Xotels in their eBook titled ‘Leadership in Revenue Management’, defines revenue management as “Selling the Right Room to the Right Client at the Right Moment and the Right Price”. They have also added this, “On the Right Distribution Channel with the best commission efficiency”.
I was Group Sales Manager (then General Manager) at the Holiday Inn in Chico, California when I started learning or might I say dabbling in revenue management. I was working closely with Mohammad Rana our management consultant who gave me guidance and the basic tools in understanding this seemingly complicated discipline. I looked at his laptop where he had a program with all these numbers in the screen and I blinked. My mom who is a Physics and Math major swears that my brain simply goes into rejection mode when I see numbers.
But fear not, there is a light at the end of the tunnel. I learned the parameters and certain indicators that helped me through this labyrinth. So, whether you are a front desk agent, sales coordinator, or sales manager I hope this helps you. But wait! This is not a cue for you think you are an expert in revenue management after this. Even I will not claim that for myself.
These are just tips that would help you have a productive conversation with your revenue manager. Or sometimes you are just pressed for time that you need to give a quote, as in now! I ran into those situations many times as my revenue manager was always traveling around looking after several hotels.
Here is one sample situation: It is March 15, 2016 and a coach of an out of town basketball team calls you inquiring about the rate for his team playing versus your community college basketball team. Let’s say Saturday - September 10, 2016.
1) From your property management system (there are different ones depending on the hotel brand), pull out the history of September 1 to 30, 2015.
- September 10, 2015 was a Thursday. Check the nearest Saturday which is the 12th. They plan these things on Saturdays which is usually busy,
- Note the Occupancy for the day. Individuals and group.
- Note the ADR (Average daily rate) for the day.
- Was there any event that weekend that made for higher occupancy?
2) From your property management system (there are different ones depending on the hotel brand), pull out the forecast of September 1 to 30, 2016.
- Note the Occupancy for the day. Individuals and group.
- Note the ADR (Average daily rate) for the day.
- Is the same event returning this year?
- Are there other groups already booked that day?
3) Research your competitive set.
- Pull out 2015 STR report. Compare how your hotel fared in occupancy, average daily rate, market share versus your competitive set. Adjust accordingly.
- Search their 2016 rate on their website or 3rd party websites. This is a good estimate (guestimate) of their percentage occupancy. But if you have a friend in that hotel, ask!
4) Research the group, i.e. the basketball team.
- Did they book last year?
- How many rooms did they actually use from the original block.
- If there are other groups what type are they?
- Note: That same wedding block will not return.
- There were 2 sports teams blocked and one of them is this team.
5) Therefore: Make the recommendation to your revenue manager.
- The quoted rate will be between the rate of 2015 and current 2016. If this is the 1st group booked, then the lower range rate applies.
- If there are more groups already booked the rate will be higher.
- Make sure you have a good ratio of individual and group bookings.You do not want your hotel to be fully booked by the same low group rate.
- Remember the law of supply and demand. The less rooms you have available the higher the rate goes.
- Number of rooms will be based on their needs. Any additional requirement is subject to space and rate availability.
- Set a deadline to give you the name list 30 days before arrival. Do not keep holding on to the rooms or the rate if the team is past the deadline. But do give them a call or email to remind them of the deadline. Also, before you cancel their group block.
- Complimentary rooms if offered are not given up front and do not have cash value. It must be offered as 15(example only) paid rooms + 1 room free. It must be used at the time the group is in-house. Or at a later date with date and use restrictions.
If you have any questions, feel free to leave a comment. Do you want to know more? XOTELS has a free downloadable ebook: HOTEL REVENUE MANAGEMENT BOOK AND ARTICLES
Good luck and have fun!
