday for the month of June.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 60
  • 61. Introduction to Revenue Management Forecasting Elements To record: • Objectives reached vs. objectives set • Reservations on the books • Pick-up realized vs. expected pick-up • Expected segments • Average rate • Total revenue We should forecast: • Once per week for the next 4 weeks • Once per month for the next 3 months • Once per month every 3 months for the whole year • Once per year for the next yearHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 61
  • 62. Introduction to Revenue Management Demand Curve vs. Advanced Reservation Individuals Companies FIT Groups -60 -30 -15 -5 Days before arrivalHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 62
  • 63. Introduction to Revenue Management Demand CurveHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 63
  • 64. Introduction to Revenue Management Groups We should take note of all Group requests in our statistics, so we can evaluate profitability and apply RM to group pricing. • Provider • Type of contract • Revenue per room • Revenue per guest • Revenue per group • Group sub-segments • Purpose of the visit • number of and motive for cancellationsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 64
  • 65. Introduction to Revenue Management Demand CurveHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 65
  • 66. Introduction to Revenue Management Tour Operators Tour operator contracts are the most difficult to apply RM to since the system of prices and sales is already fairly static. Technically, it is a segment ‘not yieldable’. Hotels should insist the tour operators agree to dynamic prices, but these companies and their ‘packages’ business model make it very difficult commercially to use dynamic pricing methods. From the analysis of these contracts we can reason that there are months hotels benefit from them and months where sales opportunities are lost due to them.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 66
  • 67. Introduction to Revenue Management Shoulder Days What is the impact of closing sales for a specific day? The impact of closing sales of a room type for specified dates could be larger than what we believe. The “Shoulder days” are the days of ‘closed stays’ that imply a reservation. In other words, the 2 or 3 days the client would have stayed in the hotel. This statistic helps us to calculate the impact on revenue when a room type isn’t available. Some segments like groups and tour operators can produce a large number of ‘shoulder days’.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 67
  • 68. Introduction to Revenue Management What actions should we take?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 68
  • 69. Introduction to Revenue Management Tactics – How to act during high demand High Demand • Close or restrict discounts • Apply a minimum of nights, but with caution • Reduce groups and ‘shoulder days’ • Reduce ‘late check out’, and in moderation, if possible, ‘late check in’ • Increase guarantees and cancellation charges • Increase rates in accordance with those the competition • Increase the cost of packages and hotel services • Apply the full cost of suits and executive rooms • Select dates that are ‘closed to arrivals’ • Evaluate the total profit of the hotel and try to increase it • Invoice for all of the nights in case the client shortens their stayHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 69
  • 70. Introduction to Revenue Management Tactics – How to act during low demand Low demand: • Sell added value and special benefits • Offer packages including internal and external products • Don’t close sales of the cheapest category of rooms • Incentivize upgrades • Offer better prices at adjusted budgets • Don’t use ‘stay restrictions’ • Motivate hotel staff to be especially attentive • Monitor competitors’ actions • Lower pricesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 70
  • 71. Introduction to Revenue Management Consistency Consistency in applying prices… It’s very important to be consistent with our product, services and the value we offer. We must align our value, price and quality, in order to not disappoint our customers.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 71
  • 72. Introduction to Revenue Management Tactics – Four Revenue Management Principal points to remember: • • • • • • • • • • • •Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 72
  • 73. Introduction to Revenue Management Questions When should we reject a sale? Is it useful to know how much customers spend? When should we offer a discount? When should we use overbooking?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 73
  • 74. Introduction to Revenue Management How do we measure our Factor Yield / RM Room Revenue o Average Rate x Occupation Revenue per Available Room RevPAR Number of Rooms AvailableHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 74
  • 75. Introduction to Revenue Management How do we measure our Factor Yield / RM Total Revenue TRevPAr Total Revenue per Available Room Rooms Available Gross Operating Profit – GOP GOPPar Gross Operational Profit per Available Room Rooms AvailableHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 75
  • 76. Introduction to Revenue Management Elements of Analysis We have three levels of analysis: daily, monthly and yearly Daily: • Average occupation • Average rate • Rev PAR • Pick-Up Monthly: • Geographic origin, GOB • Length-of-stay, LOS • Lead Time • Channel • Commissions Always: • Profitability of each type of guestHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 76
  • 77. Introduction to Revenue Management Benchmarking Benchmarketing is the study of the competition to discover how they sell, at what price and what their occupancy is. The objective is to discover how we can improve and act upon this with distributors, guests…To be able to improve our commercialization. At a minimum, benchmarking should give us information on: • Prices • Room type • Products • Packages • Channels of distribution • Occupation • Services offeredHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 77
  • 78. Introduction to Revenue Management Benchmarking My Hotel vs. My Competitors Who manages their hotel better, Manager A or Manager B?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 78
  • 79. Introduction to Revenue Management Daily Prices To manage our prices taking into account the prices our competition is selling at, is one of the best tools to help us sell smarter. From them we can make a number of conclusions. There are a number of ways to obtain this information. The questions we seek to answer include: • What is their strategy? • Do they use ‘yield’? • What occupation do they have? • Can it affect our sales? • What would be their future prices? • Do they require minimum stay (L.O.S.)?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 79
  • 80. Introduction to Revenue Management Place your hotel: market vs. your value All of the commercial policies and prices of your establishment must be consistent with your product and values. Aligning price, services and product will ensure you have an excellent perceived value for money and that demand is more loyal and sustained. Monitor your competitors in terms of their products and associated ‘perceived value’. After, compare your hotel to theirs and adjust your offering to be more competitive and more productive.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 80
  • 81. Introduction to Revenue Management Place your hotel: market vs. your value Evaluate your hotel and your competitors: • Product – room type • Product – hotel services • Price • Channels of distribution • Location • Strengths and weaknesses • Client segments of the hotel • Their presence in other markets • What hotels have similar prices You can also study the market for your destination, as well as source markets.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 81
  • 82. Introduction to Revenue Management Place your hotel: market vs. your value - SWOT Strengths Weaknesses My Hotel My Environment Threats OpportunitiesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 82
  • 83. Introduction to Revenue Management Market Share Report This study helps us to understand our results compared to our competitors, especially in regards to the average price and occupation. The parameters are: MPI. Market Penetration Index market penetration rate vs. the average occupation of our competitors ARI. Average Rate Index average price index, our average price vs. our competitors RGI. Revenue Generator Index revenue generator index, our share of revenue vs. our competitorsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 83
  • 84. Introduction to Revenue Management Distributors Our presence with distributors is key. We can consult them at any time for competitive data and we can observe the positions they occupy in search engine results. We can observe how they sell… use of photography, text, reference to locations, positioning of product. Very good presence with distributors can help our product compete with superior hotels (in this case we’d be competitive on price) and with similar hotels (in this case we’d be the better option).Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 84
  • 85. Introduction to Revenue Management How to be present. Distributors and the exponential effect. Is it really the same hotel? Where will customers book it? The hotel’s website is not the best option to book it in this case.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 85
  • 86. Introduction to Revenue Management Many published rates and many products An establishment should have however many rates they believe to be opportune. All rates should be competitive depending upon the moment they are applied. Attention to the offers and closed prices and/or flat-rates offered to companies and agencies. If the latter act with a discount code, we must always reference these exceptions and offers. All products should always be offered and done so with the largest number of distributors possible.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 86
  • 87. Introduction to Revenue Management Pricing Matrix RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 87
  • 88. Introduction to Revenue Management Optimize your supplementary products Clients for the most part consume on impulse. A direct call to make a reservation sometimes lasts only a few minutes, as can the online process, so we must always present ourselves in the most ‘desirable’ fashion. Different room types meet different needs of different segments. Why don’t we offer them all? In the descriptions suggested ‘use/benefits’ are given. Create clear differences between the room categories. Stimulate the thought… ‘a little more per night you can enjoy…’Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 88
  • 89. Introduction to Revenue Management Upselling Upselling is another tool that helps us to achieve good results from RM. Two moments when it can be applied: • Moment reservation is made • Arrival at hotel Offer what the client ‘needs’ in a direct way for a little more money. We must: • Understand the client • Observe their needs • Propose options • Communicate the benefitsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 89
  • 90. Introduction to Revenue Management Price Parity Although price parity is a model criticized by some, others defend it. In spite of not being logically sound financially, it’s use has spread and has been accepted by all OTA’s. Internally, the differences between the reprecussion of the commissions that are considered as costs of promotion or sales; are compensated some OTA’s with others. In the case of not having parity, clients will buy in mass, the cheapest OTA’s. Although this would be more effective, having one OTA’s dominating almost all sales would be dangerous.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 90
  • 91. Introduction to Revenue Management Commercial Parity Commercial parity is based on the commercial parameters that can influence the client’s purchase It’s important to have commercial parity with our distributors because they otherwise could have advantages over our own channel. • Payment conditions • Reservation conditions • Cancellation charges • Advance notice of cancellation required • Cleaning charges • Hidden offers • …Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 91
  • 92. Introduction to Revenue Management Control Price Parity Controlling price parity is very important and affects our relationship with our clients and distributors. Technological tools exist to compare prices for our own hotel: • know who we work with • know who are our distributors • know the mark-up on our product • understand the distributor’s model: retail, merchant, opaque...Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 92
  • 93. Introduction to Revenue Management Parity Disruptors Some companies willingly perform actions to cause “Parity Disruption”. Break the parity of your hotel to get benefits from it, decreasing your margin so clients choose your property. In other instances, data is aggregated from different channels to show which has the lower prices. Normally, these companies don’t have direct contracts with the hotel and use price comparison to attract clients. If it’s necessary, make reservations in each channel to get the voucher and know which agency is selling your property in this way.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 93
  • 94. Introduction to Revenue Management Overbooking Overbooking isn’t an effect or a consequence. In RM, it is a tool that allows us to get the most ‘play’ out of our hotel’s availability. On many occasions, the no-shows, last minute cancellations and shortened stays, affect our profitability. It’s recommended to have an action plan for these occasions. We need to think about how these deviations will impact: costs of stay, costs of transportation, compensation for services or monetary, and possibly sanctions.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 94
  • 95. Introduction to Revenue Management Overbooking Calculate your level of Overbooking and evaluate risk vs. Profit Not Guaranteed Reservations Received > Cancellations > Arrivals No Shows Rates we charge Transfer ExpensesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 95
  • 96. Introduction to Revenue Management Parameters to measure efficacy REVPAR: Room Revenue per Available Room TREVPAR: Total Revenue per Available Room TREVPEC: Total Revenue per Client GOPPAR: Gross Operating Profit per Available Rooms Conference/ REVPAM: Conference/Banqueting Revenue per Available M2 REVPASH: F&B Revenue per Available seats and hourHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 96
  • 97. Introduction to Revenue Management When we obtain more by applying RMHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 97
  • 98. Introduction to Revenue Management Where to obtain more by applying RMHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 98
  • 99. Introduction to Revenue Management How much you’ve obtained by applying RMHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 99
  • 100. Introduction to Revenue Management Practice: How to determine our pricesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 100
  • 101. Introduction to Revenue Management Pricing Matrix Pricing Matrix – General RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 101
  • 102. Introduction to Revenue Management Pricing Matrix Pricing Matrix – Very Low Season 100% 75% 50% 25% 99% 66% 33% RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 102
  • 103. Introduction to Revenue Management Pricing Matrix Pricing Matrix – Low Season 100% 75% 50% 25% RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 103
  • 104. Introduction to Revenue Management Pricing Matrix Pricing Matrix – Mid-Season 99% 66% 33% RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 104
  • 105. Introduction to Revenue Management Pricing Matrix Pricing Matrix – Mid-to-High Season 100% 75% 50% 25% RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 105
  • 106. Introduction to Revenue Management Pricing Matrix Pricing Matrix – High Season 100% 75% 50% 25% RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 106
  • 107. Introduction to Revenue Management Dynamic Pricing Advantages of Dynamic pricing: • Eliminate discounts in periods of high demand • Reduce availability of rooms for groups • Increase discounts in periods of low demand • Establish ‘Special Events’ rates or for periods of extraordinary high demandHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 107
  • 108. Introduction to Revenue Management Revenue Algorhythm Revenue from ‘automatic application’ functions with an algorhythm of revenue included in the PMS or CRS. Calculation based on: room type, bands of prices allowed, % occupation or level of actual sales. Must exclude some reservations from the system so they are not figured into the the base calculation of revenue. By human or automatic calculation. System can become more sophisticated with algorhythms or artificial intelligence by combining: historic data, competitive data, booking window, pick-up, customer searchs in the reservation booking engine calendar. Some companies use cookies and add web tracking data as well.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 108
  • 109. Introduction to Revenue Management Revenue Algorhythm Example • 1 hotel with 500 rooms • 5 room types • 150 rooms are doubles • Sales from 1 May 2020: 22% = 33 rooms • Price range: 116$ - 148$ • Difference: 32$ • Mid-High Season. Rate change every 20% change in occupation. • Rate change in increases of 6.40$ Prices on display: Prices on display: 1. 0% 1. 0% 116.0 $ 116.0 $ 2. 20% 2. 20% 122.4 $ 122.4 $ 3. 40% 3. 40% 128.8 $ 128.8 $ 4. 60% 4. 60% 135.2 $ 135.2 $ 5. 80% 5. 80% 141.6 $ 141.6 $ al 100% al 100% 148.0 $ 148.0 $Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 109
  • 110. Introduction to Revenue Management Revenue Algorhythm Example We can create an algorhythm for our PMS or CRS, or implement new, easy-to-use RM tools. Numerical Algorithms Group - IndustriesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 110
  • 111. Introduction to Revenue Management Day-to-Day ToolsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 111
  • 112. Introduction to Revenue Management Remember: Basic Elements of RM Basic elements of RM are: • Historic information – statistics, demand and trends • Forecasting • System tools to manage prices • Overall strategy • RM pricing policy With them, we act upon: • Fixed and perishable inventory • Anticipated sales • Opportunity to segment customersHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 112
  • 113. Introduction to Revenue Management Strategy and Rates With a simplified rate structure, we increase the ability to sell and provide clarity to customers to make their purchase decision easier. RATE STRUCTURE COMPLEMENTARY PRODUCTS & SERVICES • Double Room 200,50 $ • Airport Transfer 60 $ • Superior Room 350,50 $ • Breakfast Buffet 18 $ • Executive Room 510,50 $ • Flowers 23 $ • Junior Suite 620,50 $ • Suite 862,50 $Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 113
  • 114. Introduction to Revenue Management Benchmarking & Compset Competitive analysis shouldn’t be the only factor used to develop your strategy, but it is a key component. We can share our results anonymously in order to compare our results with those competitors’ hotels who also share their data anonymously. This study helps us understand our results in comparison with our compset.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 114
  • 115. Introduction to Revenue Management Historic Data Different reports that will help us analyze ‘the past’ by segments, monthly day-to-day, competition, etc.… Last Year Totals On the Books On the Books last week Pick Up IND. GRP. IND. GRP. IND. GRP. IND. GRP. DATE LCR LGS IND. LEIS GRP. LEIS OTH Total LCR LGS IND. LEIS GRP. LEIS OTH Total LCR LGS IND. LEIS LEIS. GRP OTH Total LCR LGS IND. LEIS LEIS. GRP OTH Total CORP CORP CORP CORP CORP CORP CORP CORP 01-nov WED 28 32 12 1 59 0 2 134 93 48 69 15 61 0 0 286 73 38 65 13 39 0 0 228 20 10 4 2 22 0 0 58 02-nov THU 31 32 20 1 84 0 1 169 78 47 49 17 57 0 0 248 50 37 45 15 32 0 0 179 28 10 4 2 25 0 0 69 03-nov FRI 51 32 34 1 114 0 4 236 67 48 30 20 38 0 1 204 41 38 34 16 28 0 1 158 26 10 -4 4 10 0 0 46 04-nov SAT 86 32 68 2 118 0 3 309 83 46 40 25 25 0 0 219 58 37 37 22 15 0 0 169 25 9 3 3 10 0 0 50 05-nov SUN 81 33 33 4 122 0 1 274 103 46 37 33 22 0 0 241 73 37 31 24 14 0 0 179 30 9 6 9 8 0 0 62 06-nov MON 84 34 29 13 107 0 1 268 117 45 51 49 28 0 0 290 86 36 35 43 18 0 0 218 31 9 16 6 10 0 0 72 07-nov TUE 101 35 34 28 95 0 1 294 107 45 51 49 26 0 0 278 79 36 35 32 17 0 0 199 28 9 16 17 9 0 0 79 08-nov WED 106 35 35 33 92 0 1 302 95 45 41 38 31 0 0 250 60 36 32 9 19 0 0 156 35 9 9 29 12 0 0 94 09-nov THU 108 35 39 43 94 0 1 320 66 45 31 27 36 15 0 220 38 36 22 2 20 15 0 133 28 9 9 25 16 0 0 87 10-nov FRI 85 34 43 58 87 0 2 309 40 44 36 21 50 15 0 206 23 35 23 4 34 15 0 134 17 9 13 17 16 0 0 72 11-nov SAT 70 34 24 125 62 0 1 316 51 43 29 46 40 0 0 209 36 34 19 43 29 0 0 161 15 9 10 3 11 0 0 48 12-nov SUN 71 35 28 125 54 0 1 314 64 42 27 49 31 0 0 213 49 33 14 43 24 0 0 163 15 9 13 6 7 0 0 50 13-nov MON 67 35 41 72 64 0 1 280 76 42 30 52 27 0 0 227 59 33 15 43 20 0 0 170 17 9 15 9 7 0 0 57 14-nov TUE 62 37 51 77 68 0 1 296 76 41 34 57 24 0 0 232 56 32 18 52 16 0 0 174 20 9 16 5 8 0 0 58 15-nov WED 55 36 54 81 88 0 1 315 65 38 42 16 24 0 0 185 41 30 28 11 16 0 0 126 24 8 14 5 8 0 0 59 16-nov THU 40 36 57 60 103 0 1 297 58 37 40 17 24 0 0 176 42 29 32 12 14 0 0 129 16 8 8 5 10 0 0 47 17-nov FRI 44 37 80 39 87 0 1 288 59 37 52 41 67 0 0 256 50 29 44 36 59 0 0 218 9 8 8 5 8 0 0 38 18-nov SAT 44 37 89 23 91 0 1 285 49 36 53 75 85 0 0 298 42 28 45 76 71 0 0 262 7 8 8 -1 14 0 0 36 19-nov SUN 50 36 104 19 75 0 1 285 59 38 58 75 95 0 0 325 56 28 49 76 82 0 0 291 3 10 9 -1 13 0 0 34 20-nov MON 54 35 100 20 74 10 1 294 65 37 61 73 98 0 0 334 60 27 49 74 86 0 0 296 5 10 12 -1 12 0 0 38 21-nov TUE 53 35 99 20 68 10 1 286 64 38 55 70 81 0 0 308 63 28 44 72 71 0 0 278 1 10 11 -2 10 0 0 30 22-nov WED 60 35 94 17 65 10 1 282 26 38 41 7 56 0 0 168 22 28 33 7 49 0 0 139 4 10 8 0 7 0 0 29 23-nov THU 52 36 76 14 58 0 1 237 32 38 18 2 30 0 0 120 33 28 11 2 23 0 0 97 -1 10 7 0 7 0 0 23 24-nov FRI 42 37 56 14 48 0 1 198 22 38 9 2 21 0 0 92 19 28 5 2 15 0 0 69 3 10 4 0 6 0 0 23 25-nov SAT 31 36 29 73 48 0 1 218 31 38 13 0 25 0 0 107 21 28 5 40 20 0 0 114 10 10 8 -40 5 0 0 -7 26-nov SUN 48 36 29 60 65 0 1 239 43 36 31 1 23 0 0 134 32 27 14 41 20 0 0 134 11 9 17 -40 3 0 0 0 27-nov MON 53 36 33 43 82 0 1 248 51 36 36 1 25 0 0 149 40 27 19 90 22 0 0 198 11 9 17 -89 3 0 0 -49 28-nov TUE 58 37 33 30 90 0 1 249 38 36 24 1 19 0 0 118 31 27 13 50 15 0 0 136 7 9 11 -49 4 0 0 -18 29-nov WED 48 37 45 20 110 0 2 262 28 36 27 1 17 0 0 109 28 27 15 1 12 0 0 83 0 9 12 0 5 0 0 26 30-nov THU 49 34 61 10 123 0 2 279 30 34 24 0 11 0 0 99 30 25 16 0 5 0 0 76 0 9 8 0 6 0 0 23 Total 1812 1051 1530 1126 2495 30 39 8083 1836 1218 1139 880 1197 30 1 6301 1391 942 847 951 905 30 1 5067 445 276 292 -71 292 0 0 1234 Occupancy 22,42% 13,00% 18,93% 13,93% 30,87% 0,37% 0,48% 83,94% 29,14% 19,33% 18,08% 13,97% 19,00% 0,48% 0,02% 65,43% 27,45% 18,59% 16,72% 18,77% 17,86% 0,59% 0,02% 52,62% 12,81% Room Revenue 8.633.064 6.401.220 5.031.018 1.370.202 ARR 1.068,05 1.015,91 992,90 23,01 RevPAR 896,48 664,72 522,43 142,28 400 325 334 308 286 290 278 298 248 241 250 227 232 256 300 204 219 220 206 209 213 185 176 168 200 120 134 149 92 107 118 109 99 100 0 01-nov 02-nov 03-nov 04-nov 05-nov 06-nov 07-nov 08-nov 09-nov 10-nov 11-nov 12-nov 13-nov 14-nov 15-nov 16-nov 17-nov 18-nov 19-nov 20-nov 21-nov 22-nov 23-nov 24-nov 25-nov 26-nov 27-nov 28-nov 29-nov 30-novHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 115
  • 116. Introduction to Revenue Management Historic Data Exchange of competitive dataHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 116
  • 117. Introduction to Revenue Management Historic Data Detailed market segmentation analysis and origins: SegmentosHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 117
  • 118. Introduction to Revenue Management Historic Data Effectively analyze and manage ‘booking trend’ Pick Up Analysis 2005 vs 2006 (Total) ene-05 ene-06 feb-05 feb-06 mar-05 mar-06 abr-05 abr-06 may-05 may-06 jun-05 jun-06 jul-05 jul-06 ago-05 ago-06 sep-05 sep-06 oct-05 oct-06 nov-05 nov-06 dic-05 dic-06 Occ. 90 days out 25,35% 22,48% 31,39% 15,94% 28,03% 14,36% 14,42% 5,63% 20,66% 8,00% 19,49% 3,54% 15,11% 2,46% 5,65% 8,97% 12,73% 7,93% 7,19% 10,62% 16,55% 14,94% 12,27% 8,98% Occ. 60 days out 35,05% 31,31% 46,58% 22,30% 10,52% 20,25% 24,62% 11,00% 34,62% 10,52% 22,77% 6,03% 9,02% 12,27% 8,57% 10,71% 20,76% 12,07% 8,58% 12,87% 29,06% 25,23% 18,82% 22,95% Occ. 30 days out 74,45% 49,49% 79,24% 59,40% 59,52% 35,81% 57,63% 32,61% 50,27% 31,44% 36,13% 34,02% 26,76% 27,96% 26,90% 28,22% 42,62% 34,64% 21,20% 29,89% 62,52% 64,43% 42,15% Pick up 1st Week 6,21% 1,72% 3,50% 8,86% 11,29% 12,88% 7,40% 14,43% 5,72% 12,06% 6,53% 7,92% 10,25% 9,41% 9,05% 13,94% 9,21% 15,02% 6,68% 8,73% 8,89% 11,98% Pick up 2nd Week 3,20% 4,14% 8,74% 8,73% 10,05% 15,85% 11,03% 12,15% 12,24% 7,83% 12,23% 9,58% 13,29% 8,16% 12,31% 12,72% 10,23% 15,12% 6,64% 9,12% 6,31% 9,23% Pick Up 3rd Week 2,31% 6,48% 11,59% 7,33% 5,70% 11,59% 7,10% 10,56% 6,47% 3,70% 7,81% 6,47% 6,48% 5,43% 9,56% 9,23% 7,29% 4,05% 5,04% 8,60% 2,04% 6,46% Pick Up Final Week 2,79% 4,67% 8,51% 2,46% 3,70% 8,51% 2,04% 5,08% 6,67% 6,40% 6,49% 5,71% 6,12% 7,06% 8,65% 10,69% 7,60% 3,59% 2,79% 2,28% 4,74% 1,97% Final Occupancy 88,97% 66,50% 81,72% 86,78% 90,25% 81,72% 85,20% 74,83% 81,37% 61,43% 69,19% 63,72% 62,90% 58,01% 66,48% 74,80% 76,95% 72,42% 42,37% 58,62% 84,50% 71,78% Occupancy Pace Report - 90 Days Out Occupancy Pace Report - 60 Days Out 2006 2005 2006 2005 40,00% 50,00% 30,00% 40,00% 30,00% 20,00% 20,00% 10,00% 10,00% 0,00% 0,00% 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Occupancy Pace Report - 30 Days Out Occupancy Pace Report - EOM Figures 2006 2005 2006 2005 100,00% 100,00% 80,00% 80,00% 60,00% 60,00% 40,00% 40,00% 20,00% 20,00% 0,00% 0,00% 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 118
  • 119. Introduction to Revenue Management Historic Data Detailed study, day-to-day, for each season, taking into account the impact of events, festivals and vacation periods on the city and hotel. Daily Room Occupancy- Total 71,11% 77,88% 72,90% 64,88% 62,18% 59,03% 53,77% Mon Tue Wed Thu Fri Sat Sun Rooms Occupied - Ind. Corp Rooms Occupied - Ind. Leis 67 77 71 42 54 60 53 41 47 41 41 40 40 40 Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun Rooms Occupied - Grp. Corp Rooms Occupied - Grp. Leis 38 38 40 41 46 44 44 32 32 40 40 20 24 21 Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun Rooms Occupied - Industry 43 43 45 46 44 38 32 Mon Tue Wed Thu Fri Sat SunHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 119
  • 120. Introduction to Revenue Management Historic Data Know our ‘top producers’ with precisionHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 120
  • 121. Introduction to Revenue Management Forecasting How to develop a good forecasting procedure? Rigorously control daily, weekly and monthly pick-up data BUSINESS-ON-THE-BOOKS GRP DATE BAR Guideline IND LEISURE IND CORP. GRP CORP. OTHER RMS % ADR REV LEISURE 1.601 24,71% 7.239 11.590.426 01-oct jue BAR 1 60 0 0 0 4 64 30,62% 6.993 447.571 02-oct vie RACK 70 0 0 0 2 72 34,45% 8.881 639.454 03-oct sáb RACK 68 0 0 0 3 71 33,97% 8.832 627.091 WEEK 1 198 0 0 0 9 207 33,01% 8.281 1.714.117 04-oct dom BAR 1 51 0 0 0 7 58 27,75% 7.071 410.091 05-oct lun BAR 1 26 0 0 0 12 38 18,18% 8.093 307.545 06-oct mar BAR 1 33 0 1 0 16 50 23,92% 5.567 278.364 07-oct mié BAR 1 41 0 0 0 13 54 25,84% 5.889 318.000 08-oct jue BAR 1 41 0 0 0 FORECAST 10 51 24,40% 5.376 274.182 09-oct vie RACK 68 0 0 0 1 69 33,01% 8.199 P/UP 565.728 AVG P/UP 10-oct sáb RACK 81 0 0 REVPAR 0 RMS 1% ADR 82 REV 39,23% REVPAR 8.384 687.454 RNTS % WEEK 2 341 0 1 1.789 0 60 402 27,48% 7.068 2.841.363 11-oct dom BAR 1 82 0 0 2.141 0 64 30,62% 0 6.993 82 447.571 39,23% 2.141 8.414 - 0,00% 689.909 3.060 72 34,45% 8.881 639.454 3.060 - 0,00% 12-oct lun BAR 1 59 0 0 3.000 0 71 0 33,97% 59 8.832 28,23% 627.091 7.782 3.000 - 459.127 0,00% 13-oct mar BAR 1 43 0 0 2.734 0 207 4 33,01% 47 8.281 22,49% 1.714.117 6.210 2.734 - 291.863 0,00% 14-oct mié BAR 1 45 0 0 1.962 0 58 5 27,75% 50 7.071 23,92% 410.091 5.435 1.962 - 271.728 0,00% 15-oct jue BAR 1 58 0 0 1.472 0 38 18,18% 5 8.093 63 307.545 30,14% 1.472 6.375 - 0,00% 401.637 1.332 50 23,92% 5.567 278.364 1.332 - 0,00% 16-oct vie RACK 71 0 3 1.522 0 54 6 25,84% 80 5.889 38,28% 318.000 7.253 1.522 - 580.273 0,00% 17-oct sáb RACK 76 0 5 1.312 0 51 4 24,40% 85 5.376 40,67% 274.182 8.597 1.312 - 730.727 0,00% 2.707 69 33,01% 8.199 565.728 2.707 - 0,00% WEEK 3 434 0 8 0 24 466 31,85% 7.350 3.425.265 3.289 82 39,23% 8.384 687.454 3.289 - 0,00% 1.942 402 27,48% 7.068 2.841.363 1.942 - 0,00% 3.301 82 39,23% 8.414 689.909 3.301 - 0,00% 2.197 59 28,23% 7.782 459.127 2.197 - 0,00% 1.396 47 22,49% 6.210 291.863 1.396 - 0,00% 1.300 50 23,92% 5.435 271.728 1.300 - 0,00% 1.922 63 30,14% 6.375 401.637 1.922 - 0,00% 2.776 80 38,28% 7.253 580.273 2.776 - 0,00% 3.496 85 40,67% 8.597 730.727 3.496 - 0,00% 2.341 466 31,85% 7.350 3.425.265 2.341 - 0,00%Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 121
  • 122. Introduction to Revenue Management Forecasting Competitive Study: my hotel vs. my competitors 2008 ADR Apr M ay Ju n Ju l Au g Sep O ct No v Dec My Property 284,10 268,93 268,90 222,10 179,60 230,75 238,72 222,16 203 ,48 SubMarket Class 243,75 246,95 244,40 217,35 186,72 211,18 204,09 180,78 161 ,84 Index 116,6 108,9 110,0 102,2 96,2 109,3 117,0 122,9 125,7 % C hg My Property 13,8 -2,3 -10,9 2,0 -2,6 -15,6 -3,2 -4,6 -3,1 SubMarket Class 9,7 -2,8 -5,7 3,5 0,5 -7,2 -8,7 -12,1 -5,8 Index 3,7 0,6 -5,5 -1,4 -3,1 -9,0 6,0 8,6 2,8 2008 RevPAR Apr M ay Ju n Ju l Au g Sep O ct No v Dec My Property 211,84 210,15 204,26 184,72 140,30 159,09 172,21 140,45 96,23 SubMarket Class 180,10 187,61 179,93 167,68 136,98 145,83 137,30 100,48 69,23 Index 117,6 112,0 113,5 110,2 102,4 109,1 125,4 139,8 139,0 % C hg My Property -3,8 -13,1 -24,1 -3,7 -8,4 -28,7 -13,5 -22,4 -14,3 SubMarket Class 5,4 -8,1 -17,6 5,6 1,2 -19,3 -21,5 -35,9 -17,3 Index -8,6 -5,4 -7,9 -8,8 -9,5 -11,7 10,2 21,1 3,7Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 122
  • 123. Introduction to Revenue Management Forecasting PACE TREND – how reservation trends are consolidated for a specific date ES Week of Week of Week of Week of Week of Week of Market Penetration - Revenue 29-nov Rank 06-dic Rank 13-dic Rank 20-dic Rank 27-dic Rank 03-ene Rank Current Subscriber 122% 4 of 7 54% 6 of 7 171% 2 of 7 213% 2 of 7 236% 2 of 7 228% 2 of 7 A 1 Week Ago Subscriber 119% 4 of 7 50% 5 of 7 209% 2 of 7 201% 2 of 7 236% 1 of 7 204% 2 of 7 L 2 Weeks Ago Subscriber 129% 3 of 7 49% 5 of 7 268% 1 of 7 224% 2 of 7 222% 1 of 7 151% 2 of 7 L 3 Weeks Ago Subscriber 148% 2 of 7 66% 4 of 7 255% 1 of 7 164% 2 of 7 206% 2 of 7 128% 4 of 7 4 Weeks Ago Subscriber 195% 2 of 7 78% 4 of 7 328% 1 of 7 167% 2 of 7 240% 1 of 7 196% 2 of 7 Green: High Market Penetration (greater than 100%) Red: Low Market Penetration (less than 100%) Average Daily Rate (USD) 29-nov Rank 06-dic Rank 13-dic Rank 20-dic Rank 27-dic Rank 03-ene Rank Current Subscriber 367 3 of 7 365 3 of 7 362 3 of 7 334 2 of 7 418 3 of 7 293 4 of 7 Competitive Set 340 286 290 328 398 344 1 Week Ago Subscriber 363 4 of 7 420 2 of 7 362 4 of 7 334 2 of 7 418 4 of 7 293 5 of 7 A Competitive Set 343 289 324 331 405 323 Subscriber 359 4 of 7 329 3 of 7 362 3 of 7 339 2 of 7 440 4 of 7 305 4 of 7 L 2 Weeks Ago Competitive Set 327 279 298 304 380 279 L 3 Weeks Ago Subscriber 359 3 of 7 329 3 of 7 374 2 of 7 363 2 of 7 402 4 of 7 298 4 of 7 Competitive Set 323 284 286 307 376 277 4 Weeks Ago Subscriber 356 4 of 7 329 2 of 7 321 3 of 7 363 2 of 7 423 4 of 7 373 2 of 7 Competitive Set 329 284 298 309 372 286 Green: Above Comp Set Average Red: Below Comp Set Average Room Nights 29-nov Rank 06-dic Rank 13-dic Rank 20-dic Rank 27-dic Rank 03-ene Rank Current Subscriber 56 2 of 7 6 5 of 7 19 1 of 7 53 1 of 7 47 1 of 7 19 1 of 7 Competitive Set 199 66 49 79 60 21 1 Week Ago Subscriber 48 2 of 7 4 4 of 7 19 1 of 7 53 1 of 7 47 1 of 7 19 1 of 7 A Competitive Set 173 55 32 86 59 27 2 Weeks Ago Subscriber 41 2 of 7 3 5 of 7 19 1 of 7 49 1 of 7 40 1 of 7 13 1 of 7 L Competitive Set 138 34 22 73 63 35 L 3 Weeks Ago Subscriber 41 1 of 7 3 3 of 7 16 1 of 7 25 2 of 7 28 1 of 7 9 2 of 7 Competitive Set 116 24 22 65 46 30 4 Weeks Ago Subscriber 38 1 of 7 3 3 of 7 28 1 of 7 25 2 of 7 32 1 of 7 11 1 of 7 Competitive Set 69 20 18 63 43 24Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 123
  • 124. Introduction to Revenue Management Forecasting Lead Time – informs us of customer demand for a specific date Lead Tim Statistics e 0-3 4-7 8-14 15-30 31+ (Based on RoomNights) Days Days Days Days Days ALL Subs RoomNights 19 18 63 73 310 Average RoomRate in USD 436,37 318,51 375,33 449,75 366,96 Average Length of Stay 2,11 1,50 2,17 2,70 2,79 Market Penetration (RoomNights) 45,3% 35,0% 82,5% 63,2% 110,9% Comp Total RoomNights 202 253 340 536 1.164 Set Average RoomRate in USD 457,18 425,99 397,12 426,85 448,39 Average Length of Stay 1,60 1,71 2,18 2,81 2,58Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 124
  • 125. Introduction to Revenue Management Forecasting Study of events in the hotel, city, conferences, festivals and vacations Month/Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 January B S S S S S S S S S D D D S S S S S S S S D S S S S D S S S S Specials Event MLS February E E E E E E E E C C C C E E E E E E E S E E E E E E E E Specials MLS March E D X X A C X X X X X C C X X X X X C C X X C C C C C C C C C Specials Event MLS April D C C D D D D C C D D D D D C C D D D D D C C D D D D D C C Specials MLS Easter May C C C C A A A A C C C C C C C C C C C C C C C C C C C C C C C Specials Event Event Event MLS Jun C C C C D D D D D D D D B B B C C D D D D D D D D D D D D D Specials Event MLS Jul D D C C C E E D D E E E E E D D E E E E E D D E E E E E D D E Specials Event MLS Aug E E E E D D E E E E E D D E E E E E D D E E E E E D D E E E E Specials MLS Sep E D D E D D D D D D D D D D D D D D D D D D D D D D D D D D Specials MLS Oct X X X D D D D D D D D D D D D D D D D D D D D D C C C C C C D Specials Event MLS Nov C E E E E E E E E E E E E E E E E E E E E E E E E C C C B B Specials Event MLS Dec B C C C E E E E E E E E E E E E E E E E E E E D D D D D D B B SpecialsEvent Christmas MLSHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 125
  • 126. Introduction to Revenue Management Forecasting Internal reports that cross-check annual data such as inquiries for other areas of the hotel alba, apartments, spaHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 126
  • 127. Introduction to Revenue Management Organigram DOSM DOSM Marketing Marketing Revenue Revenue eCommerce eCommerce Dtor. Ventas Dtor. Ventas Manager Manager Manager Manager Manager Manager Adjunto Adjunto Rvas. Indiv. Rvas. Indiv. Reservas Reservas Equipo Assistant Assistant 1 Assistant 2 Assistant 1 Assistant 2 CRS Grupos Equipo Assistant Assistant 1 Assistant 2 Assistant 1 Assistant 2 CRS Grupos Ventas (EQUIPO) (EQUIPO) Ventas (EQUIPO) (EQUIPO)Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 127
  • 128. Introduction to Revenue Management Exercise 1Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 128
  • 129. Introduction to Revenue Management Exercises Reactive measures, short-termHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 129
  • 130. Introduction to Revenue Management Exercises Proactive measures – long-termHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 130
  • 131. Introduction to Revenue Management Exercises Required Analysis Reports and ActionsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 131
  • 132. Introduction to Revenue Management Exercises Daily Tasks Weekly TasksHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 132
  • 133. Introduction to Revenue Management Exercises Monthly Tasks Annual TasksHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 133
  • 134. Introduction to Revenue Management Exercises Daily Management Reservations Website ReceptionHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 134
  • 135. Introduction to Revenue Management Exercise 2Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 135
  • 136. Introduction to Revenue Management Exercise Position your hotel…possible improvements • Type of hotel • Positioning • Characteristics • Company to which it belongs • Objectives of hotel managementHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 136
  • 137. Introduction to Revenue Management Exercise Annual Calendar of Actions Expected Hotel Month Segment Activity Objetive R/Ngts Who Cost Status Revenue When we use it…Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 137
  • 138. Introduction to Revenue Management Exercise Hotel room structure: What is the hotel room structure of a ‘exemplary’ hotel like? What is the structure of supplementary products like? What is the objective of the ‘extras’?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 138
  • 139. Introduction to Revenue Management Exercise Practical exercise in groups: • Our hotel has 100 rooms • 14-21 January in Barcelona with events, conferences, weekends, etc. • Use BAR of A-D (A is the highest price = 400 and D the lowest = 100) • Mobile World Congress: 14-17 January we are at 90% • Group confirmed for 75 rooms 19-20 January • Average occupation the remainder of January isn’t over 50%Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 139
  • 140. Introduction to Revenue Management Exercise 3Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 140
  • 141. Introduction to Revenue ManagementExercises Glossary: Describe y Order by Families AAVV ADR ALGORITMO ARI BAR BOOKING ENGINE BOOKING PACE CANAL CHANNEL MANAGER CMS CONSORTIA CORPORATE ERP GDS GOPPAR IDS MPI ORIGEN OTA PMS RATE PARITY REVPAR REVPAV RGI RM SERMENTACION TTOOCurso Formación YM Revenue Management – Madrid 9,10 y 11 Noviembre 2012 de Impartido por: Tomeu Pons tomeupons@gmail.com 141
  • 142. Introduction to Revenue Management Summary: Revenue Management ConceptsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 142
  • 143. Introduction to Revenue Management Exercise 4Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 143
  • 144. Introduction to Revenue Management Exam Questions: 1. When should you activate an offer? 2. From where does the data from the flow of reservations come from? 3. How do you control the costs of distribution? 4. Besides rooms, to what else can you apply RM in hotels? 5. How do you know if you are selling at prices that are too low? 6. How do you know if you are selling at prices that are too high? 7. How do ‘save’ inventory and why? 8. To whom must availability be given to? 9. When should be create a new type of hotel room? 10. How do you control sales price and who usually lets them get out of control? 11. What are the 5 most important variables of RM? (glossary) 12. When should you reject reservations at low prices and at high prices? 13. What is auto allotment? 14. About your hotel: do a SWOT analysis 15. Make prices for: 1 hotel with 1 room and 1 salonHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 144
  • 145. Introduction to Revenue Management Summary: Revenue Management Concepts Free Downloads: http://www.adhp.org/pdf/1-theBasicsofRM.pdf http://revenueanalytics.com/pdf/Cornell%20Fe bruary%202009.pdf http://cqx.sagepub.com/ http://www.hammerman.com/files/occtrack/fore casting.pdf http://www.hsmai.org/members/SIGRevManag ement.cfmHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 145
  • 146. Introduction to Revenue Management Recommended ReadingHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 146
  • 147. Introduction to Revenue Management Thanks for your attention. Professor: Tomeu Pons tomeupons@gmail.com LinkedIn: http://es.linkedin.com/in/tomeupons Blog: http://flamingohotelier.wordpress.com/Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 147
  • 148. This document was written under the license of the Creative Commons & Copyleft. Use this content at your convenience. Link to this document. If you are the owner of the Copyright of a part of this document, please advise and it will be substituted or deleted.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 148

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