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The The ““Total Hotel Revenue ManagementTotal Hotel Revenue Management””

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Revenue Management SeriesRevenue Management Series

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March 26March 26thth, 2009, 2009

2:00 2:00 –– 3:00 PM EDT3:00 PM EDT

Hospitality Sales and Marketing Association International (HSMAI)

Total HotelTotal Hotel

Revenue Management Revenue Management

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OverviewOverview

Fran BrasseuxFran Brasseux

Executive Vice President, HSMAIExecutive Vice President, HSMAI

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HSMAI University Alliance PartnersHSMAI University Alliance Partners

Thank You To Our SponsorThank You To Our Sponsor

IDeaS Revenue Optimization - www.ideas.com

IDeaS, a SAS COMPANY, is the premier provider of enterprise revenue optimization solutions and services. IDeaS can help make an immediate

impact on company revenue and profitability with its forecasting, optimization and pricing solutions. Headquartered in Minneapolis, IDeaS has technology,

support, sales and distribution offices in North and South America, the United Kingdom, Europe, Africa, the Middle East, Australia and Asia.

For more information, visit www.ideas.com.

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POLL QUESTION #1POLL QUESTION #1How many people are participating in

this webinar at your location today?

� 1

� 2

� 3

� 4

� 5

� 6

� 7

� 8 or more

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Panel Moderator Panel Moderator

� Bill CarrollSchool of Hotel AdministrationCornell University

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TodayToday’’s Panelists s Panelists

� Jennifer JodoinDirector of Revenue ManagementThe Breakers, Palm Beach

� Greg MoonDirector of Revenue ManagementThe Wilshire Grand Hotel – Los Angeles

� Angie BelknapRegional Revenue Manager

ARAMARK Parks and Destinations

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Program GoalsProgram Goals

� Expand on specific areas from Session 1

� Experts share approaches to total revenue management:� Ancillary revenue streams

� Packaging

� Alternate revenue management applications

� Answer participants questions

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Economic EnvironmentEconomic Environment

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Credit Market Crisis Credit Market Crisis -- U.S. export to ROWU.S. export to ROW

Recession Recovery ReboundRecession Recovery Rebound

Pessimism Confidence ExuberancePessimism Confidence Exuberance

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The Path of Recovery ... The Path of Recovery ... In HospitalityIn Hospitality

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� Resolution of the credit crisis

� Fiscal policy stimulus

� Equity market recovery

� Broad based economic recovery

� Labor market recovery

Business

Demand Leisure

Demand Group

Demand

� Low interest rates

� Equity available

A period of time when

demand exceeds supply!

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� Immediate vs. long run (survival)

� Demand management vs. yield management

Role of Revenue ManagementRole of Revenue Management

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What To Do During Recession What To Do During Recession

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1. Don’t discount; cost manage

2. If you do, minimize dilution & maximize response

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Minimize Dilution & Maximize Response Minimize Dilution & Maximize Response

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SegmentSegmentChannelChannel

DirectDirect SalesSales Chain/Chain/

RepRepTravelTravel

AgentAgentOnlineOnline

InterInterOnlineOnline

DirectDirectCVB/CVB/

NTONTO

LeisureLeisure

MercenaryMercenary

LoyalLoyal

BusinessBusiness

CorporateCorporate

LessLess

ManagedManaged

UnmanagedUnmanaged

WholesaleWholesale

GroupGroup

LargeLarge

SmallSmall

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What To Do During Recession What To Do During Recession

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1. Don’t discount; cost manage

2. If you do, minimize dilution & maximize response

3. Value add instead of discount

4. Negotiate shorter deals or phased deals

5. Shift rejected demand

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What To Do During Recession What To Do During Recession

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6. Reward the loyal customer

7. Convert the mercenaries

8. Make the most of what you get

9. Link & measure promotion

10. Practice game theory

Are you the predator or the prey?

� Jennifer Jodoin Director of Revenue ManagementThe Breakers, Palm Beach

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It’s all in how you look at it:

�Ancillary spend by market segment and corresponding strategies.

�Pricing and strategies by distribution channel.

�Pricing and strategies by room type.

Total Hotel Revenue ManagementTotal Hotel Revenue Management

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� In a perfect world:

� We would know exactly the spending behaviors of each guest by type, demographic, distribution channel, etc.

� Most of us aren’t that lucky:� Hotel systems provide a reporting and tracking challenge when they are

on different platforms and don’t share information.

� So what do the rest of us do?

� Try to come up with a reporting/tracking system using the data that you do have:

• Guest mix analysis

• Tender Type

• Capture ratios

Ancillary Spend by Market SegmentAncillary Spend by Market Segment

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� Applying revenue management strategies to other areas:

� Dining

� Spa

� Golf

� Bungalows and Cabanas

� Successes:

� Bungalows and Cabanas: we use IDeaS RMS to track demand, assist with forecast and apply BAR model.

� Dining: focused on capture ratios to drive guest covers/spend.• Analyze basics: seating arrangements, menu, average dining time, identify “hot and

cold” times and strategize accordingly.

� Challenges:

� Spa: fluctuating treatment times, therapist schedules/specialties and room availability made yielding a difficult feat.

� Golf: Not a lot of room for yielding. Focused on identifying slower times/days and implementing promotions.

ConsiderationsConsiderations……

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� MAINTAIN RATE PARITY!� Guests should not have to work at finding the lowest rate.� SHOW VALUE – nobody wins in a rate war.� Dynamic packaging.� Pre-arrival confirmations and cross selling.

� KEEP IT SIMPLE:� Keep your room offerings streamlined and easy to follow (especially online).

� KNOW YOUR COSTS:� Understand the costs and mark up.� Manage your allotments and inventory.� Use your relationships to partner promotions and specials (some may provide

opaque packages)

� DON’T UNDERESTIMATE THE POWER OF YOUR CALL CENTER:� Make sure they have the tools/training necessary to close the sale.

Pricing and Strategies by Distribution Pricing and Strategies by Distribution

Channel:Channel:

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Poll Question #2Poll Question #2

How many room types do you have?

� 1-3� 4-5� 6-10� 10+

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Pricing/Strategies by Room Type

� Try to keep the number of room types to a minimum if possible.

� Know the occupancy and ADR (actual and optimal) achieved by room type to determine if you are priced right and selling appropriately.

� Use this data to set future pricing and make decisions such as group blocks, upgrades etc.

Pricing and Strategy by Room TypePricing and Strategy by Room Type

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� Track performance by market segment and individual group:

� Booking window

� Pick up patterns at significant intervals (time of contract, points of

allowed attrition, cutoff and select days before arrival)

� Track and forecast group wash.

� Keep detailed records of daily block reductions/cancellations.

� Keep in contact with meeting planners:

� Be proactive:

• Don’t wait for the cutoff date to find out that their attendance is down.

• Keep an eye on the length of stay pattern and trim blocks as necessary.

• Keep them apprised of how their pick up is going (call in groups).

Tracking and Collecting Group Tracking and Collecting Group

Cancellations/Attrition:Cancellations/Attrition:

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� Nobody likes attrition:

� Attrition is wasted money for the group and a potential missed

opportunity for the hotel.

� Look at the big picture:

� Don’t risk future relationships/bookings for a quick gain.

• Maintain a balance of the integrity of your contract without being

inflexible.

• Analyze potential future business

• Compromise on a case by case basis

• Try to use attrition as leverage to secure a future booking.

Tracking and Collecting Group Tracking and Collecting Group

Cancellations/Attrition:Cancellations/Attrition:

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� Greg Moon Director of Revenue Management

The Wilshire Grand Hotel – Los Angeles

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Promotions and Packages (Dealing with a Difficult Economy):

� Diversify Products to match Diversified Markets

� Guest “Build your own” Packages.

� Re-price existing bundled packages.

� Pricing and Strategies by Distribution Channel

� WEB rate, 2 nights for the price of one

� “Bring a Friend” (2 rooms for the price of one)

� Pricing and strategies by room type.

� Isolate smaller rooms – “cozy accommodations” to use in lower priced promotions.

Hotel Revenue ManagementHotel Revenue Management

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� SynXis – Guest “Build Your Own” Package

o Allows guests to choose components to fit their needs,

o Limited in pushing those chosen components to respective

fulfillment departments, on and off site.

� Reports are generated daily and automatically emailed to the provider (Florist Shop, Limo Service etc.)

» Requires manual input to provide some information not in the reports:

» guest flight information for limo pick-up.

» Round trip not available - only 1 way.

System Limitations/Challenges:System Limitations/Challenges:

GDS Provider GDS Provider –– Web Site Booking EngineWeb Site Booking Engine

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� “Bring a Friend” – 2 Rooms for the price of one

o Allows guest to buy two rooms, with one reservation.

� Goal – targeting the transient market, primarily those coming to nearby Staples Center for a concert, sports function.

� Wanted to utilize a “Travel With” or “Accompany” capability.

o System could not split one reservation into two with two names.

� System could capture the name of the other guest in comments.

» Dug harder into operations – How can we book this?

» Reservations receives an automated email daily report showing each new booking of this rate plan in SynXis.

» Reservations picks up the existing reservation in Opera, and adds Accompany Guest information manually.

System Limitations/Challenges:System Limitations/Challenges:

Web Site Booking EngineWeb Site Booking Engine

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Example: Room and Zoom Packages - Targeted Market to Corporate Guests

What does a Corporate Guest need coming to Downtown LA?

ReRe--price Existing Bundled Packages:price Existing Bundled Packages:

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� Example: Room and Zoom Packages� Previously sold few – not a successful package, but still not dead enough

to pull off the market.

� Action Steps Taken:

� Targeted Market Mainly to Corporate Guests

� Talked to the car rental office in-house• Procured a rate low enough to attract attention.

• Got a high-end car model and mid-range model.

� Got agreement in Revenue Committee to build a rate close to the opaque rates currently selling well.

� For Fun:

• Asked the rental company for a convertible – “Topless in LA”

ReRe--price Existing Bundled packages:price Existing Bundled packages:

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� Example: Universal Studio Package� Also not a successful package, but still not dead enough to pull off the

market.

� Targeted Market: Mainly Leisure Guests� Identified LOS of Universal Studios package bookings 2.45 nights.

� Action Steps Taken:

Mixed an existing “2 Nights for the Price of One” Promotion with the Universal Studio package.

Marketing now points Universal Studios guests to the new package.• Tickets to Universal Studios,• The room rate they would get per night if they booked the “2 for 1”promotion without tickets.

Combine Existing Bundled Package with Combine Existing Bundled Package with

a Promotion:a Promotion:

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Result:• Doubled our Universal Studios ticket sales.

• Did not slow down production of stand alone “ Two

for One” promotion.

Combine Existing Bundled Package Combine Existing Bundled Package

with a Promotion:with a Promotion:

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� Be open to CHANGE� Your guest spending patterns have changed.� Perhaps your entire market make-up has changed.

� Identify your strengths and expand on them.� Why do guests choose your property: Location?

� 4 and 5 star properties are selling 3 star prices� Use out-of-the-ordinary ideas to counteract this out-of-the-ordinary economy.

� Plan what your success rate will be – measure your success.

� If your ideas don’t produce the sales levels you expected, try something else!

� Diversify Products to match Diversified Markets.� Mix your current offerings to match your needs.� i.e.: Most have a Web rate (non-refundable, non-modifiable) – mix that concept with a current package you are running to lower the package rate, without killing rate integrity!

Hotel Revenue ManagementHotel Revenue ManagementFinal thoughts: Packages and PromotionsDealing with a Difficult Economy

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� Angie BelknapRegional Revenue Manager ARAMARK Parks and Destinations

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� Total Property Review – Evaluating and Working

with what you have.

� Customer Relationship Management – Tracking the customer spend.

� Turning all associates into sales people – Train all staff to be sales people not order takers.

Total Property Revenue Management Culture Total Property Revenue Management Culture --

Alternate Revenue Management Applications Alternate Revenue Management Applications

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Total Property ReviewTotal Property Review

� SWOT – For each business/enterprise and their appropriate competitors

� Market rate positioning/evaluation for all prices

� Brainstorming for new ideas to increase value with existing product and new offering to increase revenue opportunities.

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S.W.O.T (Strengths, Weaknesses, S.W.O.T (Strengths, Weaknesses,

Opportunities, Threats)Opportunities, Threats)

� Goal

� Guidelines

� Questions that should be answered

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Market Rate Positioning/Evaluation for All Market Rate Positioning/Evaluation for All

Prices Throughout the PropertyPrices Throughout the Property

� Rate/price positioning – Benchmark your competitive set against your hotel for each assigned criteria.

� Review/assign the factors for each business that build value into the product.

� Assign a “weight” to each criteria according to how important it is in the buying decision.

� Rank each competitor’s value (either higher or lower) with your hotel as the benchmark.

� Result – each competitor will have an overall score.

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Brain storming Brain storming –– Increasing Value and Increasing Value and

Additional Revenue OpportunitiesAdditional Revenue Opportunities� Restaurant

� How to increase overall check average?� How to create additional seats?� How to effect customer demand patterns?� Are there additional outlets – To Go, late night dinning, coffee Kiosk, poolside

� Front desk� Upsell� Bounce Back� Cross Selling

� Reservations � How to increase revenue per call?� How to increase conversion?� What happens when we are sold out?� How can we effect customer demand patterns?

� Overall property� How can we increase revenue across all lines of business?� Are we charging for something that our competition offers for free?

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� Are we charging for things guests don’t value?

� Do we give the competition too much credit?

� Are we ignoring external factors?

� Do we include all stakeholders in the review?

� Is too much time focused on brain storming, and not enough on executing?

Pitfalls to Avoid When Completing a Property Pitfalls to Avoid When Completing a Property

ReviewReview

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Customer Relationship Management Customer Relationship Management –– Assigning Assigning

a Value to a Segment/Account/Customera Value to a Segment/Account/Customer

� Day of week production

� Seasonal demand time

� Ancillary spend

� Brand advocate – refers other business

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Customer Relationship Management Customer Relationship Management –– Tracking Tracking

� Ensure each guest/account has a profile that is complete (Address, phone, email).

� Encourage guests to charge to the room for any spending on property.

� Make it easy for all guests in the room to charge.

� For every new reservation check to see if the guest has stayed with us before and use their existing tile.

� Ensure sourcing and segmentation is correct

� Merge…merge….merge

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Pitfalls in Customer Relationship ManagementPitfalls in Customer Relationship Management

� Not setting up an expectation of preferred customer

behavior and rewarding guests when they meet/exceed that expectation.

� Not using/combining existing guest histories

� Not collecting enough data

� Not doing anything with the information collected

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Turning All Associates into sales PeopleTurning All Associates into sales People

� Set up expectations for each position.

� Invest the time in training – be sure your associates experience what they are selling (It is easier to sell what you know).

� Role play

� Testing/Review

� Contests and Incentives

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Up Selling/Cross Selling ExamplesUp Selling/Cross Selling Examples� Front desk

� Suite, Cabin, premium floor, add on package, additional night, highlight our restaurant/lounge, highlighting additional leisure activities, highlighting spa services.

� Restaurant� Bottled water, Premium liquor, wine paring, appetizer, dessert (encourage

sharing or taking it to go). Telling locals about upcoming events. Couples menus, Prix Fixe menus

� Catering� Higher dollar entrée, themed break, linens, hosted bar, Complete Meeting

Packages.

� Spa or Gift shop� Longer treatments, add on treatments, spa products, gift cards.

� Housekeeping� Ensuring all in room collateral is pristine.

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Pitfalls in Turning All Associates into Sales Pitfalls in Turning All Associates into Sales

PeoplePeople

� Having the wrong people delivering the training

� Not enough time invested

� No Follow up

� Incentives turning into expectations

� Stale incentives

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� Jennifer JodoinDirector of Revenue ManagementThe Breakers, Palm Beach

� Greg MoonDirector of Revenue ManagementThe Wilshire Grand Hotel – Los Angeles

� Angie BelknapRegional Revenue Manager

ARAMARK Parks and Destinations

Questions? Questions?

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Upcoming HSMAI University ProgramsUpcoming HSMAI University Programs

33rdrd Annual Hotel Sales Strategy ConferenceAnnual Hotel Sales Strategy Conference

March 31March 31st st -- Swissotel ChicagoSwissotel Chicago

HSMAI Affordable Meetings HSMAI Affordable Meetings

MidMid--AmericaAmericaChicago, IL Chicago, IL -- April 1April 1--22

99thth Annual Resort ConferenceAnnual Resort Conference

May 3May 3--5 5 -- PGA National Resort & Spa, Palm Beach Gardens, FLPGA National Resort & Spa, Palm Beach Gardens, FL

Revenue Management & Internet Strategy ConferenceRevenue Management & Internet Strategy Conference

June 25June 25thth -- Anaheim, CAAnaheim, CA

Videocast Webinars: Videocast Webinars:

Live from the Hotel Sales Strategy ConferenceLive from the Hotel Sales Strategy ConferenceMarch 31March 31stst

1. One1. One--onon--One with Smith Travel Research One with Smith Travel Research 1:15 PM CDT1:15 PM CDT

2. The Voice of the Customer 2. The Voice of the Customer 2:15 PM CDT2:15 PM CDT

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EvaluationEvaluation

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TodayToday ’’s webinar is copyright 2009 by the Hospitality Sale s & Marketings webinar is copyright 2009 by the Hospitality Sale s & MarketingAssociation International with All Rights Reserved.Association International with All Rights Reserved.

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