The Taj Group of hotels implemented a revenue optimization software to improve profits. Initially piloted at the Taj Mahal Palace in Mumbai, the software helped increase the Taj's gross revenue from Rs. 699.16 crore in 2003-2004 to Rs. 873.24 crore in 2004-2005 through more accurate forecasting and pricing of rooms. The software also helped boost the Taj's net worth, profit before tax, and profit after tax over the same period. Looking to expand internationally, the revenue optimization software will be increasingly important for the Taj Group to maximize profits across its growing portfolio of hotels.

1. HITTHE
SUITE SPOT
by:
parth arora
OUP

2.  Conventional wisdom has it that a hotel
should optimize its revenue by increasing
room occupancy.
 TheTaj group of hotels was on top of this
game But conventional wisdom isn't always
right.Their revenue optimisation software
implementation came to the rescue.
 A part of theTata Group,Taj Hotels Resort
and Palaces has its business spread across 12
countries.
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3.  Case study Highlights
 Focusing on the bottom line
 Guesswork out of Revenue Optimization
 How Shukla convince RO is Important
 The growth ofTaj Group in Financial terms
 Importance Of RO
 Conclusion
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4.  TheTAJ Palace is only Indian Hotel to be
awarded with the Best Business Hotel in Asia
in 1998
 The gross revenue ofTaj shot up from Rs.
6,99.16 crore in 2003-2004 to Rs. 873.24 crore
in 2004-2005.
 TAJ plans to invest in the range of Rs. 225
crore to 4500 crore to take theTAJ brand to
new markets overseas.
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5.  Revenue optimization, as the name
suggests, uses optimization techniques
to enable CIOs turn their IT prowess to
do what every CFO wants them to do—
make more money and have an impact
on the bottom line.
 Some companies tend to treat IT like a stick to
beat back untamed costs. But revenue
optimization defies this cost-cutting
role and enables companies to use IT to
earn more revenue and make a positive
difference to the bottom line.
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6.  This is the sort of logic that
convinced theTaj to try out revenue
optimization software. Initially, a
pilot project was rolled out at theTaj
Mahal Palace in Mumbai.
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7.  Forecasting, however, is always a tricky business,
and you can never be sure about how accurate your
predictions will be. It is a double-edged sword.
Wrong assessments have the ability to reduce the
earning potential of theTaj group.
 This is exactly what theTaj was doing in the pre-RO
era-in those days, managers used Excel spread
sheets in order to do the calculations but the need
for a dedicated revenue optimization system, which
was more closely aligned with the property
management system.
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8.  The board understands the importance of
technology, and once he showed them the cost
benefits, they readily agreed.
 Results are showing up onTaj’s balance sheet—
as expected.The gross revenue of theTaj shot up
from Rs 699.16 crore in 2003- 2004 to Rs 873.24
crore in 2004-2005, a respectable leap of around
25 percent. Correspondingly, the net worth of
the group went up by over 27 percent, from
887.73 crorein 2003-2004 to Rs 1,130.39 crore in
2004-2005.
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9.  Profit before tax at Rs 141.68 crore and profit
after tax at Rs. 105.86 crore were also
significantly higher by 77 percent and 74
percent respectively for the same period.
 Room income in 2004-2005 was higher than
the previous year by 34 percent and the
average room rate (ARR) also increased by 24
percent over the previous year, contributing
75 percent of the total increase in room
income.
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10.  RO works well in an industry where demand
outstrips supply.
 Revenue optimization also helps service
customers better in an indirect manner
because the money that it helps to earn can
be ploughed back into the business to
provide better services to customers.
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11.  TheTaj has introduced a variety of services
for its guests, like personalized butler service,
enhanced concierge services, and door
associate program. Such initiatives are
strengthened by revenue optimization
because the company will be able to use it to
know exactly who will appreciate or require
such customized service.
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12.  Revenue optimization for theTaj gains greater
importance in light of the fact that it is planning
to expand outside India at an accelerated pace.
 Taj unveiled plans to acquire five-star properties
in China, Australia, United States, Europe,West
Asia and Africa.
 In March 2006, the company said that it plans to
invest Rs 100 crore in the next fiscal to setup
budget hotels in various locations across the
country.
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13.  IT’s swift march, its only a matter of time
before the two are rolled together. One day,
revenue optimization linked with purchasing
costs and loyalty programs, just might enable
theTaj to come up with perfect personalized
holiday offer that will live up to the name of
theTaj.
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14. THANKYOU
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