Welcome Revenue Management – An Insider’s Perspective Alise Deeb

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Presentation transcript:

Welcome Revenue Management – An Insider’s Perspective Alise Deeb Senior VP, Revenue Management La Quinta Inn & Suites

Topics of Conversation History of the Industry Recovery Future Forecast Basics of Revenue Management Understanding the Customer Strategies Partnership with Hotels Q&A © 2012 CTDA, All Rights Reserved.

What Happened? Data From the Smith Travel Data Conference Understand the relationship between GDP and Hotel Demand © 2012 CTDA, All Rights Reserved.

Demand Returned... Sourced by STR – Hotel Conference 2011 Discussion on Recovery Pricing doesn’t drive demand as illustrated in 2001 and 2009 What happened to pricing in 2012? Sourced by STR – Hotel Conference 2011 © 2012 CTDA, All Rights Reserved.

Recovery… Review of the Top 25 Markets as defined by Smith Travel Research Only 4 markets have recovered their ADR (Nashville, New Orleans, Oahu Island, and San Francisco) West Coast currently has the highest growth in RevPAR (Revenue Per Available Room) 15 Markets will grow RevPAR greater than 6.5% by end of 2012 ADR In Top 50 Markets – Currently 4.7% below previous peak Starbucks have raised their rates faster than the hotel industry © 2012 CTDA, All Rights Reserved.

Next Year’s Forecast 2012 STR PKF PWC Supply 0.5% 0.4% Occupancy 2.1% 2.4% 2.5% ADR 4.4% 4.2% 4.6% RevPAR 6.5% 6.7% 7.2% 2013 STR PKF PWC Supply 0.9% 0.8% 0.7% Occupancy 0.3% 1.1% 0.6% ADR 4.6% 5.0% 4.9% RevPAR 6.2% 5.6% 2012’s demand has continued to grow due to the limited supply growth 2013’s Forecast varies by company, all agree on continued growth © 2012 CTDA, All Rights Reserved.

Revenue Management: Science or Fiction? Economic Factors Supply & Demand Unemployment Gas Prices Inflation Political Uncertainty Group & Base Business Other Events Holidays Weather Details about Hotel growth, financing Group & Base: Conventions, transportation crews Events: Superbowl, RNC/DNC, July results (not a slump and why), Hurricanes – what Issac did this year © 2012 CTDA, All Rights Reserved.

Revenue Management: Science or Fiction? Lead Indicators Booking Pace Group Pace Tracking Interest on the Internet Results & Reporting Travelclick Smith Travel Automated Revenue Management Systems Many other tools and services available for Business Intelligence providing hoteliers insight Is it really pricing? Use of Hotelligence Pricing can drive share it doesn’t create demand… typically not the most expensive opportunity © 2012 CTDA, All Rights Reserved.

Understanding what drives the choice… Why does the consumer travel? Not all about price Location Loyalty Program Hotel Amenities Buying and Selling and the Emotional Response Communication and Marketing Self Booking Tools vs. the traditional Travel Agent model Social Media (Trip Advisor, etc…) © 2012 CTDA, All Rights Reserved.

Just the Facts… What are the many factors that Revenue Managers consider when negotiating discounts? Hotel needs: Market performance Performance in the marketplace Hotel’s Budget Historical Preference New Supply New Ownership/Renovations © 2012 CTDA, All Rights Reserved.

Guest/Company profile: Just the Facts… Guest/Company profile: Volume Booking Pace – when do they book? Length of Stay When do they stay? Day of Week Month How do they book? Booking Channel Number of preferred hotels © 2012 CTDA, All Rights Reserved.

What are the Strategies? Dynamic Pricing – combination of time-based strategies combined with supply and demand, use of rationale pricing as a baseline Day of Week – Every day is assigned a value Length of Stay – Price is determined by check in and check out Static Pricing – Set Rates, may include some seasonality typically has a high use of discounting SE – understanding Price gouging © 2012 CTDA, All Rights Reserved.

What are the Strategies? Special Event Pricing – Implementing pricing based on event demand vs. mother nature Seasonality – defined by either demand or what the market will sustain Bottom Line – Opportunity pricing that responds to the marketplace activity SE – understanding Price gouging © 2012 CTDA, All Rights Reserved.

Partnering with Hotels Positioning yourself for better pricing Communicating and limiting hotel participation Provide additional data Deliver on commitments Open to Dynamic Pricing for preferred hotels Comparing “Apples to Apples” Education/Training with Technology Booking Tools Mobile Apps © 2012 CTDA, All Rights Reserved.

Q & A © 2012 CTDA, All Rights Reserved.