1. TheScoop
Relevant Insight for Hotel Operators and Owners
It’s Time to Think about Revenue Maximization
San Diego11/5/2013 - We’ve beenfocusedonRevenue Managementsince we startedtosee how well the airlines
yieldedthe pricingof theirseatsbackinthe 1980’s. Additionally,since the economicdownturnof 2008, operatorsand
ownershave beenobsessedwith“costcontainment”betterknownasexpense management. Slashingeverythingfrom
staffingtothe numberof ouncesina hamburgeronthe room service menu.
Quite simply,revenuemanagementhasbeenone of the best practicesthatthe industrycouldeverhave developed
thanksinlarge part to the airlinesSTRGlobal. First,we asan industryworktogether. Forthe most part,a majorityof
hotelsinall majormarketsparticipate andreporttheirdatainto STR. Andinturn, STR quicklyprocessesthe information
and distributesthe resultstotheirsubscribers. Asa competitive industry,we lovethe metricsthatthe weeklyand
monthlyreportsprovide. We love the rankings,the daybyday performance andof course,we love whenwe win. And
whenwe under- performwe are able toquicklyidentifyareasforimprovement.
My nextcommentsinnowaytakesaway anythingfromthe STR data andthe informationitprovides;however,if we do
not take a similarapproachrelative torevenuesof otherindustries,we will be unable toaddvalue toour assetsby
increasingvolume and we have aninability toincrease ourhigh-marginrevenues.
• Apple’sIPhone 5was introducedandfora few daysthe mediaandcustomers(includingmyself)were
all dismayedthatinorderto use the device withotherproductswe hadto spendanother$29.99 to purchase a
one inchby one inchadapter. Accordingtoindustrydata publishedinthe New YorkTimesandCNET,Apple sold
inexcessof 25 millionIPhone 5’sinthe 4th quarterof 2012. If only50% of those purchasersalsoboughtthe
adapter,Apple broughtinanother$375M inrevenues…..andI’dlike toknow the profitmarginoneachof those
little adapters.
• All the cable companiesare spendingcapitoltoincrease the recordingpowerof theirDVR’sinan effort
to attract newcustomerand increase additional monthlyfees. The advertisementbudgetshave skyrocketed
and thisnewertechnologyisemerginginmore andmore homeseachday withoutmuchadditional costin
productdevelopment.
But again,whathave we done. Yes,we were hithardin 2008 & 2009 and while we hadanobligationtoourownersand
investorstomanage ourexpenses,manyof usretreated;lowerrates,developedlowermargin-value addedpackages
that reducedprofits. Byreducingoreliminatingservicesmostof all we were notthinkingof innovation. Innovative
productsand servicesthatourguestswouldgladlypayforwithoutfeeling“nickel anddimed”-Afternearly3decadesin
thisbusinessInoticedthat,we are so fearful of ourguestsbeing“nickel anddimed”thatwe justdon’tcharge or worse
we eliminate the service fromourbusiness. I don’tknow aboutyou,but I get“nickel anddimed”everydayat most
placesI enjoyshoppingat.

2. Travelingacrossthe countryoverthe pastthree years,I noticedlongerlines,shorteroperatinghours,lesstowels. I’ve
alsonoticedthatI was receivingvaluable thingsthatIneededandwouldgladlypayforwithoutacharge. Whetheritis
complimentarybreakfasttointernetfeesbeingwaived,we have takenoureye off the ball…IncreasedRevenues.
(Ona side note,I waswalkingthroughthe meetingspace of ahotel thatwas busywitha group at around3pm, justas
the 700 attendeeswere takingtheirtraditional “afternooncoffee break”. Whatwason the skirtedtablestookme by
surprise. Waterpitchersfromthe early1990’s and plasticcups…..that’sit. There weren’tevenslicedlemonsinthe
water. No goodies,cookies,fruitandnotevencoffeeforthe endof the day pickme up.).
This,at a 4-Star/4DiamondResortwhosaidtheywere emergingfromthe “worst”of the recession. There’salotof
profitbetweenfreewaterand$18.00 coffee breaks.
If we lookat today’stravelers,fromgroupattendeestothe familyvacationer,theystill have moneytospend,butmany
of usare afraidto charge an extrafee sowe simplydonotofferthe productor service,thuslimitingourabilityto
maximize revenuesandprofits.
HLA will workwithyourteamsto identifynewproductsandservicesthatare unique toyourproperties. Whetherwe
workwithyour cateringteam,toincrease weddingpackagesordevelopingaunique approachto your IBT market,we
can helpyougainadditional rate without“tossing”incomplimentaryin-roomwirelessinternetservice.
We will lookatthe whatthe marketisdoingand suggestrational solutionsthatwill enable youtotake businessaway
fromyour competitors,become the rate leaderandincrease the overall performanceof yourdestination….youwill all
be playingona level playingfield,workingtomaximizerevenuesandimprove yourprofitmarginsatthe same time.
Located in San Diego, Larry Kaufman is the founder and managingpartner of Hospitality & Lodging Advisors,Inc. HLA provides
consultingservices to hotel owners, developers and operators, with a primary focus on sales,marketing, revenue management,
interactivemarketing and product positioning. With over 30 years’experience in the hotel business Kaufman has broad insigh tinto
branded and independent hotels with business planning,analysisand sales training.