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Total Hotel Revenue Management & War Board

Total Hotel Revenue Management & War Board. DOS/DORM Full Service Breakout Wednesday, January 21, 2015. Evolution into Total Hotel Revenue. Traditional Revenue Management: Sell the right rate to the right guest at the right time Total Hotel Revenue Management:

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Total Hotel Revenue Management & War Board

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  1. Total Hotel Revenue Management &War Board DOS/DORM Full Service Breakout Wednesday, January 21, 2015

  2. Evolution into Total Hotel Revenue • Traditional Revenue Management: • Sell the right rate to the right guest at the right time • Total Hotel Revenue Management: • Optimize revenues and profits from ALL revenue streams

  3. Discussion • What are some examples of utilization of total revenue management in other industries?

  4. Discussion Discovery • What is the key in each example? • They know the mix of their business and how to maximize revenues and profits based on this knowledge.

  5. RM History • “Born” 1/17/1985: AA launched Ultimate Super Saver fares in order to compete with low cost carrier PeopleExpress • Developed out of the need to fill a minimum number of seats without selling every seat at discount rates – sell enough to cover fixed costs, then sell the rest to maximize profits

  6. RM History, cont. • Uses basic principles of supply and demand to generate incremental revenues • There are three essential conditions for RM to be applicable: 1) Fixed amounts of resources available for sale 2) Resources are perishable 3) Customers are willing to pay different prices for using the same resources

  7. RM History, cont. • RM is especially high relevance in cases where fixed costs are high compared to variable costs • Less variable costs there are, the more added revenue will contribute to overall profit. • Profits are maximized by managing the MIX of business!

  8. Discussion • What is your hotel’s most profitable market segment? • What is your hotel’s most profitable mix of business? • These are the questions we MUST know the answer to for maximizing total hotel profits!

  9. Evolving into Total Hotel Revenue Management… • We have always tried to choose the best pieces of business, but the difference today is to sophisticate that process, and apply to all guest touch points/revenue streams. • Have the empirical data to identify that ideal business mix. • Have the talent and strategic vision to deploy optimal selling guidelines at every horizon – long, medium and short-term.

  10. How to Evolve into Total Hotel Revenue Management GOAL: Optimize revenues and profits from ALL revenue streams • MIX – determine your hotel’s most profitable mix of business • Profitability by Market Segment from a total spend • Rooms, F&B, and Ancillary revenues

  11. ProfitSword:Monthly Statistics Report

  12. How to Evolve into Total Hotel Revenue Management GOAL: Optimize revenues and profits from ALL revenue streams • Identify most profitable business sources • Brand.com is the least expensive • GDS = 10% • OTA’s = 15% to 30% • Group Intermediaries normally = 10% • Concession Management • Know what the retail value is of each concession

  13. Total Hotel Tools • Concession Grid Concession Grid Rev.xlsx

  14. How to Evolve into Total Hotel Revenue Management GOAL: Optimize revenues and profits from ALL revenue streams • Room Type Management • Track REVPAR by room type • Create and maintain straight line availability • Space Management • Catering free sell calendar • Straight line availability for groups • Groups with same sets in same rooms

  15. Space Management

  16. How to Evolve into Total Hotel Revenue Management GOAL: Optimize revenues and profits from ALL revenue streams • Drill-Down Displacements • Strategically select/deny/place business based on spend by revenue center…not just on rooms! • Catering Estimator Tool

  17. Total Hotel Tools

  18. Total Hotel Tools • Catering Estimator Tool Group Catering Estimator Tool.xlsx

  19. How to Evolve into Total Hotel Revenue Management GOAL: Optimize revenues and profits from ALL revenue streams • Ancillary Pricing Maximization/Customization • Restaurants • Bars • Spa • Tennis • Golf • Retail

  20. What is the role of the DOS in a Total Hotel Profit Management Environment? • Total Account Management • Lead the subject matter experts • Market Expert • Know the competition – all guest touch points – Total Hotel Competitor Assessment Tool

  21. Total Hotel Tools • Total Hotel Competitive Assessment Tool totalhotelcompetitiveassessmenttool.xlsm

  22. What is the role of the DORM in a Total Hotel Profit Management Environment? • Optimize revenues and profits from ALL revenue streams • “General Contractor” of revenue and profit centers for the entire asset • Provide accurate data and analysis for profitable decision making in a timely manner

  23. What if the Hotel Utilizes Brand Revenue Management? • Use and abuse your Brand Revenue Manager • Have them assist in most profitable mix of business for the hotel • They should be running all group/crew/LNR displacements – they have the tools • Historical data • Use your Prism resources

  24. Take Aways:Total Hotel Revenue Management Toolkit • Concession Grid • Visual for sales managers to quickly make decisions • Catering Estimator Tool • Assists in quickly determining the catering spend and set minimums for groups • Total Hotel Competitive Assessment • Takes the hotel shop a step further analyze group and catering in addition

  25. Take Aways • Catering Free Sell Calendar • Pricing – as dynamic as possible • Know competition – by segment and pricing • Apply room management techniques to catering space as well • Evaluate all pieces of business as a whole – nothing on a individual basis • New Analysis Tools • Always think PROFIT!!

  26. War Board If you could choose ONE hotel in your market to TAKE OUT OF BUSINESS, who would it be? YOU WILL NOW GO TO “WAR” WITH THEM (without them even realizing it)…

  27. War Board Here’s how it works… • Blow up a photo of your hotel. • Hang it on the wall. • Blow of a photo of your target hotel. • Hang it on the wall. • Give everyone on your team a pad of post it notes in different colors. • Every time they uncover a lead at your target hotel, they write it on the sticky note and stick it on the hotel. • Every time they BOOK the business at your hotel, they MOVE the sticky note from the target hotel’s photo to your hotel’s photo. • You’ve just one a battle in your war. When your hotel is covered with sticky notes, it’s time to wage war on the next hotel!

  28. SOURCES • What the Heck is Hotel Revenue Management, Anyway?A Hotel Marketer’s Guide to Revenue ManagementBy: Neil Salerno – Hotel Marketing Coach • Starting Down the Road to Total Revenue Management - by: Bonnie Buckhiester • Excerpt from The Evolving Dynamics of Revenue Management, published by the HSMAI Foundation

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