Cutting-edge revenue strategies for hotels
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Breakthrough technologies are removing the costly inefficiencies of traditional revenue management for hotel owners. So perhaps you should learn how to maximize profitability in the new environment? This FREE Tnooz-Duetto webinar will cover cutting-edge strategies to enable hotel managers, brands and owners to: Leverage independently yieldable hotel segments to capture maximum value Leave offers open, yielding them to demand and remaining visible to prospective business Integrate powerful insights from revenue analytics with demand-generation efforts in sales, marketing, distribution, digital marketing and loyalty programs. Panelists for the webinar are: Marco Benvenuti, co-founder and chief analytics officer, Duetto Cindy Estis Green, co-founder and CEO, Kalibri Labs Jason Thielbahr, SVP revenue optimization and distribution services, Red Lion Hotels Kevin May, editor and moderator, Tnooz Gene Quinn, CEO and producer, Tnooz This webinar took place on Thursday 9 October 2014
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Cutting-edge revenue strategies for hotels
- 1. Cutting-edge revenue strategies for hotel managers Webinar 9 October 2014
- 2. Your hosts Kevin May Editor & moderator Gene Quinn CEO & producer
- 3. K Your panelists Marco Benvenuti Chief Analytics Officer and Co-founder Duetto Cindy Estis Green CEO & Co-founder Kalibri Labs Jason Thielbahr SVP, Revenue and Distribution Red Lion Hotels
- 4. Cutting-edge Revenue Strategies for Hotels Marco Benvenuti Co-founder & Chief Analytics Officer Duetto
- 6. Traditional PricingBAR + Room Types Modifiers
- 8. Post OTA LandscapeCommissions Are Skyrocketing Source: 2013 HAMA Study & Kalibri Labs 0% 10% 20% 30% 40% 2009 2010 2011 2012 Commissions Total Revenue
- 9. Open Pricing
- 10. Room Types
- 11. Next FrontierCorporate Rates Current Landscape: Restrictive Clauses Non-yieldable, fixed rates Last Room Availability / inability to close Sub-optimal yielding strategies Frequent unavailability Future: Open Pricing Optimal hotel revenue strategy Market transparency Better Corporate Rate availability
- 12. Next FrontierCorporate Rates: Today $109 Weekday / $149 Weekend - ROH Last Room Availability
- 13. Next FrontierCorporate Rates: Tomorrow $99 Weekday / $149 Weekend Flat – Yieldable
- 14. 10/9/2014 14 Analysis of hotel costs Cindy Estis Green, CEO and Co-founder cindy@kalibrilabs.com
- 15. Booking Brands and Stay Brands 15
- 16. 0% 5% 10% 15% 20% 25% 30% 35% 40% 2009 2010 2011 2012 Room Revenue Total Revenue Total S&M Commissions Total Acq Costs Commissions Rise at 2x the Rate of Revenue Growth (retail commissions only) Commissions Total Revenue © 2013 Kalibri Labs Source: HAMA Study 2013-14
- 17. Contribution to Operating Expenses and Profit Ranges − NYC 2012 Cost Type Low High Commissions Only 10% 20% Commissions + Sales/Marketing 20% 30% © 2013 Kalibri Labs
- 18. Hotel Business Acquisition Costs Commissions and Transaction Fees (buying) Sales and Marketing Expenses (shopping) 10/9/2014 18
- 19. 10/9/2014 19
- 20. Contribution by Channel Commissions and Transaction Fees Erode the Revenue that Flows Through to Profit COPE: 86.7%
- 21. Net RevPAR NYC Hotel 2013 vs. 2012 10/9/2014 21 +1.5% -.50% 91 92 93 94 95 96 97 98 99 100 101 RevPAR Net RevPAR Last Year This Year
- 22. Sales and Marketing Efficiency How much revenue is generated for every $1 spent in Sales and Marketing? 22 $11.60 $11.80 $12.00 $12.20 $12.40 $12.60 $12.02 $12.49 $12.50 NYC-Luxury Comp Set My Hotel Revenue Sales and Marketing Expense Minus Commissions and Transaction Fees
- 23. Acquisition Costs by Category 10/9/2014 23
- 24. JASON W. THIELBAHR SVP, REVENUE AND DISTRIBUTION RLHC JASON.THIELBAHR@REDLION.COM +1 509 723 7251
- 25. LOCATIONS
- 26. 26 NEW BRAND RLH RLI&S SEGMENT Full Service Full Service Select Service CATEGORY 3-3.5 stars 3-3.5 stars 3 stars SERVICE Upscale Midscale w/ Midscale no F&B F&B AVERAGE SIZE 125-450 125-450 80-200 keys keys (market Keys (market depending) depending) NUMBER Coming 42 12 OF PROPERTIES Soon! TARGET Radisson, Holiday Inn, Comfort Inn, COMP SET Wyndham, Best Western, Country Inn & Suites Crowne Plaza, Doubletree Hampton Inn BRAND SUMMARY
- 28. 28 ABOUT RLHC 06 LEADERSHIP 12 MARKETING REVPAK 16 LOYALTY PROGRAM 27 RED LION HOTELS 36 TIMELINE & CONTACT 71 OPPORTUNITY 61 SIGNATURE MOMENTS 56 NEW BRAND 47 RED LION INN & SUITES 41 The RevPak Guest Management System has a singular focus on 3 core objectives: 1. Engage Customers 2. Increase Bookings 3. Measure Results Its integrated platform of custom applications is designed to provide a single view of all RLHC customers and accounts for 1-to-1 Marketing Duetto Revenue Management System Customer Direct Voice BI Portal Adobe Omniture Web Analytics Compass Sales Force Automation Revinate OPERA Business Intelligence Serenata CRM Windsurfer CRS
- 29. 29 ABOUT RLHC LEADERSHIP 12 MARKETING REVPAK 16 LOYALTY PROGRAM 27 RED LION HOTELS 36 TIMELINE & CONTACT 71 OPPORTUNITY 61 SIGNATURE MOMENTS 56 NEW BRAND 47 RED LION INN & SUITES 41 Duetto Revenue Management System Customer Direct Voice BI Portal Adobe Omniture Web Analytics Compass Sales Force Automation Revinate OPERA Business Intelligence Serenata CRM Windsurfer CRS Lag Measures: Forecasting Accuracy E-Commerce Mix Premium Retail Mix Call Center Conversion Sell-out Effectiveness Rate Parity Reputation Management Organic Search Rankings Member Profile Emotional Loyalty
- 30. 30 DYNAMIC RATE MARKETING Dynamic Rate Marketing allows real-time hotel inventory availability and pricing to be featured in various marketing initiatives. Meta Search Email Marketing Travel Ads Network Website Merchandising SEM/Paid Search
- 31. WE ARE MOVING QUICKLY TOWARDS THAT BRIGHTER HORIZON 31
- 32. Thank you! Send your questions and comments to kevin@tnooz.com Replay and presentation of webinar will be available on www.tnooz.com
Editor's Notes
- An alarming trend is that commissions paid to OTAs and other intermediaries is skyrocketing, and growing at almost twice the rate of revenue. This is indicative of too much focus on gross revenue versus net revenue. Hotels are giving up far too much of their profit margin to intermediaries, and not focused enough on customer acquisition costs through various channels.
- A new class of brands in travel—the booking brands. This bifurcation of brands where booking brands are the “go-to” place for consumers has caused a steep rise in acquisition costs. Consumers pass through the booking brands before even deciding between the stay brands. Stay brands pay to compete for bookings then pay all over again to compete on the stay experience.
- Hotels in NYC were paying 10-20% of room revenue for commissions only; when adding S&M expense, these hotels paid 20-30% of room revenue for total acquisition costs. And…these costs (according to the HAMA study) are rising at 2x the rate of revenue growth. This is unsustainable. These costs have to be managed.
- Costs are categorized in two buckets—the direct purchase-related expenses associated with buying and the costs incurred associated with shopping like media, social media, and sales payroll/benefits. The direct Commissions/Trans Fees are associated with the channel in which the purchase was made. Its unambiguous and clear. The S&M costs associated with the shopping are not attempted to connect to specific channels since they may be across multiple channels and would be artificially assigned if associated with one channel so they are looked at in aggregate and compared to total and room revenue only (not assigned by channel).
- RevPAR may appear to be growing, but if you examine net RevPAR (revenue net of acquisition costs), you may find that it is moving counter to top line revenue. In our prototype system, we had many comp sets where the #1 hotel in RevPAR index dropped to #2 or #3 in their comp set when compared on the basis of Net RevPAR.