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Revenue Management Webinar Series

Session 3: Who Are My True Competitors?

This webinar series is brought to you by This webinar series is brought to you by HSMAI University, HSMAI University, HotelNewsNowHotelNewsNow , and STR, and , and STR, and

sponsored by sponsored by IDeaSIDeaS Revenue SolutionsRevenue Solutions

Overview of Format and TopicOverview of Format and Topic

Webinar Moderator

Fran Brasseux

Executive Vice President, HSMAI

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We are very grateful to our sponsor for this

Revenue Management Webinar Series:

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Panel Moderator:

Jeff Higley, VP,

Digital Media &

Communications

HotelNewsNow/

STR STR/STR Global

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TodayToday’’s Presenters: s Presenters: Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global

Panelists:

Jan D. Freitag

Vice President,

Global

DevelopmentSTR

David Bland

Senior Director

Hospitality & Leisure

Group, Alvarez &

Marsal Real Estate

Advisory Services, LLC

Trevor Stuart-Hill

President & Founder,

Revenue Matters

Orly Ripmaster

Senior ManagerSTR Analytics

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Klaus Kohlmayr

Senior DirectorOf Consulting

IDeaS

US Lodging Industry Overview

Jan D. Freitag

Vice President

STR

Agenda

Total US OverviewChain ScalesForecast

www.hotelnewsnow.com

Click on “Industry Presentations”

2011 – So far, so … blah

Total US - Key StatisticsYTD April 2011

% Change• Hotels 52k• Room Supply 578 mm 0.9%• Room Demand 326 mm 6.4%• Occupancy 56.5% 5.4%• A.D.R. $100 3.1%• RevPAR $56 8.7%• Room Revenue $32.5 bn 9.7%

Slight Annual RevPAR Changes Prevail

Strongest Demand Rebound Ever. But ADR Growth…?

-8.6%

-0.1%

- 4.5%

*Total US, ADR & Demand % Change, 12 MMA 1/89 – 4/11

1.6%

Gas Price vs. Room Demand: This Means What?

* US Room Demand vs. US Average Gas Price $ / Gallon (Source: www.eia.gov)

Mill

ions

Gas Price vs. Room Demand: Geek Speak

“We note relatively low correlation coefficients and predictive values (R2) across the time period tested.

In fact, the correlation coefficient between total U.S. lodging demand and WTI and Brent prices is 0.37 (R2 0.14) and 0.38 (R2 0.14), respectively. “

Joe Greff, J.P. Morgan, 3/10/11

Chain Scales

Luxury Leads Recovery. Supply Growth in Up / UpMid.

*US Chain Scales, Supply & Demand % Change, YTD 4/11

ADR Will Follow. But When?

*US Chain Scales, OCC & ADR % Change, YTD 4/11

Strong High End Performance

*US Chain Scales, OCC % , YTD 4/11

Luxury Leads The Way

*US Chain Scales, ADR $, YTD 4/11

Forecast

2010 Profits Were $10 Billion Off Peak

*Total US Room Revenue and Profit , in $ billions, 2007 - 2010

2011 Total US Outlook

LowGrowth Forecast

HighGrowth

Supply 1.0 0.7 0.4

Demand 2.1 2.5 3.0

Occupancy 1.1 1.8 2.6

ADR 3.7 4.2 4.8

RevPAR 4.8 6.1 7.4

2011 Chain Scale Outlook

Chain Scale

Occupancy(% chg)

ADR (% chg)

RevPAR(%chg)

Luxury 0.8 7.4 8.2

Upper Upscale 1.8 6.1 7.9

Upscale 2.2 5.4 7.6

Upper Midscale 2.4 3.9 6.3

Midscale 1.8 2.5 4.3

Economy 2.5 1.9 4.4

Independent 1.5 4.1 5.6

Total US 1.8 4.2 6.1

2012 Total US Outlook

LowGrowth

ForecastHigh

Growth

Supply 0.8 0.5 0.2

Demand 1.8 2.2 2.7

Occupancy 1.0 1.7 2.5

ADR 6.2 6.8 7.4

RevPAR 7.2 8.5 9.9

2012 Chain Scale Outlook

Chain Scale

Occupancy(% chg)

ADR (% chg)

RevPAR(%chg)

Luxury -0.8 11.5 10.7

Upper Upscale 2.2 8.4 10.6

Upscale 1.9 7.3 9.2

Upper Midscale 2.5 6.9 9.4

Midscale 1.2 5.9 7.1

Economy 2.0 4.9 6.9

Independent 1.6 6.5 8.1

Total US 1.7 6.8 8.5

www.hotelnewsnow.com

Click on “Industry Presentations”

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Trevor Stuart-Hill

President &

Founder, Revenue Matters

Why is this an important question?• We’re all stakeholders

– Investment in an Asset

(Owner)

– Benchmarking

Operational

Performance (GM)

– Price Positioning /

Tactics (RM)

– Guest Perception (S&M

and PR)

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Owner’s Perspective

– Upside potential of market (ROI)

– Market gap being filled (competitive advantage)

– Threats (i.e. new supply)

– Legal / Performance component (Mgt. Co.)

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Management Co. / GM Perspective

• Bonuses & Incentives

– KPI Targets

– Promote based on ROI thresholds

• Validation of S&M / RM decision making

• Momentum / Brand Power

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Revenue Management Perspective

• Futures traders (no – not the price of pork

bellies)

• Need to know if a response to a given

competitors action is warranted or not

• Conversely – need to know who is watching

you

• Game scorecard

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S&M / PR Perspective

• Customers’ perception is everything

• They vote with their feet (and wallets)

• Sales professionals need to know which other

properties are in the consideration set – and

why

• Communicating a relevant message in a way

that your audience can relate to it

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Utopia?

• Stakeholders perspectives are understood

• Goals and motivations are in alignment

• Competitors are plentiful and predictable

• Everyone’s business mix is similar

• BUT…. Would we REALLY want this???

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Orly Ripmaster

Senior Manager

STR Analytics

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STR Analytics Agenda

•STR Comp Set Selection Parameters

•STR Analytics Comp Set Selection Guidelines

•STR Analytics Comp Set Selection Tools

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STR COMPETITIVE SET PARAMETERSProperty/Brand/Company Guidelines

•Percent Check

•Company Check

•Property Minimum

•Company Minimum

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STR COMPETITIVE SET PARAMETERSCompetitive Set Changes

•Minimum of Two

•New Construction Hotels

•Non-Participating Hotel Removal

A CHANGE MAY NOT BE MADE IF DATA OF A

SINGLE PROPERTY IS ISOLATED IN ANY WAY.

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STR COMPETITIVE SET PARAMETERS

• Multiple Competitive Sets

ALL competitive set guidelines must

be met in order to create a property

competitive set or ad-hoc grouping.

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STR ANALYTICS COMPETITIVE

SET GUIDELINES

What is a “reasonable” SET :

What are some potential selection

traps:

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STR ANALYTICS COMPETITIVE SET

GUIDELINES

Multiple sets by competition:

•Regional / national

• Segmentation

• “Aspirational”

How can I find help in selecting the right set?

•New Tools for STR Analytics

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STR ANALYTICS COMPETITIVE SET TOOLS•Bandwidth & RPM Reports

•Competitive Set Advisory

•mComp Report

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STR ANALYTICS COMPETITIVE SET TOOLS•Bandwidth Reports

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STR ANALYTICS COMPETITIVE SET TOOLS•RPM Reports

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STR ANALYTICS COMPETITIVE SET TOOLS•Comp Set Consulting &

mComp Report

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STR ANALYTICS COMPETITIVE SET TOOLS

Contact

Orly Ripmaster

Senior Manager

(303) 396-1641orly@STRanalytics.com

www.STRanalytics.com

David Bland

Senior Director

Hospitality & Leisure Group,

Alvarez & Marsal Real Estate

Advisory Services, LLC

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Alvarez & Marsal Hospitality & Leisure Group• Our Hospitality and Leisure practice provides advisory services over a broad scope of

tourism and leisure products such as Hotels, Resorts, Casinos, Marinas, Spas, Convention

Centers, F&B Facilities, Vacation Ownership Golf Courses, Sports Facilities and Cruises.

• Our scope of hospitality advisory services include:

– Market and feasibility analysis

– Strategic planning

– Transaction advisory

– Operator selection

– Management and franchise agreement negotiations

• We have served a wide range of clients in the hospitality arena including multinational

development companies, government and financial institutions, international lodging

companies, law firms, private equity funds and investment banks. Recently, our

professionals have assisted:

– Operations diagnostics

– Asset valuation services

– Asset Management

– Litigation

– Restructuring and Creditor Advisory

– Lehman

Brothers

– Citigroup

– Bank of America

– Scotiabank

– JP Morgan Chase

– Starwood Hotels

& Resorts

– Loews Hotels

– Starwood Vacation

Ownership

– RLJ Development

– Lowe Enterprises

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Establishment of your Competitive Set performs

two distinct roles:

1) Positive/Upside: Goals for your hotel to reach

2) Negative/Downside: Measure of minimum

performance in Management Agreements

Aspiration and Motivation

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Revenue Management Strategy Mastery

Who controls your hotel’s inventory and pricing?

– Does that person have direct knowledge of the

competitive set hotels?

– When was the last time that person personally

experienced all of the competitors?

– How does the Revenue Manager work with the DOS

and Group Sales?

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“Matter of Perspective”

• Whose perspective counts?

• Who determines your competitors?

– Operator – tool to improve or protect contract

– Owner - focus on upside or downside?

– Guest perception of value

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Klaus Kohlmayr

Senior Director of

Consulting

IDeaS

1. How to determine your hotel’s true and

most relevant competitors

2. How to correctly evaluate your hotel’s

positioning – considering price, value,

and competitiveness

3. From information to strategies!

RGI/RevPar Index

ARI/MPI

Social Media scoring

Rev/m2

Please the Owner

Please the Boss

Do Better

Beat the Competition

Step 1 – Understand your Competitors

You Competitors

Product/Place/Price/PromotionProduct/Place/Price/Promotion

Strengths/WeaknessStrengths/Weakness

Objectives & StrategiesObjectives & Strategies

Reaction PatternsReaction Patterns

Dr. Philip Kotler, Marketing Management

Step 2 – Evaluate the level of danger

You Competitors

Segment OverlapSegment Overlap

Power of InfluencePower of Influence

Dr. Philip Kotler, Marketing Management

Relative CompetitivenessSegment Overlap: HighSegment Overlap: High Power of Influence: LowPower of Influence: Low

My Hotel CompetitorLocal Corp

Segment Overlap: HighSegment Overlap: High Power of Influence: HighPower of Influence: High

Step 3 – Evaluate Product & Services• What are the most important services to my

customers?– Breakfast, Speedy Check-in, Bed, Internet access, Hotel access etc

• How does my Hotel compare with my competitors

Breakfast Check-in Access Total

Comp A -3 +3 0 -3

Comp B +2 0 -3 +3

Importance

to Client3 2 1

Step 4 – Research your Price

Positioning

Step 5 – Bringing it together

V-5 V+5

$$$

$

• # of Days above/below 100

• Day of Week patterns

• Driven by Occupancy or Average Rate?

Beware of Averages!

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X X X X X X

X

XXXXXX

X X X X X X

XXXXXX

X X X X X X

X = competitors

Vertical line = average price

XXXXXX

Scenario #1 Prices

Scenario #2 Prices

And don’t forget your “wider”

competitors…

Questions? Questions? Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global

Panelists:

Jan D. Freitag

Vice President,

Global

DevelopmentSTR

David Bland

Senior Director

Hospitality & Leisure

Group, Alvarez &

Marsal Real Estate

Advisory Services, LLC

Trevor Stuart-Hill

President & Founder,

Revenue Matters

Orly Ripmaster

Senior ManagerSTR Analytics

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Klaus Kohlmayr

Senior DirectorOf Consulting

IDeaS

Upcoming Webinars:The HSMAI University 10-part 2011 Revenue Management Series – Next:

Session 4 on July 26 - How Will You Measure Your Success?Special rates for registering for entire series

Portrait of American Travelers - June 2, 2011 - With Peter Yesawich, President & CEO

of the Ypartnership

The Impact of Social Media on Revenue Management – June 30, 2011 – With Bonnie

Buckhiester

To register, please go to www.hsmaiuniversity.org.

And don’t miss …HSMAI Revenue Optimization Conference, June 20, 2011, Austin, TX

The 2011 HSMAI Revenue Optimization Conference, prior to HITEC, is a unique one-day interactive program featuring thought leaders and subject-matter experts in various aspects of revenue management.

For more information and registration go to www.hsmai.org and click on HSMAI Revenue Optimization Conference.

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