What is Revenue Management?

The goal of this presentation is for the learner to understand the

purpose of, and processes involved with revenue

management.

Lesson ObjectivesAfter completing this lesson the

learner will be able to:□Explain the role of the revenue

manager.□Define the 9 meeting basics.□Explain strategies to maximize

revenue.

What is Revenue Management?

□ Simply stated, it is a technique used to maximize revenues.

□ Other terms used are yield management. □ It should take into consideration as many

factors as possible to determine the rate.□ It also is useful as an evaluative tool to

determine standards for which actual results can be compared.

Why do hotels need Revenue Management?

□To improve revenue – beyond transient rooms revenue

□Improve communications among revenue generating departments

□Identify the most productive channels of distribution (both room nights and rate)

□Establish clear roles and responsibilities among staff

The Role of Revenue Manager

□Focal point of the revenue management function

□Keep track of property’s competitive position – RevPar

□Mange channel distribution process□Impartial manager – guides revenue

generating process

Revenue Management Tools □Revenue Meeting□External Reports□Internal Reports (history, forecasts,

bookings, and budgets)□Competitive Surveys

□Internet□GDS□Call arounds

□Strategies and Tactics

The Revenue Meeting

□Purpose□Identify revenue opportunities for the

property□Held at a frequency equal to the

booking pace of the hotel□Attendees

□GM, Rev. Manager, DOS, Sales and Catering managers, Res. Manager, Controller

The Meeting Basics1. Start with discussion of m-t-d occupancy,

ADR, RevPar against budget and forecast2. Bring accurate 7- or 30 day forecast3. Periodic review of rolling 12 month forecast4. Invite any staff member who can block

revenue opportunities5. Have history used to make of the forecasts

– notes, PMS and CRS reports

The Meeting Basics

6. Discuss current sales leads7. Discuss peaks and valleys of

business along with strategies to improve outlook

8. Include booking pace report9. Be sure everyone is prepared and

ready to participate

RevPar□Calculation

□Total rooms revenue/ total rooms available

Or□ADR multiplies by

the Occupancy %

Rooms Available

350

Occ. % 85Total Revenue

$87,000

ADR $291.95RevPar $248.57/

247.83

External Reports

□Star Reports□Provided by Smith Travel Research□Show’s relative position of property

against “competitive set”□Shows RevPar penetration□Is historical data□Smith Travel Research

Internal Reports

□History – last 2 years□Forecasts – 7 and 30 day □PMS□Booking Pace□Chain or Property Revenue

Management□Budget

Completive Surveys□Global Distribution Systems (GDS)

□How are you positioned?□How are your competitors positioned?□What rates are available?

□Starwood GDS information

Strategies to Maximize Revenue

□What Channels to use□How will you position the property□Routinely review property

information in all channels (monthly)□Determine best mix of group and

transient□Determine mix of catering

Strategies (Continued)□Set a “Hurdle Rate” and communicate it to all

revenue producing departments□Discount management□Minimum length of stay□“Sell-Thru”□Length of stay rate sensitivity (tiers)□Closed to arrival□Determine total revenue potential of business