Use Revenue Management to Boost Profit at your Independent Hotel
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Revenue management is a critical component to running an efficient and profitable hotel today. It is especially important for independent hotels, who don't benefit from the resources and negotiating power that come with a big brand. This webinar will take you from basic practices to advanced pricing strategies that will allow you to better manage distribution complexity and drive more profitability. WEBINAR AGENDA: Learn the basics of revenue management Understanding customer acquisition costs and the dynamic digital landscape Common pricing mistakes to avoid Use Open Pricing to better manage distribution Automate functions with alerts and price rules
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Use Revenue Management to Boost Profit at your Independent Hotel
- 1. Use Revenue Management to Boost Profit at your Independent Hotel November 24, 2015
- 2. To Tweet about the Webinar…… 2 Founded by Industry Leaders World-Class Technology Development Committed to Customer Success @OptimizeDemand
- 3. About Duetto 3 Founded by Industry Leaders World-Class Technology Development Committed to Customer Success
- 4. New Partnership 4 Founded by Industry Leaders World-Class Technology Development Committed to Customer Success
- 5. Dan Yacker VP, Global Strategic Alliances Duetto delivers cloud-based revenue strategy to hotels, allowing them to maximize profits through actionable data to better manage pricing, revenue and business mix decisions. Past Experience:
- 6. Agenda ▍ Learn the basics of revenue management ▍ Common pricing mistakes to avoid ▍ Use Open Pricing to better manage distribution ▍ Automate functions with alerts and price rules 6
- 7. Revenue Management Introduction The primary aim of Revenue Management is selling the right product to the right customer at the right time for the right price — and on the right channel. Inventory / Capacity Demand Price $
- 8. Do I need revenue management? The 7 mistakes you can’t afford to make
- 9. #1 Selling out too soon
- 10. #2 Not changing your rates
- 11. #3 Pricing by gut feel
- 12. #4 Reacting to competition price changes
- 13. #5 Selling rooms on first come first served basis
- 14. #6 Linking different price points
- 15. #7 Not adjusting pricing 24/7
- 16. What is Required to Thrive? 16
- 17. How to Thrive Start Practicing Revenue Judo 1. Redefine revenue strategies 2. Improve your forecast 3. Implement an Open Pricing strategy 17
- 18. Revenue Management A systematic approach to segmenting, forecasting and pricing that can drive efficiency and profitability.
- 19. 19 5 Key Reasons to Forecast Staffing Product Inventory Development Work Performance Evaluations Pricing
- 20. Better Data = Better Forecasts Reviews & Social Media Competitor Pricing Data Booking & Reservation Data Web Shopping Regrets & Denials Weather Air Traffic Traditional Revenue Management Traditional Revenue Management
- 21. 21 One-Rate Seasonal Weekday/Weekend BAR BAR by LOS Open Pricing Pricing Approaches
- 23. Pricing Types 23 Seasonal Best Available Rate (BAR)
- 24. Pricing Types 24 Seasonal Best Available Rate (BAR) BAR by LOS
- 25. Pricing Types 25 Seasonal Best Available Rate (BAR) Open Pricing BAR by LOS
- 26. Regain Control ▍ Independently price every single segment, offer and room type ▍ Maximize revenue over high demand and need periods ▍ Keep all channels open and benefit from the “billboard effect”
- 27. BAR Pricing = Lost Opportunity 27 BAR 2 $200 BAR 1 $100 Retail/ Transient Rate Code: BAR 15% With BAR Pricing comes static: - Room Type Differentials - Discounts/ Offers 45% Occupancy75% BAR 3 $300
- 28. Traditional Pricing Day 1 Day 2 Day 3 Day 4 CAPACITY AAA Promo Rate 10% 20% ✔ ✔ AAA Promo Rate 10% 20% ✔ ✔ ✖ AAA Promo Rate 10% 20%✖ AAA Promo Rate 10% 20% ✔ ✖
- 29. Open Pricing Day 1 Day 2 Day 3 Day 4 CAPACITY AAA Promo Rate 10% 20% ✔ ✔ AAA Promo Rate 10% 20% ✔ ✔ 10% 20% ✔ AAA Promo Rate✔ AAA Promo Rate 10% 20% ✔ ✔
- 30. 30 How an RM system will impact your job
- 31. Review and Monitor Alerts Reviewing Revenue Opportunities Quicker decisions OTB, PickUP, Forecast, Price Recommendations (LIVE from PMS) Integrated data such as STR, Competitor data, Online Reputation, etc can all be seen on the same platform. Price recommendations according to setup business rules & forecast are directly sent back to PMS ! An RMS gives you back time, so your team can be more strategic and less operational 4 hours on the same platform – no more Excel RM Daily Tasks
- 32. No manual report running and updating spreadsheets One platform for all! No more updating several excel spreadsheets No Speed Constraints! .No more Excel and logging in to various platforms Saving time and removing the risk of human error Your team can be more Strategic and less operational
- 33. How an RM system will impact your daily job ▍ No manual report running and updating spreadsheets ▍ Near real-time data ▍ Accurate data ▍ Easy user interface ▍ Flexible reporting
- 34. Exploring the ROI of a revenue management system Hard ROI ▍ RMS increases in RevPAR through OCC and ADR
- 35. Exploring the ROI of a revenue management system Soft ROI – Save time ▍ No more manual data entry or reports ▍ Customized reports and alerts ▍ Spend more time being strategic
- 36. Questions?
Editor's Notes
- Even though revenue management Is a broad topic the focus of the discussion will be price optimization.
- What is Forecasting? Types of Forecasting (Const. v Unconst., seasonal impacts, etc.) What are “rolling” forecasts Why Forecast? Pricing (Group v non-group business) Staffing Product Inventory Development work – maintenance schedules Performance evaluations: incentive structures Do macro and micro trends impact forecasts? Lost Business Air Travel Review Data How do you evaluate forecast accuracy? MSE MSPE MAD MAPE Budgeting Daily & Monthly The infamous “budget season” Questions
- Perishable inventory optimization Influences operations (housekeeping), S&M, finance, etc. rental cars, airlines, hotels, stadiums (tickets)
- Managing booking curves and setting appropriate prices 2. Managing distribution channels
- If every room is filled, you did your job right? Are you making as much as you could or should be? Goal: incrementally raise rates as the day of arrival comes Goal: sell your last room on the last day! Elastic Demand
- Are your rates static throughout the year or even season to season? Rates should go up and down based on pace and demand Heavy on business travelers: probably have higher rates during week than on weekends More price points you offer, the more revenue you can capture….up or down!
- If your relying on gut feel, you’re bound to make mistakes “I remember last year this same weekend did very well.” If you’re only getting reports from the property mgt system you’re not getting accurate view of historical & future demand Forecast should have: historical data, pace of bookings and competitive info More data the better: reviews, weather, air traffic, etc
- An important piece but only a piece; pay attention but don’t follow every move Competitor raises rates 6 months out? Could be wedding If every comp hotel making changes; may need to listen
- Not all reservations and customers are equal 2 guests may pay same rate, but one staying for 3 nights High demand? Close a low-cost channel but lose a valuable customer willing to stay for many days Marathon example: shoulder dates Room types too: sell a King to someone that doesn’t care but then someone that will pay comes after
- More frequently you change your rates based on supply and demand the more revenue you capture Managing all the fluctuating rates by hand very difficult so many hotels use BAR pricing for simplicity BAR = set one rate and all others move up and down together Unlink: more prices, some willing to pay more, no closed channels
- No one likes to think revenue mgt is a 24-hr job but it is Could be devastating for hotels with high weekend business Not unusual to get 20+ bookings on a Fri night; rooms would be sold for well under optimum price Not fair to pass this off to front desk personnel
- Even if you’re doing everything right, it’s hard in today’s complex digital marketplace. Especially for an independent.
- The solution really lies in a switch in mindset. Technology enables people to make smarter decisions and it is a necessary component but the most important thing is the philosophical change, the change in culture and processes within hotel companies to get out of a very stove piped environment where the digital marketing, the loyalty marketing, revenue managers, distribution managers and sales managers don’t have a common language. And don’t have access to the same data to make smarter decision as a group.
- Managing booking curves and setting appropriate prices 2. Managing distribution channels
- Pricing (Group v non-group business) Staffing Product Inventory Development work – maintenance schedules; renovations Performance evaluations: incentive structures Ops – number of sell out days RM – RevPAR increase S&M – group rooms sold, total rev. to hotel
- ADD BLUE BAR WITH PRICING
- BAR – derived rates
- BAR – derived rates
- -Open Pricing: Duetto enables fully dynamic, open pricing, which means you have the flexibility to independently price every single segment, channel, room type, and offer to maximize revenue. -Open Pricing enables you to keep all your OTA channels open instead of closing them off at certain occupancy levels. This allows hotels to continue to have offerings show up through various channels regardless of occupancy or price. REMEMEBER EARLIER I MENTIONED UNCONTRAINED DEMAND which again means….” “
- This can all be done manually, but it takes time and effort. A revenue management system can make it easy for you so you can spend your time on what really matters.
- T – this is an “in summary” page, highlighting the key points from the last four slides
- Creative – can we get an image of a generic chart showing increases?
- Creative – can we get an image of a business person calm and under control, maybe looking at his watch? T- this is an important point, we should spend some time explaining it, perhaps with an example or two.
- Even though revenue management Is a broad topic the focus of the discussion will be price optimization.