Introduction to  Hotel Revenue   Management          Earn Moreby Selling the Same   Presented by Tomeu Pons   7 May 2013 |...
Introduction to Revenue Management Presentation                  The main objective of this seminar is to understand the p...
Introduction to Revenue Management Presentation                                                 Professor: Tomeu Pons tome...
Introduction to Revenue Management Agenda                            •   Definition                            •   Price  ...
Introduction to Revenue Management Definition               Revenue Management is a commercial management technique       ...
Introduction to Revenue Management Why use RM?               Revenue Management is a strategy we can use in response to:  ...
Introduction to Revenue Management Definition               Revenue Management is a method of managing sales of hotel     ...
Introduction to Revenue Management Basic Elements of Revenue Management               Basic elements of Revenue Management...
Introduction to Revenue Management Improve RevPAR and GopPAR                                                              ...
Introduction to Revenue Management Desired equilibrium in response to a changing market                                   ...
Introduction to Revenue Management The Customer               The customer is the most important factor in determining pri...
Introduction to Revenue Management The Product               The product is another of the key factors.               What...
Introduction to Revenue Management The Price               Although the price seems to be a lever we control, this is     ...
Introduction to Revenue Management The Moment of the Reservation               The moment of reservation is a key element ...
Introduction to Revenue Management                                                           How it was born …Hotel Revenu...
Introduction to Revenue Management Where it was born, how and what need it met…Hotel Revenue Management Seminar – Miami Be...
Introduction to Revenue Management Where it was born, how and what need to it meet               These sales techniques we...
Introduction to Revenue Management  An exampleHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013   Presented ...
Introduction to Revenue Management Variability of industry pricingHotel Revenue Management Seminar – Miami Beach, FL - 7 M...
Introduction to Revenue Management Evolution of Tourism Pricing Management               History of Pricing               ...
Introduction to Revenue Management Definition               Pricing               Techniques to determine prices are devel...
Introduction to Revenue Management  Pricing                                                   Where do prices come from?  ...
Introduction to Revenue Management Pricing               Techniques to set the prices of a good or a service…             ...
Introduction to Revenue Management Pricing – Where do prices come from?               In the mind of the consumer, they ar...
Introduction to Revenue Management  Pricing – An Efficient Price                    The efficient price is the maximum con...
Introduction to Revenue Management                         Now that we understand that prices are factors affected by     ...
Introduction to Revenue Management  How prices were set and how prices are currently set                   Without Yield –...
Introduction to Revenue Management  Real impact on hotels               A hotel has 200 rooms…               If they apply...
Introduction to Revenue Management  Real impact on hotels                          1 Hotel x 100 rooms x 365 days =       ...
Introduction to Revenue Management  Real impact on hotels                Pricing Mix                                      ...
Introduction to Revenue Management                                                How clients agree to prices…Hotel Revenu...
Introduction to Revenue ManagementConsumer BehaviorHotel Revenue Management Seminar – Miami Beach, FL   7 May 2013   Prese...
Introduction to Revenue Management Fixed Pricing (static)Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013  ...
Introduction to Revenue Management Booking EngineHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013   Present...
Introduction to Revenue Management Dynamic Pricing – ActionsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 201...
Introduction to Revenue Management Distribution – Direct or IndirectHotel Revenue Management Seminar – Miami Beach, FL - 7...
Introduction to Revenue Management Maintaining Indirect DistributionHotel Revenue Management Seminar – Miami Beach, FL - 7...
Introduction to Revenue ManagementBillboard EffectHotel Revenue Management Seminar – Miami Beach, FL   7 May 2013   Presen...
Introduction to Revenue Management                                                 ImplementationHotel Revenue Management ...
Introduction to Revenue Management  Definitions          Revenue Manager:          Revenue Management:          Yield Mana...
Introduction to Revenue Management Corporate PolicyHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013   Prese...
Introduction to Revenue Management When is it appropriate to apply ‘Yield’          To implement RM we need:          •   ...
Introduction to Revenue Management Main techniques               The main RM tools:               •   Availability managem...
Introduction to Revenue Management How we set prices               The key point is to have the ‘right price’.            ...
Introduction to Revenue Management Management of Availability               The correct management of availability is one ...
Introduction to Revenue Management Types of Rates               All hotels offer a variety of rate types. The trend is to ...
Introduction to Revenue Management  Price Matrix                                        RACK                              ...
Introduction to Revenue Management Price Matrix x Occupation                             Demand Profile                Nov...
Introduction to Revenue Management Total Demand, Unconstrained Demand               The total demand of a room for a speci...
Introduction to Revenue Management Segmentation of the Market/Consumers               Market segmentation is the study of ...
Introduction to Revenue Management Segmentation of the Market/Consumers               In order to investigate the segmenta...
Introduction to Revenue Management Price Elasticity               Price elasticity measures the effect changes in price ha...
Introduction to Revenue Management Segmentation of the Market/Consumers               Example:Hotel Revenue Management Sem...
Introduction to Revenue Management Demand Forecasting               Investigation based on a calendar that allows us to kn...
Introduction to Revenue Management Demand Forecasting               Forecasting consists of the estimation and analysis of...
Introduction to Revenue Management Demand Forecasting               To be able to forecast, it’s necessary to know histori...
Introduction to Revenue Management Objective of Forecasting                                         Why do we make forecas...
Introduction to Revenue Management Forecasting: Behavior Patterns of Reservations               Booking Pace              ...
Introduction to Revenue Management Pick-Up               The pick-up is the figure that tells us today how many confirmed ...
Introduction to Revenue Management Pick-Up       Difference in the number of reservations between one date and another.   ...
Introduction to Revenue Management Forecasting Elements               To record:               •   Objectives reached vs. ...
Introduction to Revenue Management Demand Curve vs. Advanced Reservation                                                  ...
Introduction to Revenue Management Demand CurveHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013   Presented...
Introduction to Revenue Management Groups               We should take note of all Group requests in our statistics, so we...
Introduction to Revenue Management Demand CurveHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013   Presented...
Introduction to Revenue Management Tour Operators               Tour operator contracts are the most difficult to apply RM...
Introduction to Revenue Management Shoulder Days               What is the impact of closing sales for a specific day?    ...
Introduction to Revenue Management                                           What actions should we take?Hotel Revenue Man...
Introduction to Revenue Management Tactics – How to act during high demand               High Demand               • Close...
Introduction to Revenue Management Tactics – How to act during low demand               Low demand:               • Sell a...
Introduction to Revenue Management Consistency                          Consistency in applying prices…                   ...
Introduction to Revenue Management Tactics – Four Revenue Management               Principal points to remember:          ...
Introduction to Revenue Management Questions               When should we reject a sale?               Is it useful to kno...
Introduction to Revenue Management  How do we measure our Factor Yield / RM                                    Room Revenu...
Introduction to Revenue Management  How do we measure our Factor Yield / RM                                 Total Revenue ...
Introduction to Revenue Management Elements of Analysis               We have three levels of analysis: daily, monthly and...
Introduction to Revenue Management Benchmarking               Benchmarketing is the study of the competition to discover h...
Introduction to Revenue Management Benchmarking                 My Hotel vs. My Competitors                 Who manages th...
Introduction to Revenue Management Daily Prices               To manage our prices taking into account the prices our     ...
Introduction to Revenue Management Place your hotel: market vs. your value               All of the commercial policies an...
Introduction to Revenue Management Place your hotel: market vs. your value               Evaluate your hotel and your comp...
Introduction to Revenue Management Place your hotel: market vs. your value - SWOT                                         ...
Introduction to Revenue Management Market Share Report               This study helps us to understand our results compare...
Introduction to Revenue Management Distributors               Our presence with distributors is key. We can consult them a...
Introduction to Revenue Management How to be present. Distributors and the exponential effect.                            ...
Introduction to Revenue Management Many published rates and many products               An establishment should have howev...
Introduction to Revenue Management  Pricing Matrix                                        RACK                            ...
Introduction to Revenue Management Optimize your supplementary products               Clients for the most part consume on...
Introduction to Revenue Management Upselling               Upselling is another tool that helps us to achieve good results...
Introduction to Revenue Management Price Parity               Although price parity is a model criticized by some, others ...
Introduction to Revenue Management Commercial Parity               Commercial parity is based on the commercial parameters...
Introduction to Revenue Management Control Price Parity               Controlling price parity is very important and affec...
Introduction to Revenue Management Parity Disruptors               Some companies willingly perform actions to cause “Pari...
Introduction to Revenue Management Overbooking               Overbooking isn’t an effect or a consequence.               I...
Introduction to Revenue Management Overbooking          Calculate your level of Overbooking and evaluate risk vs. Profit  ...
Introduction to Revenue Management  Parameters to measure efficacy               REVPAR: Room Revenue per Available Room  ...
Introduction to Revenue Management  When we obtain more by applying RMHotel Revenue Management Seminar – Miami Beach, FL -...
Introduction to Revenue Management  Where to obtain more by applying RMHotel Revenue Management Seminar – Miami Beach, FL ...
Introduction to Revenue Management  How much you’ve obtained by applying RMHotel Revenue Management Seminar – Miami Beach,...
Introduction to Revenue Management                           Practice: How to determine our pricesHotel Revenue Management...
Introduction to Revenue Management  Pricing Matrix               Pricing Matrix – General                                 ...
Introduction to Revenue Management  Pricing Matrix               Pricing Matrix – Very Low Season                         ...
Introduction to Revenue Management  Pricing Matrix               Pricing Matrix – Low Season                              ...
Introduction to Revenue Management  Pricing Matrix               Pricing Matrix – Mid-Season                              ...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
Tutorial introduction to revenue management for hotels hospitality seminar  what is revenue management in hotel industry c...
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Tutorial introduction to revenue management for hotels hospitality seminar what is revenue management in hotel industry course

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The main objective of this seminar is to understand the purpose of revenue management in both technological and commercial terms.
With this information, a hotel can evaluate, develop and optimize its pricing strategy with the goal of maximizing profits.

Revenue Management is a method of managing sales of hotel inventory by applying yield management techniques.

Basic elements of Revenue Management used to manage inventory:

Historical data – statistics, demand and trends
Forecasts
Price management tools
Overall strategy
Pricing policies

The main factors in setting prices are:

Production costs
Market
Competition
Demand
Product positioning

tutorial Introduction to Revenue Management for Hotels Hospitality seminar- what is revenue management in hotel industry course

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Tutorial introduction to revenue management for hotels hospitality seminar what is revenue management in hotel industry course

  1. 1. Introduction to Hotel Revenue Management Earn Moreby Selling the Same Presented by Tomeu Pons 7 May 2013 | Miami Beach, FL
  2. 2. Introduction to Revenue Management Presentation The main objective of this seminar is to understand the purpose of revenue management in both technological and commercial terms. With this information, a hotel can evaluate, develop and optimize its pricing strategy with the goal of maximizing profits.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 2
  3. 3. Introduction to Revenue Management Presentation Professor: Tomeu Pons tomeupons@gmail.com Collaborating Professor – Turisme Sant Ignasi TSI, Fundación ESADE Fundació Tourism Education Manager – Cibernarium, Barcelona Activa Collaborating Professor – University of Barcelona E- Educated in Hospitality, Marketing, E-commerce and IT Systems in Hotelerí Escola Hotelería UIB, ESADE, La Salle URL and UPC Chief Operating Office – Flamingo Hotelier Previously, Consultant ,Director of Marketing and CEO in companies companies such as The Perfect Hotels, Sercotel, Hotusa and SAPHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 3
  4. 4. Introduction to Revenue Management Agenda • Definition • Price • Effects on a hotel • Distribution: direct and indirect • When it is used • Factors • Tactics • Calculating prices • Reporting, statistics and tools • Exercises • Glossary • Exam • NotesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 4
  5. 5. Introduction to Revenue Management Definition Revenue Management is a commercial management technique that helps us to sell the right product at the right moment at the right price to the right client. Wikipedia: http://en.wikipedia.org/wiki/Revenue_managementHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 5
  6. 6. Introduction to Revenue Management Why use RM? Revenue Management is a strategy we can use in response to: • Increased competition • Increase in channels of distribution • Transparency in prices • Increase in special promotions and discounts • Decrease in expected response time to clients • 80% of sales are influenced by online channelsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 6
  7. 7. Introduction to Revenue Management Definition Revenue Management is a method of managing sales of hotel inventory by applying yield management techniques Revenue Management: Commercial management technique that helps us sell the right product at the right moment at the right price to the right client Yield: The techniques, formulas and strategies hotels use to manage inventory, price and sales policies to maximize revenue generated from the sale of this inventoryHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 7
  8. 8. Introduction to Revenue Management Basic Elements of Revenue Management Basic elements of Revenue Management used to manage inventory: • Historical data – statistics, demand and trends • Forecasts • Price management tools • Overall strategy • Pricing policies With the above, we can address: • Fixed and perishable inventory • Anticipated sales • Customer segmentationHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 8
  9. 9. Introduction to Revenue Management Improve RevPAR and GopPAR RevPAR RevPAR GopPAR GopPAR Increase Increase Increase Increase your your occupancy occupancy Rooms Rooms ADR ADR Maximize Maximize Revenue Revenue and profit and profitHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 9
  10. 10. Introduction to Revenue Management Desired equilibrium in response to a changing market Sell at Sell at high prices low pricesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 10
  11. 11. Introduction to Revenue Management The Customer The customer is the most important factor in determining price. Each client is different and has their own motivation: • Different motives • Different expectations • Willing to pay different prices • Interested in different products To understand this environment we must ‘segment’ the market, and for each of these segments we must adapt: • Interested in different products • Pricing • Reservation terms • Marketing along the path-to-purchaseHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 11
  12. 12. Introduction to Revenue Management The Product The product is another of the key factors. What is it about our product that drives sales? • Hotel • Destination • Experience • Rooms • Services Once we determine this, we can effectively develop our product: Create additional room types? Create a range of price points?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 12
  13. 13. Introduction to Revenue Management The Price Although the price seems to be a lever we control, this is completely false: - Price is determined by demand - Prices rise and prices fall - High seasons and low seasons - Years with low/no demand - Channels with low/no demand - Competition, local and international affects demand However, there are techniques and factors that enable us to increase prices.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 13
  14. 14. Introduction to Revenue Management The Moment of the Reservation The moment of reservation is a key element in the management of prices and quite often it isn’t take seriously enough It’s an important moment for the customer just as much as it is an important moment for the hotel. Both must work together in the same way. Many techniques exist for both players. Forecasts based on historical data help us a great deal.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 14
  15. 15. Introduction to Revenue Management How it was born …Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 15
  16. 16. Introduction to Revenue Management Where it was born, how and what need it met…Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 16
  17. 17. Introduction to Revenue Management Where it was born, how and what need to it meet These sales techniques were developed during the middle of the 20th century by American companies. Once their information systems were computerized, they were able to apply these methods effectively. Companies could sell airplane tickets at different prices. They realized that different clients, at different times, with different motivations, were willing to pay different prices. To be able to ‘predict’ how much clients were willing to pay for a ticket, they developed ‘Yield’ techniques that allowed them to fixed these prices. It was important for them to computerize and collect information about supply and demand.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 17
  18. 18. Introduction to Revenue Management An exampleHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 18
  19. 19. Introduction to Revenue Management Variability of industry pricingHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 19
  20. 20. Introduction to Revenue Management Evolution of Tourism Pricing Management History of Pricing The total acceptance and integration of the Internet as a major sales channel changed the way hotels price their inventory: 2003 – Some Majors changed to dynamic pricing 2004 – Fixed Consortia pricing disappeared 2005 – Decrease number of Categories and continued change to dynamic pricing 2006 – Some corporate accounts are already dynamic 2007 – BAR is implemented completelyHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 20
  21. 21. Introduction to Revenue Management Definition Pricing Techniques to determine prices are developed in the heart of each company. Setting prices can vary depending on the strategy of the company. The main factors in setting prices are: • Production costs • Market • Competition • Demand • Product positioningHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 21
  22. 22. Introduction to Revenue Management Pricing Where do prices come from? What are customers willing to pay? $ $ $ $Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 22
  23. 23. Introduction to Revenue Management Pricing Techniques to set the prices of a good or a service… Setting of prices can focus on anything from cost of production to consumer demand. From the point-of-view of marketing, an ‘efficient price’ is a price that is close to the maximum price a consumer is willing to pay. In economic terms, it is a price that transfers the most value obtained by the consumer to the producer.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 23
  24. 24. Introduction to Revenue Management Pricing – Where do prices come from? In the mind of the consumer, they are comparing different options (substitute products), taking into consideration their budget and the benefits of the purchase (e.g. pleasure). This determines, in their minds, the right price they’d pay. For a company to increase profitability from sales, they must know in each moment what is the approximate maximum price a customer is willing to pay for the product or service. To increase the consumers’ perceived value of our products and services, we must take in to account factors such as product, price, distribution and promotions.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 24
  25. 25. Introduction to Revenue Management Pricing – An Efficient Price The efficient price is the maximum consumers are willing to pay. Prices are influenced by multiple factors… But they are only perceived as ‘the right price for me or not’Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 25
  26. 26. Introduction to Revenue Management Now that we understand that prices are factors affected by Now that we understand that prices are factors affected by multiple variables and are only perceived as multiple variables and are only perceived as ‘the right price for me or not’ ‘the right price for me or not’ We know we need to work with prices, adjust them and take We know we need to work with prices, adjust them and take advantage of them so they are perceived as ‘the right price for me’ advantage of them so they are perceived as ‘the right price for me’Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 26
  27. 27. Introduction to Revenue Management How prices were set and how prices are currently set Without Yield – Prices based upon cost Cost of Desired Cost of Production Distribution Profit $$ $$$ $$$$$ $$$$$ With Yield – Prices based upon demand Cost of Desired YIELD Cost of Production Distribution Profit Pr $$ $$$ $$$$$ $$$$$$ $$$$$$$$$$$$$$$$$$$$Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 27
  28. 28. Introduction to Revenue Management Real impact on hotels A hotel has 200 rooms… If they apply RM for each of their rooms and each room achieves an increase of €2, the impact on final results is significant. 200 rooms x 2$ = 400$/day x 365 days = 146.000$ 200 rooms x 3$ = 600$/day x 365 days = 219.000$ 200 rooms x 5$ = 1000$/day x 365 days = 365.000$Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 28
  29. 29. Introduction to Revenue Management Real impact on hotels 1 Hotel x 100 rooms x 365 days = 36,500 rooms x 1/3 = 12,166 rooms 12,166 x 3 $ = 36,498 $ 12,166 x 6 $ = 72,996 $ 12,166 x 9 $ = 109,494 $ TOTAL ANNUAL INCREASE = 218,988 $Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 29
  30. 30. Introduction to Revenue Management Real impact on hotels Pricing Mix Price Nº of RoomsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 30
  31. 31. Introduction to Revenue Management How clients agree to prices…Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 31
  32. 32. Introduction to Revenue ManagementConsumer BehaviorHotel Revenue Management Seminar – Miami Beach, FL 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com 32
  33. 33. Introduction to Revenue Management Fixed Pricing (static)Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 33
  34. 34. Introduction to Revenue Management Booking EngineHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 34
  35. 35. Introduction to Revenue Management Dynamic Pricing – ActionsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 35
  36. 36. Introduction to Revenue Management Distribution – Direct or IndirectHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 36
  37. 37. Introduction to Revenue Management Maintaining Indirect DistributionHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 37
  38. 38. Introduction to Revenue ManagementBillboard EffectHotel Revenue Management Seminar – Miami Beach, FL 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com 38
  39. 39. Introduction to Revenue Management ImplementationHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 39
  40. 40. Introduction to Revenue Management Definitions Revenue Manager: Revenue Management: Yield Management:Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 40
  41. 41. Introduction to Revenue Management Corporate PolicyHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 41
  42. 42. Introduction to Revenue Management When is it appropriate to apply ‘Yield’ To implement RM we need: • Fixed production of stock/products • Perishable product • Clear policy on dynamic pricing • Ability to update prices quickly • Reservations/sales occur within a time period • Ability to segment the market or groups of customers To manage RM actions, the involvment of Management, Sales and Reservations is required. Their must be a unified vision and mission, and agreed objectives. It’s necessary to collect information about demand: price paid, reservation dates, dates of consumption, quantity of demand, events in the destination or origen location, competitors’ prices, distributors…Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 42
  43. 43. Introduction to Revenue Management Main techniques The main RM tools: • Availability management • Categories • Groups • Reservation terms • Auto-Allotment • CTA, Close-to-Arrival • MinLOS & MaxLOS • Upselling • OverbookingHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 43
  44. 44. Introduction to Revenue Management How we set prices The key point is to have the ‘right price’. To determine the right price we take in to account: • Value of our product • Customers’ perceived value • Positioning • CompetitionHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 44
  45. 45. Introduction to Revenue Management Management of Availability The correct management of availability is one of the most important points of good RM Factors that affect availability include: • Reservation terms • Rates • Reservations not guaranteed • Pre-payments • Categories • Groups • Overbooking • Waiting lists • Peaks and valleys in planningHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 45
  46. 46. Introduction to Revenue Management Types of Rates All hotels offer a variety of rate types. The trend is to simplify them into ‘rate periods’ and apply to BAR ‘discount periods’. With the current system we lose competitivity and have to work more hours to organize our work. Rate types: • Published rates on hotel website, Booking… • Negotiated ECI, companies, groups… • Packaged, Expedia… • Opaque Atrapalo, Lastminute • Restricted cancellations, advanced payment, promotionsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 46
  47. 47. Introduction to Revenue Management Price Matrix RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90 Creation of numerous published rates that pass from one to the other in function of the level of occupation and expected demand, and we make if from the level of rates that we consider most opportune. ¿What is the BAR Best Available Rate?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 47
  48. 48. Introduction to Revenue Management Price Matrix x Occupation Demand Profile Nov - Mar Apr - Jun Jul - Oct BAR BAR BAR Occupation Rate Occupation Rate Occupation Rate Rate Base Base Rate Base Rate 215 230 250 High Demand >75% 205 >85% 215 >95% 235 180 195 215 190 215 235 Moderate Demand 65% 175 75% 205 75% 225 165 180 200 190 190 210 Low Demand 55% 170 65% 175 65% 195 150 165 185 140 150 170 Very Low Demand <50% 110 >55% 130 >55% 150 75 115 135Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 48
  49. 49. Introduction to Revenue Management Total Demand, Unconstrained Demand The total demand of a room for a specified day. This figure is independent of the physical capacity of the hotel. For the total registered demand for a product, it’s useful to have a system that permits ‘on-request’, including when all rooms are already sold. This demand will allow us to calculate the “Last Room Value”, or how much somebody is willing to pay for the last room in our inventory.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 49
  50. 50. Introduction to Revenue Management Segmentation of the Market/Consumers Market segmentation is the study of consumers and what their different motives may be for choosing our hotel. This allows us to to create different segments or groups of consumers according to their motives for the visit. To know these motives we must be able to analyze ways to increase the demand in each of these segments. We also must know the segments of our competitors and the destination in general to make comparisons.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 50
  51. 51. Introduction to Revenue Management Segmentation of the Market/Consumers In order to investigate the segmentation of the market and consumers, we must collect data: • Duration of stay • Motive for the stay – source and recipient • Motive to choose hotel • How long in advance did they book hotel • Revenue per room • Revenue per client • Distribution channel where booking was madeHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 51
  52. 52. Introduction to Revenue Management Price Elasticity Price elasticity measures the effect changes in price have on demand. Sometimes an increase in price causes a significant decrease in the demand and in other instances only a slight decrease. Elastic Demand Inelastic Demand • High competition • Low competition • Standard services • Differentiated servicesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 52
  53. 53. Introduction to Revenue Management Segmentation of the Market/Consumers Example:Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 53
  54. 54. Introduction to Revenue Management Demand Forecasting Investigation based on a calendar that allows us to know the demand that our product will have in the future. The objective is to forecast the periods of low demand and stimulate sales, as well as to know the periods of high demand in which we can increase rates. Use Google Calendar to collect all of the events that can influence consumption. This tool is easy to use and available to all of the team.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 54
  55. 55. Introduction to Revenue Management Demand Forecasting Forecasting consists of the estimation and analysis of future demand for a specific product or service using inputs such as historic sales, marketing estimates and promotional information. Price Waterhouse CoopersHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 55
  56. 56. Introduction to Revenue Management Demand Forecasting To be able to forecast, it’s necessary to know historic consumption data, referring to: • Consumption weekdays • Consumption during events: conferences, festivals… • Consumption during vacations • Clients – Business or Leisure • Changes in demand It can be easy to make a forecast. If you can, also make a forecast about your competitors and about the destination. This document will allow you to know the number of arrivals and departures, occupation by room and possibly revenue from other non-room sources. It’s a great tool to define internal objectives.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 56
  57. 57. Introduction to Revenue Management Objective of Forecasting Why do we make forecasts? • Measure demand • Forsee falls in demand • React to low demand • Define commercial strategy • Apply rates • Restrict sales • Control costs • Control commissions • Financial planning • Human Resources planningHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 57
  58. 58. Introduction to Revenue Management Forecasting: Behavior Patterns of Reservations Booking Pace The booking pace must be monitized for the current day and future days to ensure alignment with the forecast and to be able to react to any deviations from the forecast that occur. DailyPick-up The daily pick-up, and the ability to follow the rhythym of reservations must distinguish individuals and groups.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 58
  59. 59. Introduction to Revenue Management Pick-Up The pick-up is the figure that tells us today how many confirmed reservations we have for a specific day. This figure shows us in a detailed way, by day or room type, the % already sold. This figure allows us to guide our decisions to increase or maintain rates for a specific day and what we must already apply today. The ideal is to be able to analyze and act daily, in all distribution channels, with this information.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 59
  60. 60. Introduction to Revenue Management Pick-Up Difference in the number of reservations between one date and another. Example: Reservations made yesterday for the month of June.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 60
  61. 61. Introduction to Revenue Management Forecasting Elements To record: • Objectives reached vs. objectives set • Reservations on the books • Pick-up realized vs. expected pick-up • Expected segments • Average rate • Total revenue We should forecast: • Once per week for the next 4 weeks • Once per month for the next 3 months • Once per month every 3 months for the whole year • Once per year for the next yearHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 61
  62. 62. Introduction to Revenue Management Demand Curve vs. Advanced Reservation Individuals Companies FIT Groups -60 -30 -15 -5 Days before arrivalHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 62
  63. 63. Introduction to Revenue Management Demand CurveHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 63
  64. 64. Introduction to Revenue Management Groups We should take note of all Group requests in our statistics, so we can evaluate profitability and apply RM to group pricing. • Provider • Type of contract • Revenue per room • Revenue per guest • Revenue per group • Group sub-segments • Purpose of the visit • number of and motive for cancellationsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 64
  65. 65. Introduction to Revenue Management Demand CurveHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 65
  66. 66. Introduction to Revenue Management Tour Operators Tour operator contracts are the most difficult to apply RM to since the system of prices and sales is already fairly static. Technically, it is a segment ‘not yieldable’. Hotels should insist the tour operators agree to dynamic prices, but these companies and their ‘packages’ business model make it very difficult commercially to use dynamic pricing methods. From the analysis of these contracts we can reason that there are months hotels benefit from them and months where sales opportunities are lost due to them.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 66
  67. 67. Introduction to Revenue Management Shoulder Days What is the impact of closing sales for a specific day? The impact of closing sales of a room type for specified dates could be larger than what we believe. The “Shoulder days” are the days of ‘closed stays’ that imply a reservation. In other words, the 2 or 3 days the client would have stayed in the hotel. This statistic helps us to calculate the impact on revenue when a room type isn’t available. Some segments like groups and tour operators can produce a large number of ‘shoulder days’.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 67
  68. 68. Introduction to Revenue Management What actions should we take?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 68
  69. 69. Introduction to Revenue Management Tactics – How to act during high demand High Demand • Close or restrict discounts • Apply a minimum of nights, but with caution • Reduce groups and ‘shoulder days’ • Reduce ‘late check out’, and in moderation, if possible, ‘late check in’ • Increase guarantees and cancellation charges • Increase rates in accordance with those the competition • Increase the cost of packages and hotel services • Apply the full cost of suits and executive rooms • Select dates that are ‘closed to arrivals’ • Evaluate the total profit of the hotel and try to increase it • Invoice for all of the nights in case the client shortens their stayHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 69
  70. 70. Introduction to Revenue Management Tactics – How to act during low demand Low demand: • Sell added value and special benefits • Offer packages including internal and external products • Don’t close sales of the cheapest category of rooms • Incentivize upgrades • Offer better prices at adjusted budgets • Don’t use ‘stay restrictions’ • Motivate hotel staff to be especially attentive • Monitor competitors’ actions • Lower pricesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 70
  71. 71. Introduction to Revenue Management Consistency Consistency in applying prices… It’s very important to be consistent with our product, services and the value we offer. We must align our value, price and quality, in order to not disappoint our customers.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 71
  72. 72. Introduction to Revenue Management Tactics – Four Revenue Management Principal points to remember: • • • • • • • • • • • •Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 72
  73. 73. Introduction to Revenue Management Questions When should we reject a sale? Is it useful to know how much customers spend? When should we offer a discount? When should we use overbooking?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 73
  74. 74. Introduction to Revenue Management How do we measure our Factor Yield / RM Room Revenue o Average Rate x Occupation Revenue per Available Room RevPAR Number of Rooms AvailableHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 74
  75. 75. Introduction to Revenue Management How do we measure our Factor Yield / RM Total Revenue TRevPAr Total Revenue per Available Room Rooms Available Gross Operating Profit – GOP GOPPar Gross Operational Profit per Available Room Rooms AvailableHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 75
  76. 76. Introduction to Revenue Management Elements of Analysis We have three levels of analysis: daily, monthly and yearly Daily: • Average occupation • Average rate • Rev PAR • Pick-Up Monthly: • Geographic origin, GOB • Length-of-stay, LOS • Lead Time • Channel • Commissions Always: • Profitability of each type of guestHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 76
  77. 77. Introduction to Revenue Management Benchmarking Benchmarketing is the study of the competition to discover how they sell, at what price and what their occupancy is. The objective is to discover how we can improve and act upon this with distributors, guests…To be able to improve our commercialization. At a minimum, benchmarking should give us information on: • Prices • Room type • Products • Packages • Channels of distribution • Occupation • Services offeredHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 77
  78. 78. Introduction to Revenue Management Benchmarking My Hotel vs. My Competitors Who manages their hotel better, Manager A or Manager B?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 78
  79. 79. Introduction to Revenue Management Daily Prices To manage our prices taking into account the prices our competition is selling at, is one of the best tools to help us sell smarter. From them we can make a number of conclusions. There are a number of ways to obtain this information. The questions we seek to answer include: • What is their strategy? • Do they use ‘yield’? • What occupation do they have? • Can it affect our sales? • What would be their future prices? • Do they require minimum stay (L.O.S.)?Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 79
  80. 80. Introduction to Revenue Management Place your hotel: market vs. your value All of the commercial policies and prices of your establishment must be consistent with your product and values. Aligning price, services and product will ensure you have an excellent perceived value for money and that demand is more loyal and sustained. Monitor your competitors in terms of their products and associated ‘perceived value’. After, compare your hotel to theirs and adjust your offering to be more competitive and more productive.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 80
  81. 81. Introduction to Revenue Management Place your hotel: market vs. your value Evaluate your hotel and your competitors: • Product – room type • Product – hotel services • Price • Channels of distribution • Location • Strengths and weaknesses • Client segments of the hotel • Their presence in other markets • What hotels have similar prices You can also study the market for your destination, as well as source markets.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 81
  82. 82. Introduction to Revenue Management Place your hotel: market vs. your value - SWOT Strengths Weaknesses My Hotel My Environment Threats OpportunitiesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 82
  83. 83. Introduction to Revenue Management Market Share Report This study helps us to understand our results compared to our competitors, especially in regards to the average price and occupation. The parameters are: MPI. Market Penetration Index market penetration rate vs. the average occupation of our competitors ARI. Average Rate Index average price index, our average price vs. our competitors RGI. Revenue Generator Index revenue generator index, our share of revenue vs. our competitorsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 83
  84. 84. Introduction to Revenue Management Distributors Our presence with distributors is key. We can consult them at any time for competitive data and we can observe the positions they occupy in search engine results. We can observe how they sell… use of photography, text, reference to locations, positioning of product. Very good presence with distributors can help our product compete with superior hotels (in this case we’d be competitive on price) and with similar hotels (in this case we’d be the better option).Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 84
  85. 85. Introduction to Revenue Management How to be present. Distributors and the exponential effect. Is it really the same hotel? Where will customers book it? The hotel’s website is not the best option to book it in this case.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 85
  86. 86. Introduction to Revenue Management Many published rates and many products An establishment should have however many rates they believe to be opportune. All rates should be competitive depending upon the moment they are applied. Attention to the offers and closed prices and/or flat-rates offered to companies and agencies. If the latter act with a discount code, we must always reference these exceptions and offers. All products should always be offered and done so with the largest number of distributors possible.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 86
  87. 87. Introduction to Revenue Management Pricing Matrix RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 87
  88. 88. Introduction to Revenue Management Optimize your supplementary products Clients for the most part consume on impulse. A direct call to make a reservation sometimes lasts only a few minutes, as can the online process, so we must always present ourselves in the most ‘desirable’ fashion. Different room types meet different needs of different segments. Why don’t we offer them all? In the descriptions suggested ‘use/benefits’ are given. Create clear differences between the room categories. Stimulate the thought… ‘a little more per night you can enjoy…’Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 88
  89. 89. Introduction to Revenue Management Upselling Upselling is another tool that helps us to achieve good results from RM. Two moments when it can be applied: • Moment reservation is made • Arrival at hotel Offer what the client ‘needs’ in a direct way for a little more money. We must: • Understand the client • Observe their needs • Propose options • Communicate the benefitsHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 89
  90. 90. Introduction to Revenue Management Price Parity Although price parity is a model criticized by some, others defend it. In spite of not being logically sound financially, it’s use has spread and has been accepted by all OTA’s. Internally, the differences between the reprecussion of the commissions that are considered as costs of promotion or sales; are compensated some OTA’s with others. In the case of not having parity, clients will buy in mass, the cheapest OTA’s. Although this would be more effective, having one OTA’s dominating almost all sales would be dangerous.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 90
  91. 91. Introduction to Revenue Management Commercial Parity Commercial parity is based on the commercial parameters that can influence the client’s purchase It’s important to have commercial parity with our distributors because they otherwise could have advantages over our own channel. • Payment conditions • Reservation conditions • Cancellation charges • Advance notice of cancellation required • Cleaning charges • Hidden offers • …Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 91
  92. 92. Introduction to Revenue Management Control Price Parity Controlling price parity is very important and affects our relationship with our clients and distributors. Technological tools exist to compare prices for our own hotel: • know who we work with • know who are our distributors • know the mark-up on our product • understand the distributor’s model: retail, merchant, opaque...Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 92
  93. 93. Introduction to Revenue Management Parity Disruptors Some companies willingly perform actions to cause “Parity Disruption”. Break the parity of your hotel to get benefits from it, decreasing your margin so clients choose your property. In other instances, data is aggregated from different channels to show which has the lower prices. Normally, these companies don’t have direct contracts with the hotel and use price comparison to attract clients. If it’s necessary, make reservations in each channel to get the voucher and know which agency is selling your property in this way.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 93
  94. 94. Introduction to Revenue Management Overbooking Overbooking isn’t an effect or a consequence. In RM, it is a tool that allows us to get the most ‘play’ out of our hotel’s availability. On many occasions, the no-shows, last minute cancellations and shortened stays, affect our profitability. It’s recommended to have an action plan for these occasions. We need to think about how these deviations will impact: costs of stay, costs of transportation, compensation for services or monetary, and possibly sanctions.Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 94
  95. 95. Introduction to Revenue Management Overbooking Calculate your level of Overbooking and evaluate risk vs. Profit Not Guaranteed Reservations Received > Cancellations > Arrivals No Shows Rates we charge Transfer ExpensesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 95
  96. 96. Introduction to Revenue Management Parameters to measure efficacy REVPAR: Room Revenue per Available Room TREVPAR: Total Revenue per Available Room TREVPEC: Total Revenue per Client GOPPAR: Gross Operating Profit per Available Rooms Conference/ REVPAM: Conference/Banqueting Revenue per Available M2 REVPASH: F&B Revenue per Available seats and hourHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 96
  97. 97. Introduction to Revenue Management When we obtain more by applying RMHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 97
  98. 98. Introduction to Revenue Management Where to obtain more by applying RMHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 98
  99. 99. Introduction to Revenue Management How much you’ve obtained by applying RMHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 99
  100. 100. Introduction to Revenue Management Practice: How to determine our pricesHotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 100
  101. 101. Introduction to Revenue Management Pricing Matrix Pricing Matrix – General RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 101
  102. 102. Introduction to Revenue Management Pricing Matrix Pricing Matrix – Very Low Season 100% 75% 50% 25% 99% 66% 33% RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 102
  103. 103. Introduction to Revenue Management Pricing Matrix Pricing Matrix – Low Season 100% 75% 50% 25% RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 103
  104. 104. Introduction to Revenue Management Pricing Matrix Pricing Matrix – Mid-Season 99% 66% 33% RACK RACK PREF PREF BAR1 BAR1 BAR2 BAR2 BAR3 BAR3 BAR4 BAR4 BAR5 BAR5 BAR6 BAR6 WKD1 WKD1 WKD2 WKD2 Standard Standard 200 200 160 160 140 140 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Superior Superior 215 215 175 175 155 155 135 135 125 125 115 115 105 105 95 95 85 85 75 75 Suite Suite 230 230 190 190 170 170 150 150 140 140 130 130 120 120 110 110 100 100 90 90Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons tomeupons@gmail.com @tomeu_pons 104

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