Welcome. Introductions.
Revenue Management, An Insider’s Viewpoint Donald Potter, Director of Sales Four Seasons Resort Hualalai and Althea Bryson, Regional Revenue Manager Four Seasons Denver, St. Louis, Santa Fe Different levels of understanding. Some might be elementary, but hopefully everyone will learn something new... Or have a better understanding of our logic.
Revenue Management... The Perfect Puzzle Revenue management is a science. Very analytical, very interesting.
Revenue management is the application of disciplined analytics that predict consumer behaviour at the micro-market level and optimize product availability and price to maximize revenue growth. By definition... Supply and Demand – Pattern Management – based on demand
Revenue Management is: “Selling the right product to the right customer at the right time for the right price.” Robert G. Cross Aeronomics Inc. By definition... Supply and Demand – Pattern Management – based on demand
A COMBINATION OF: Transient Group Catering
Wed Tues In it’s most simplistic form... Supply and demand... Happy Group!! RFP – what we need to know – flexibility for arrival, pattern shift, banquet spend, VIP suite needs, who’s joining them... With spouses/families? Other off property functions?
A COMBINATION OF: Systems People and making critical decisions in a quicker manner than ever before all working towards completion of the revenue cycle People Systems and Describe the DORM role.... Flow of information from RFP – Sales manager takes lead into business review... Sales and revenue management working together
Revenue Cycle Experiences now more than ever create demand with social media!! Let’s dig into maximizing revenue deeper....
All have to do with group leads as well – difference in strategy for group and transient for where the demand is. Strategy meetings Pricing – seasonality, rating verses comp set/value positioning Small changes in pricing strategies can equate to millions of dollars Distribution – selling on OTA’s verses FS.com Let’s dig into Inventory Allocation
Maximizing Revenue through monitoring future demand generators, competitive set and INVENTORY ALLOCATION How much is available at each price point? Demand and competitive set intel feeds into how we manage our inventory... What we will yield and what we will sell. YIELD MANAGEMENT PROCESS
The “Why” behind all the questions Our goal is to occupy as many rooms as possible every night. Ideally we would like to be 100% occupancy 100% of the time! If we took every catering or group request or every reservation as our guests call in (and never turned anyone away), we would sell out quickly on our highest demand days and lose the opportunity to sell more desirable patterns and/or higher rated business So, we use caps and restrictions to YIELD the demand. We pick and choose what patterns and rates we take and when.
REVPAR = Rate x Occupancy Focus on REVPAR REVPAR = Rate x Occupancy Always a balance between occupancy and rate Pattern management Also REVPASF
Whether or not to book a group or take a chance on the future? Rolling the Dice... Whether or not to book a group or take a chance on the future? SELL TO GROUP SELL AT DISCOUNT SELL AT FULL PRICE SELL TO TRANSIENT or.... EMPTY ROOM Explain scenario: We have two options today: Sell a room to the caller on the telephone for a discount. (OR GROUP) OR Wait and See We need to know what demand is out there!! REVENUE Discount Rate = $350 Full Rate = $500 Empty Room = $0
We would be able to make better decisions... Forecasting Demand If we knew.... What group leads will come in next? Will they really pick up the rooms they contracted? Who else is coming…? When will they arrive? How long will they stay? When will they book? How rate sensitive are they? We would be able to make better decisions... Forecasting demand is multi-layered... LOS, lead time, demand by room type Transient resort guest – stays longer and spends more in ancillary....
Forecasting Demand What we can look at... Economic indicators Local events Holidays Competitive rate shops Historical intel Future PACE Future PACE for competitive set Demand by day of week, segment, room type ETC.... Add lead time – how important it is for resorts – how it can change
Where can we find the intel... Systems/Reports Where can we find the intel... News Delphi IDeaS Demand 360 Hotelligence Rate 360 Internal data - Company BI tool – past and future Internal spreadsheets STR – past performance ETC.... Where do we look for this.... Delphi/GRC IDeaS - displacement Demand 360 STR Show you some examples of these
Delphi – GRC – where we load our group leads – our hotel puzzle for group... You can see “transient protect” for the transient demand piece
IDeaS displacement analysis – looks at the transient demand and at profitability with other spend. The better the “teeth” in the group, the less displacement. Profit – buyout – displacement of ancillary from other segments
Demand 360 – can drill down into what is in the comp set by day Compression that will give us demand later
STR report looks at how we faired verses our comp set – who played the occupancy/rate game the best given the demand coming in
Get ready Put on your revenue management hat... Let’s test your skills and play a little game... Get 2-6 volunteers to come play the game... Everyone to play, but focus on their results.
Who you gonna take? You are the General Manager of your own 5-room hotel I will read transient reservation opportunities You don’t know what reservation opportunities will call or when Accept or turn it down at the time the reservation opportunity is read If accepting, write the rate in the room and days it is filling You can use the same room for multiple reservations, but they cannot overlap (no double booking sleeping rooms!) Do not go back and write in the reservation opportunity after it has been read Do not overbook, accept waitlists or walk opportunities Do not erase an opportunity once you have written it down
The phone is ringing...
Who you gonna take? First call Tuesday arrival for 2 nights, BAR (Best Available Rate) rate
Who you gonna take? Second caller Sunday arrival for 4 nights, BNB (Bed -n- Breakfast) rate
3rd call Wednesday arrival for 4 nights, Advance Purchase Who you gonna take? 3rd call Wednesday arrival for 4 nights, Advance Purchase 3
4th call Tuesday arrival for 3 nights, Citi bank rate Who you gonna take? 4th call Tuesday arrival for 3 nights, Citi bank rate 4
Next call Monday arrival for 2 nights, BAR rate Who you gonna take? Next call Monday arrival for 2 nights, BAR rate 5
Next call Tuesday arrival for 2 nights, Citi bank rate Who you gonna take? Next call Tuesday arrival for 2 nights, Citi bank rate 6
Next call Wednesday arrival for 1 night, BAR rate Who you gonna take? Next call Wednesday arrival for 1 night, BAR rate 7
Next call Sunday arrival for 5 nights, Stay Longer Who you gonna take? Next call Sunday arrival for 5 nights, Stay Longer 8
Next call Saturday arrival for 1 night, Advance Purchase rate Who you gonna take? Next call Saturday arrival for 1 night, Advance Purchase rate 9
Next call Saturday arrival for 1 night, BNB rate Who you gonna take? Next call Saturday arrival for 1 night, BNB rate 10
Next call Tuesday arrival for 4 nights, BNB rate Who you gonna take? Next call Tuesday arrival for 4 nights, BNB rate 11
Next call Monday arrival for 3 nights, BAR rate Who you gonna take? Next call Monday arrival for 3 nights, BAR rate 12
Next call Wednesday arrival for 2 nights, Citi bank rate Who you gonna take? Next call Wednesday arrival for 2 nights, Citi bank rate 13
Next call Thursday arrival for 2 nights, Advance Purchase Who you gonna take? Next call Thursday arrival for 2 nights, Advance Purchase 14
Next call Monday arrival for 5 nights, Stay Longer Who you gonna take? Next call Monday arrival for 5 nights, Stay Longer 15
The phones are quiet.... Let’s tally it up Who you gonna take? The phones are quiet.... Let’s tally it up
The Data don’t Lie! $3,400 revenue 20 occupancy points $46.03 ADR If we took the reservations as they came in: 60% occupancy $7,550 in revenue $359.52 ADR $215.71 RevPAR Optimal: 80% occupancy $10,950 in revenue $405.56 ADR $312.86 RevPAR $3,400 revenue 20 occupancy points $46.03 ADR $97.14 RevPAR You can think about this with groups as well. If we put on the groups all at once, with different patterns, then we might not be able to fill in the nights around them... The more information on the group leads, the better we can quickly analyze... And book the business with you!
Any questions?? About anything we covered or anything else?
Thank you!!