Revenue Management<br />International Air and Hospitality Academy<br />September 29, 2010<br />
<ul><li>Brief Introduction
Define Revenue Management
Revenue Management Examples
How To Use Revenue Management
Recommended Career Path</li></ul>agenda<br />
Introduction<br />
Daniel Wise, CHRM<br />Professionally<br />Front Desk Clerk – Econolodge, Flagstaff, AZ<br />Assistant GM – Days Inn Flags...
Conduct weekly RM meetings<br />Benchmark hotel against competition<br />Manage rates and inventory<br />Forecast and moni...
What is revenue management?<br />
Defining revenue management<br />From the literature<br />"Revenue management is the art and science of predicting real-ti...
Fixed amount of a product<br />Product is perishable<br />Consumers willing to pay different prices<br />Conditions necess...
Airline<br />Hotels<br />Sports Teams<br />Theatres<br />Hair Salon<br />Restaurants<br />Casinos<br />Revenue management ...
Key metricsHotel industry<br />100 rooms on property<br />76 sold<br />$11,000 room revenue<br />$4,000 restaurant<br />$3...
How to use revenue management?<br />
Understand your customers<br />Forecast demand<br />Research competition<br />Distribute your product<br />Monitor demand<...
Understand your customersaka “Segmentation”<br />Types<br />Family<br />Single<br />Couples<br />Price sensitivity<br />Hi...
Use the knowledge – identify what’s important to the customer<br />Single business traveler<br />Distance to their work si...
Forecast<br />Peak/Busy dates by customer and room type<br />BT	BT	BT	BT<br />FAM	FAM<br />
Benchmark<br />Tour their site<br />Compare online information<br />Collect Intelligence<br />Shop their rates<br />Subscr...
Voice<br />Central Reservations<br />Front Desk<br />Travel Agents<br />Internet<br />Brand.com<br />OTA’s (Retail)<br />O...
Pricing decisions<br />Peak/Busy dates by customer and room type<br />Possible pricing based on forecasted demand<br />
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IAHA Sept 29 2010

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A quick presentation I gave to a group of students at the International Air and Hospitality Academy.

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IAHA Sept 29 2010

  1. 1. Revenue Management<br />International Air and Hospitality Academy<br />September 29, 2010<br />
  2. 2. <ul><li>Brief Introduction
  3. 3. Define Revenue Management
  4. 4. Revenue Management Examples
  5. 5. How To Use Revenue Management
  6. 6. Recommended Career Path</li></ul>agenda<br />
  7. 7. Introduction<br />
  8. 8. Daniel Wise, CHRM<br />Professionally<br />Front Desk Clerk – Econolodge, Flagstaff, AZ<br />Assistant GM – Days Inn Flagstaff, AZ<br />Analyst - Cendant Corp (now Wyndham), Phoenix, AZ<br />Reservation Manager – Fiesta Inn Resort, Tempe, AZ<br />Revenue Manager – Best Western International, Phoenix, AZ<br />Regional Revenue Manager – Extended Stay Hotels, Portland, OR<br />Property Revenue Manager – Best Western International, Portland, OR<br />Owner – Cascade Revenue Management, Portland, OR<br />Academically<br />B.S. Business Management – Arizona State University, Tempe, AZ<br />M.B.A. University of Oregon, Portland, OR.In progress<br />
  9. 9. Conduct weekly RM meetings<br />Benchmark hotel against competition<br />Manage rates and inventory<br />Forecast and monitor demand<br />Nurture relationships with distribution partners<br />Assist in strategy development<br />Cascade Revenue Management<br />
  10. 10. What is revenue management?<br />
  11. 11. Defining revenue management<br />From the literature<br />"Revenue management is the art and science of predicting real-time customer demand at the micro market level and optimizing the price and availability of products.“<br />-Robert G. Cross<br />In practice<br />Selling the right product<br />To the right person<br />At the right time<br />For the right price<br />
  12. 12. Fixed amount of a product<br />Product is perishable<br />Consumers willing to pay different prices<br />Conditions necessary to implement revenue management<br />
  13. 13. Airline<br />Hotels<br />Sports Teams<br />Theatres<br />Hair Salon<br />Restaurants<br />Casinos<br />Revenue management examples<br />
  14. 14. Key metricsHotel industry<br />100 rooms on property<br />76 sold<br />$11,000 room revenue<br />$4,000 restaurant<br />$300 movie rentals<br />11,00076=$144.74<br /> <br />𝐴𝐷𝑅=𝑅𝑜𝑜𝑚 𝑅𝑒𝑣𝑒𝑛𝑢𝑒𝑅𝑜𝑜𝑚𝑠 𝑆𝑜𝑙𝑑<br />Occupancy = 𝑅𝑜𝑜𝑚𝑠 𝑆𝑜𝑙𝑑𝑇𝑜𝑡𝑎𝑙 𝑅𝑜𝑜𝑚𝑠<br />RevPAR = 𝑅𝑜𝑜𝑚 𝑅𝑒𝑣𝑒𝑛𝑢𝑒𝑇𝑜𝑡𝑎𝑙 𝑅𝑜𝑜𝑚𝑠<br />Total RevPAR = 𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒𝑇𝑜𝑡𝑎𝑙 𝑅𝑜𝑜𝑚𝑠<br /> <br />76100=76%<br /> <br />11,000100=$110.00<br /> <br />15,300100=$153.00<br /> <br />
  15. 15. How to use revenue management?<br />
  16. 16. Understand your customers<br />Forecast demand<br />Research competition<br />Distribute your product<br />Monitor demand<br />Adjust<br />The basics<br />
  17. 17. Understand your customersaka “Segmentation”<br />Types<br />Family<br />Single<br />Couples<br />Price sensitivity<br />High “Bargain shoppers”<br />Low “Willing to pay more to get exactly what they want”<br />Typical booking path<br />Call direct<br />Internet<br />Travel agent<br />Categories<br />Leisure<br />AAA<br />Business<br />Group<br />Stay Patterns<br />Weekday<br />Weekend<br />
  18. 18. Use the knowledge – identify what’s important to the customer<br />Single business traveler<br />Distance to their work site<br />Weekday business<br />Book direct or with an agent<br />Low price sensitivity<br />Prefers larger king beds<br />Quality high speed internet<br />Restaurant/bar on-site or nearby<br />Family on vacation<br />Distance from attractions<br />Weekend business<br />Books online (OTA’s or brand.com)<br />High price sensitivity<br />Needs two beds<br />Free breakfast<br />Swimming pool<br />
  19. 19. Forecast<br />Peak/Busy dates by customer and room type<br />BT BT BT BT<br />FAM FAM<br />
  20. 20. Benchmark<br />Tour their site<br />Compare online information<br />Collect Intelligence<br />Shop their rates<br />Subscribe to Smith Travel Research<br />Consider other report tools<br />Maintain a friendly yet competitive relationship<br />Avoid complacency<br />Research competition<br />
  21. 21. Voice<br />Central Reservations<br />Front Desk<br />Travel Agents<br />Internet<br />Brand.com<br />OTA’s (Retail)<br />OTA’s (Opaque)<br />GDS<br />Distribution<br />
  22. 22. Pricing decisions<br />Peak/Busy dates by customer and room type<br />Possible pricing based on forecasted demand<br />
  23. 23. Monitor Demand<br />The CRM Tool<br />
  24. 24. RM Cycle<br />
  25. 25. A mix of sales and operations is very helpful<br />Begin at the front desk<br />Aim for FDM or Reservation Manager<br />If it does not exist you can “evolve” into a Revenue Manager<br />Be flexible, patient and open minded<br />Career path<br />
  26. 26. Discussion & Questions<br />Daniel Wise<br />503-719-6975 office<br />info@cascaderms.com<br />

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