Tutorial introduction to revenue management for hotels hospitality seminar what is revenue...

Introduction to Hotel Revenue

Management

Earn More by Selling the Same

Presented by Tomeu Pons

7 May 2013 | Miami Beach, FL

2222Hotel Revenue Management Seminar – Miami Beach, FL - 7 May 2013 Presented by: Tomeu Pons [email protected] @tomeu_pons

Introduction to Revenue ManagementPresentation

The main objective of this seminar is to understand the purpose of revenue management in both technological and commercial terms.

With this information, a hotel can evaluate, develop and optimize its pricing strategy with the goal of maximizing profits.


Introduction to Revenue ManagementPresentation

Professor: Tomeu Pons Professor: Tomeu Pons Professor: Tomeu Pons Professor: Tomeu Pons [email protected]@[email protected]@gmail.com

Collaborating Professor Collaborating Professor Collaborating Professor Collaborating Professor –––– Turisme Sant Ignasi TSI, FundaciTurisme Sant Ignasi TSI, FundaciTurisme Sant Ignasi TSI, FundaciTurisme Sant Ignasi TSI, Fundacióóóón ESADEn ESADEn ESADEn ESADE

Tourism Education Manager Tourism Education Manager Tourism Education Manager Tourism Education Manager –––– Cibernarium, Barcelona ActivaCibernarium, Barcelona ActivaCibernarium, Barcelona ActivaCibernarium, Barcelona Activa

Collaborating Professor Collaborating Professor Collaborating Professor Collaborating Professor –––– University of BarcelonaUniversity of BarcelonaUniversity of BarcelonaUniversity of Barcelona

Educated in Hospitality, Marketing, EEducated in Hospitality, Marketing, EEducated in Hospitality, Marketing, EEducated in Hospitality, Marketing, E----commerce and IT Systems in commerce and IT Systems in commerce and IT Systems in commerce and IT Systems in

Escola HotelerEscola HotelerEscola HotelerEscola Hoteleríííía UIB, ESADE, La Salle URL and UPCa UIB, ESADE, La Salle URL and UPCa UIB, ESADE, La Salle URL and UPCa UIB, ESADE, La Salle URL and UPC

Chief Operating Office Chief Operating Office Chief Operating Office Chief Operating Office –––– Flamingo HotelierFlamingo HotelierFlamingo HotelierFlamingo Hotelier

Previously, Consultant ,Director of Marketing and CEO in companiPreviously, Consultant ,Director of Marketing and CEO in companiPreviously, Consultant ,Director of Marketing and CEO in companiPreviously, Consultant ,Director of Marketing and CEO in companies es es es

such as The Perfect Hotels, Sercotel, Hotusa and SAPsuch as The Perfect Hotels, Sercotel, Hotusa and SAPsuch as The Perfect Hotels, Sercotel, Hotusa and SAPsuch as The Perfect Hotels, Sercotel, Hotusa and SAP


Introduction to Revenue ManagementAgenda

• Definition• Price• Effects on a hotel• Distribution: direct and indirect• When it is used• Factors• Tactics• Calculating prices• Reporting, statistics and tools• Exercises• Glossary• Exam• Notes


Introduction to Revenue ManagementDefinition

Revenue Management is a commercial management techniquethat helps us to sell the right product at the right moment at the right price to the right client.

Wikipedia: http://en.wikipedia.org/wiki/Revenue_management


Introduction to Revenue ManagementWhy use RM?

Revenue Management is a strategy we can use in response to:

• Increased competition• Increase in channels of distribution• Transparency in prices• Increase in special promotions and discounts• Decrease in expected response time to clients• 80% of sales are influenced by online channels



Revenue Management is a method of managing sales of hotel inventory by applying yield management techniques

Revenue Management: Commercial management technique that helps us sell the rightproduct at the right moment at the right price to the right client

Yield:The techniques, formulas and strategies hotels use to manageinventory, price and sales policies to maximize revenue generated from the sale of this inventory


Introduction to Revenue ManagementBasic Elements of Revenue Management

Basic elements of Revenue Management used to manage inventory:

• Historical data – statistics, demand and trends• Forecasts• Price management tools• Overall strategy• Pricing policies

With the above, we can address:

• Fixed and perishable inventory• Anticipated sales• Customer segmentation


Introduction to Revenue ManagementImprove RevPAR and GopPAR

RevPARGopPAR

RevPARGopPAR

Increaseyour

RoomsADR

Increaseyour

RoomsADR

Increaseoccupancy

Increaseoccupancy

MaximizeRevenueand profit

MaximizeRevenueand profit


Introduction to Revenue ManagementDesired equilibrium in response to a changing market

Sell at

high prices

Sell at

low prices


Introduction to Revenue ManagementThe Customer

The customer is the most important factor in determining price.

Each client is different and has their own motivation:

• Different motives• Different expectations• Willing to pay different prices• Interested in different products

To understand this environment we must ‘segment’ the market, and for each of these segments we must adapt:

• Interested in different products• Pricing• Reservation terms• Marketing along the path-to-purchase


Introduction to Revenue ManagementThe Product

The product is another of the key factors.

What is it about our product that drives sales?• Hotel• Destination• Experience• Rooms• Services

Once we determine this, we can effectively develop our product:

Create additional room types?Create a range of price points?


Introduction to Revenue ManagementThe Price

Although the price seems to be a lever we control, this iscompletely false:

- Price is determined by demand- Prices rise and prices fall- High seasons and low seasons- Years with low/no demand- Channels with low/no demand- Competition, local and international affects demand

However, there are techniques and factors that enable us to increase prices.


Introduction to Revenue ManagementThe Moment of the Reservation

The moment of reservation is a key element in the managementof prices and quite often it isn’t take seriously enough

It’s an important moment for the customer just as much as it isan important moment for the hotel. Both must work together in the same way.

Many techniques exist for both players. Forecasts based on historical data help us a great deal.


Introduction to Revenue Management

How it was born …



Where it was born, how and what need it met…



Where it was born, how and what need to it meet

These sales techniques were developed during the middle of the 20th century by American companies.

Once their information systems were computerized, they wereable to apply these methods effectively.

Companies could sell airplane tickets at different prices. Theyrealized that different clients, at different times, with differentmotivations, were willing to pay different prices.

To be able to ‘predict’ how much clients were willing to pay for a ticket, they developed ‘Yield’ techniques that allowed them to fixed these prices. It was important for them to computerize and collect information about supply and demand.


Introduction to Revenue ManagementAn example


Introduction to Revenue ManagementVariability of industry pricing


Introduction to Revenue ManagementEvolution of Tourism Pricing Management

History of Pricing

The total acceptance and integration of the Internet as a majorsales channel changed the way hotels price their inventory:

2003 – Some Majors changed to dynamic pricing2004 – Fixed Consortia pricing disappeared2005 – Decrease number of Categories and continued change to

dynamic pricing2006 – Some corporate accounts are already dynamic2007 – BAR is implemented completely



Pricing

Techniques to determine prices are developed in the heart of each company. Setting prices can vary depending on the strategyof the company.

The main factors in setting prices are:

• Production costs• Market• Competition• Demand• Product positioning


Introduction to Revenue ManagementPricing

Where do prices come from?What are customers willing to pay?

$

$

$

$


Introduction to Revenue ManagementPricing

Techniques to set the prices of a good or a service…

Setting of prices can focus on anything from cost of production to consumer demand.

From the point-of-view of marketing, an ‘efficient price’ is a pricethat is close to the maximum price a consumer is willing to pay.

In economic terms, it is a price that transfers the most valueobtained by the consumer to the producer.


Introduction to Revenue ManagementPricing – Where do prices come from?

In the mind of the consumer, they are comparing differentoptions (substitute products), taking into consideration theirbudget and the benefits of the purchase (e.g. pleasure).

This determines, in their minds, the right price they’d pay.

For a company to increase profitability from sales, they mustknow in each moment what is the approximate maximum price a customer is willing to pay for the product or service.

To increase the consumers’ perceived value of our products and services, we must take in to account factors such as product, price, distribution and promotions.


Introduction to Revenue ManagementPricing – An Efficient Price

The efficient price is the maximum consumers are willing to pay. Prices are influenced by multiple factors…

But they are only perceived as ‘the right price for me or not’



Now that we understand that prices are factors affected by multiple variables and are only perceived as

‘the right price for me or not’

We know we need to work with prices, adjust them and takeadvantage of them so they are perceived as ‘the right price for me’

Now that we understand that prices are factors affected by multiple variables and are only perceived as

‘the right price for me or not’

We know we need to work with prices, adjust them and takeadvantage of them so they are perceived as ‘the right price for me’


$$ $$$ $$$$$ $$$$$$ $$$$$$$$$$$$$$$$$$$$


How prices were set and how prices are currently set

Without Yield – Prices based upon cost

With Yield – Prices based upon demand

Cost of ProductionCost of

DistributionDesiredProfit

Cost of ProductionCost of

DistributionDesired

ProfitYIELD

Pr

$$ $$$ $$$$$ $$$$$



Real impact on hotels

A hotel has 200 rooms…

If they apply RM for each of their rooms and each roomachieves an increase of €2, the impact on final results issignificant.

200 rooms x 2$ = 400$/day x 365 days = 146.000$

200 rooms x 3$ = 600$/day x 365 days = 219.000$

200 rooms x 5$ = 1000$/day x 365 days = 365.000$


Introduction to Revenue ManagementReal impact on hotels

1 Hotel x 100 rooms x 365 days = 36,500 rooms x 1/3 = 12,166 rooms

12,166 x 3 $$$$ = 36,498 $$$$12,166 x 6 $$$$ = 72,996 $$$$12,166 x 9 $ $ $ $ = 109,494 $$$$

TOTAL ANNUAL INCREASE = 218,988 $$$$



Real impact on hotels

Nº of Rooms

Pri

ce

Pricing Mix



How clients agree to prices…

32323232Hotel Revenue Management Seminar – Miami Beach, FL 7 May 2013 Presented by: Tomeu Pons [email protected]

Introduction to Revenue ManagementConsumer Behavior


Introduction to Revenue ManagementFixed Pricing (static)


Introduction to Revenue ManagementBooking Engine


Introduction to Revenue ManagementDynamic Pricing – Actions


Introduction to Revenue ManagementDistribution – Direct or Indirect


Introduction to Revenue ManagementMaintaining Indirect Distribution

38383838Hotel Revenue Management Seminar – Miami Beach, FL 7 May 2013 Presented by: Tomeu Pons [email protected]

Introduction to Revenue ManagementBillboard Effect



Implementation


Introduction to Revenue ManagementDefinitions

Revenue Manager:Revenue Manager:Revenue Manager:Revenue Manager:

Revenue Management:Revenue Management:Revenue Management:Revenue Management:

Yield Management:Yield Management:Yield Management:Yield Management:


Introduction to Revenue ManagementCorporate Policy



When is it appropriate to apply ‘Yield’

To implement RM we need:

• Fixed production of stock/products• Perishable product• Clear policy on dynamic pricing• Ability to update prices quickly• Reservations/sales occur within a time period• Ability to segment the market or groups of customers

To manage RM actions, the involvment of Management, Sales and Reservations is required. Their must be a unified vision and mission, and agreed objectives.

It’s necessary to collect information about demand: price paid, reservation dates, dates of consumption, quantity of demand, events in the destination or origen location, competitors’ prices, distributors…



Main techniques

The main RM tools:

• Availability management• Categories• Groups• Reservation terms• Auto-Allotment• CTA, Close-to-Arrival• MinLOS & MaxLOS• Upselling• Overbooking


Introduction to Revenue ManagementHow we set prices

The key point is to have the ‘right price’.

To determine the right price we take in to account:

• Value of our product• Customers’ perceived value• Positioning• Competition


Introduction to Revenue ManagementManagement of Availability

The correct management of availability is one of the mostimportant points of good RM

Factors that affect availability include:

• Reservation terms• Rates• Reservations not guaranteed• Pre-payments• Categories• Groups• Overbooking• Waiting lists• Peaks and valleys in planning


Introduction to Revenue ManagementTypes of Rates

All hotels offer a variety of rate types. The trend is to simplifythem into ‘rate periods’ and apply to BAR ‘discount periods’.

With the current system we lose competitivity and have to workmore hours to organize our work.

Rate types:

• Published rates on hotel website, Booking…

• Negotiated ECI, companies, groups…• Packaged, Expedia…

• Opaque Atrapalo, Lastminute

• Restricted cancellations, advanced payment, promotions


Introduction to Revenue ManagementPrice Matrix

StandardStandard

SuperiorSuperior

RACKRACK PREFPREF BAR1BAR1 BAR2BAR2 BAR3BAR3 BAR4BAR4 BAR5BAR5 BAR6BAR6 WKD1WKD1 WKD2WKD2

200200 160160 140140 120120 110110 100100 9090 8080 7070 6060

215215 175175 155155 135135 125125 115115 105105 9595 8585 7575

SuiteSuite 230230 190190 170170 150150 140140 130130 120120 110110 100100 9090

Creation of numerous published rates that pass from one to the other in function of the level of occupation and expected demand, and we make if from the level of rates that we consider most opportune.

¿What is the BAR Best Available Rate?


Introduction to Revenue ManagementPrice Matrix x Occupation

Demand Profile Nov - Mar Apr - Jun Jul - Oct

Occupation RateBAR

Rate Base

High Demand

Moderate Demand

Low Demand

Very Low Demand

>75% 215205180

65% 190175165

55% 190170150

<50% 14011075

Occupation Rate

>85% 230215195

75% 215205180

65% 190175165

>55% 150130115

Occupation Rate

>95%250235215

75% 235225200

65% 210195185

>55% 170150135

BAR Base Rate

BAR Base Rate


Introduction to Revenue ManagementTotal Demand, Unconstrained Demand

The total demand of a room for a specified day. This figure isindependent of the physical capacity of the hotel.

For the total registered demand for a product, it’s useful to havea system that permits ‘on-request’, including when all rooms are already sold.

This demand will allow us to calculate the “Last Room Value”, orhow much somebody is willing to pay for the last room in ourinventory.


Introduction to Revenue ManagementSegmentation of the Market/Consumers

Market segmentation is the study of consumers and what theirdifferent motives may be for choosing our hotel.

This allows us to to create different segments or groups of consumers according to their motives for the visit.

To know these motives we must be able to analyze ways to increase the demand in each of these segments.

We also must know the segments of our competitors and the destination in general to make comparisons.


In order to investigate the segmentation of the market and consumers, we must collect data:

• Duration of stay• Motive for the stay – source and recipient• Motive to choose hotel• How long in advance did they book hotel• Revenue per room• Revenue per client• Distribution channel where booking was made




Price Elasticity

Price elasticity measures the effect changes in price have ondemand. Sometimes an increase in price causes a significantdecrease in the demand and in other instances only a slightdecrease.

Elastic Demand

• High competition• Standard services

Inelastic Demand

• Low competition• Differentiated services


Example:



Introduction to Revenue ManagementDemand Forecasting

Investigation based on a calendar that allows us to know the demand that our product will have in the future.

The objective is to forecast the periods of low demand and stimulate sales, as well as to know the periods of high demand in which we can increase rates.

Use Google Calendar to collect all of the events that can influence consumption. This tool is easy to use and available to all of the team.


Forecasting consists of the estimation and analysis of futuredemand for a specific product or service using inputs such as historic sales, marketing estimates and promotional information.

Price Waterhouse Coopers



To be able to forecast, it’s necessary to know historic consumptiondata, referring to:

• Consumption weekdays• Consumption during events: conferences, festivals…• Consumption during vacations• Clients – Business or Leisure• Changes in demand

It can be easy to make a forecast. If you can, also make a forecast about your competitors and about the destination.

This document will allow you to know the number of arrivals and departures, occupation by room and possibly revenue from othernon-room sources.It’s a great tool to define internal objectives.



Why do we make forecasts?

• Measure demand• Forsee falls in demand• React to low demand• Define commercial strategy• Apply rates• Restrict sales• Control costs• Control commissions• Financial planning• Human Resources planning

Introduction to Revenue ManagementObjective of Forecasting


Introduction to Revenue ManagementForecasting: Behavior Patterns of Reservations

Booking Pace The booking pace must be monitized for the current day and future days to ensure alignment with the forecast and to be ableto react to any deviations from the forecast that occur.

DailyPick-upThe daily pick-up, and the ability to follow the rhythym of reservations must distinguish individuals and groups.


Introduction to Revenue ManagementPick-Up

The pick-up is the figure that tells us today how many confirmedreservations we have for a specific day.This figure shows us in a detailed way, by day or room type, the % already sold.

This figure allows us to guide our decisions to increase ormaintain rates for a specific day and what we must already applytoday.

The ideal is to be able to analyze and act daily, in all distribution channels, with this information.


Introduction to Revenue ManagementPick-Up

Difference in the number of reservations between one date and another. Example: Reservations made yesterday for the month of June.


Introduction to Revenue ManagementForecasting Elements

To record:

• Objectives reached vs. objectives set• Reservations on the books• Pick-up realized vs. expected pick-up• Expected segments• Average rate• Total revenue

We should forecast:

• Once per week for the next 4 weeks• Once per month for the next 3 months• Once per month every 3 months for the whole year• Once per year for the next year



Demand Curve vs. Advanced Reservation

Individuals

Companies

FIT

Groups

-60 -30 -15 -5 Days before arrival



Demand Curve


Introduction to Revenue ManagementGroups

We should take note of all Group requests in our statistics, so wecan evaluate profitability and apply RM to group pricing.

• Provider• Type of contract• Revenue per room• Revenue per guest• Revenue per group• Group sub-segments• Purpose of the visit• number of and motive for cancellations


Introduction to Revenue ManagementDemand Curve


Introduction to Revenue ManagementTour Operators

Tour operator contracts are the most difficult to apply RM to since the system of prices and sales is already fairly static. Technically, it is a segment ‘not yieldable’.

Hotels should insist the tour operators agree to dynamicprices, but these companies and their ‘packages’ businessmodel make it very difficult commercially to use dynamicpricing methods.

From the analysis of these contracts we can reason that thereare months hotels benefit from them and months where sales opportunities are lost due to them.


Introduction to Revenue ManagementShoulder Days

What is the impact of closing sales for a specific day?The impact of closing sales of a room type for specified dates could be larger than what we believe.

The “Shoulder days” are the days of ‘closed stays’ that implya reservation. In other words, the 2 or 3 days the client wouldhave stayed in the hotel.

This statistic helps us to calculate the impact on revenue when a room type isn’t available.Some segments like groups and tour operators can produce a large number of ‘shoulder days’.



What actions should we take?



Tactics – How to act during high demand

High Demand

• Close or restrict discounts• Apply a minimum of nights, but with caution• Reduce groups and ‘shoulder days’• Reduce ‘late check out’, and in moderation, if possible, ‘late check in’• Increase guarantees and cancellation charges• Increase rates in accordance with those the competition• Increase the cost of packages and hotel services• Apply the full cost of suits and executive rooms• Select dates that are ‘closed to arrivals’• Evaluate the total profit of the hotel and try to increase it• Invoice for all of the nights in case the client shortens their stay



Tactics – How to act during low demand

Low demand:

• Sell added value and special benefits• Offer packages including internal and external products• Don’t close sales of the cheapest category of rooms• Incentivize upgrades• Offer better prices at adjusted budgets• Don’t use ‘stay restrictions’• Motivate hotel staff to be especially attentive• Monitor competitors’ actions• Lower prices



Consistency

Consistency in applying prices…

It’s very important to be consistent with our product, services

and the value we offer.

We must align our value, price and quality, in order to not

disappoint our customers.



Tactics – Four Revenue Management

Principal points to remember:

•

•

•

•

•

•

•

•

•

•

•

•



Questions

When should we reject a sale?

Is it useful to know how much customers spend?

When should we offer a discount?

When should we use overbooking?



How do we measure our Factor Yield / RM

Revenue per Available Room

RevPAR

Room Revenue

o

Average Rate x Occupation

Number of Rooms Available



How do we measure our Factor Yield / RM

Gross Operating Profit – GOP

Rooms Available

Total Revenue

Rooms Available

TRevPAr Total Revenue per Available Room

GOPPar

Gross Operational Profit per Available Room


Introduction to Revenue ManagementElements of Analysis

We have three levels of analysis: daily, monthly and yearly

Daily:• Average occupation• Average rate• Rev PAR• Pick-Up

Monthly:• Geographic origin, GOB• Length-of-stay, LOS• Lead Time• Channel• Commissions

Always: • Profitability of each type of guest


Introduction to Revenue ManagementBenchmarking

Benchmarketing is the study of the competition to discover how they sell, at what price and what their occupancy is. The objectiveis to discover how we can improve and act upon this withdistributors, guests…To be able to improve our commercialization.

At a minimum, benchmarking should give us information on:

• Prices• Room type• Products• Packages• Channels of distribution• Occupation• Services offered


Introduction to Revenue ManagementBenchmarking

My Hotel vs. My Competitors

Who manages their hotel better, Manager A or Manager B?


Introduction to Revenue ManagementDaily Prices

To manage our prices taking into account the prices ourcompetition is selling at, is one of the best tools to help us sellsmarter. From them we can make a number of conclusions.There are a number of ways to obtain this information.

The questions we seek to answer include:

• What is their strategy?• Do they use ‘yield’?• What occupation do they have?• Can it affect our sales?• What would be their future prices?• Do they require minimum stay (L.O.S.)?


Introduction to Revenue ManagementPlace your hotel: market vs. your value

All of the commercial policies and prices of your establishmentmust be consistent with your product and values.

Aligning price, services and product will ensure you have anexcellent perceived value for money and that demand is more loyal and sustained.

Monitor your competitors in terms of their products and associated ‘perceived value’. After, compare your hotel to theirsand adjust your offering to be more competitive and more productive.


Introduction to Revenue ManagementPlace your hotel: market vs. your value

Evaluate your hotel and your competitors:

• Product – room type• Product – hotel services• Price• Channels of distribution• Location• Strengths and weaknesses• Client segments of the hotel• Their presence in other markets• What hotels have similar prices

You can also study the market for your destination, as well as source markets.



Place your hotel: market vs. your value - SWOT

My Hotel

My Environment

Strengths Weaknesses

Threats Opportunities


Introduction to Revenue ManagementMarket Share Report

This study helps us to understand our results compared to ourcompetitors, especially in regards to the average price and occupation.

The parameters are:

MPI. Market Penetration Indexmarket penetration rate vs. the average occupation of ourcompetitors

ARI. Average Rate Indexaverage price index, our average price vs. our competitors

RGI. Revenue Generator Indexrevenue generator index, our share of revenue vs. ourcompetitors


Introduction to Revenue ManagementDistributors

Our presence with distributors is key. We can consult them at any time for competitive data and we can observe the positions they occupy in search engine results.

We can observe how they sell… use of photography, text, reference to locations, positioning of product.

Very good presence with distributors can help our productcompete with superior hotels (in this case we’d be competitiveon price) and with similar hotels (in this case we’d be the better option).


Introduction to Revenue ManagementHow to be present. Distributors and the exponential effect.

Is it really the same hotel? Where will customers book it?

The hotel’s website is not the best option to book it in this case.



Many published rates and many products

An establishment should have however many rates they believeto be opportune. All rates should be competitive depending uponthe moment they are applied.

Attention to the offers and closed prices and/or flat-rates offeredto companies and agencies.

If the latter act with a discount code, we must always referencethese exceptions and offers.

All products should always be offered and done so with the largest number of distributors possible.



Pricing Matrix

StandardStandard

SuperiorSuperior


200200 160160 140140 120120 110110 100100 9090 8080 7070 6060

215215 175175 155155 135135 125125 115115 105105 9595 8585 7575

SuiteSuite 230230 190190 170170 150150 140140 130130 120120 110110 100100 9090


Introduction to Revenue ManagementOptimize your supplementary products

Clients for the most part consume on impulse. A direct call to make a reservation sometimes lasts only a few minutes, as can the online process, so we must always present ourselves in the most ‘desirable’ fashion.

Different room types meet different needs of different segments. Why don’t we offer them all?

In the descriptions suggested ‘use/benefits’ are given. Createclear differences between the room categories. Stimulate the thought… ‘a little more per night you can enjoy…’


Introduction to Revenue ManagementUpselling

Upselling is another tool that helps us to achieve good resultsfrom RM.

Two moments when it can be applied:• Moment reservation is made• Arrival at hotel

Offer what the client ‘needs’ in a direct way for a little more money.We must:

• Understand the client• Observe their needs• Propose options• Communicate the benefits


Introduction to Revenue ManagementPrice Parity

Although price parity is a model criticized by some, othersdefend it.

In spite of not being logically sound financially, it’s use has spread and has been accepted by all OTA’s.

Internally, the differences between the reprecussion of the commissions that are considered as costs of promotion orsales; are compensated some OTA’s with others.

In the case of not having parity, clients will buy in mass, the cheapest OTA’s. Although this would be more effective, having one OTA’s dominating almost all sales would be dangerous.


Introduction to Revenue ManagementCommercial Parity

Commercial parity is based on the commercial parameters thatcan influence the client’s purchase

It’s important to have commercial parity with our distributorsbecause they otherwise could have advantages over our ownchannel.

• Payment conditions• Reservation conditions• Cancellation charges• Advance notice of cancellation required• Cleaning charges• Hidden offers• …


Introduction to Revenue ManagementControl Price Parity

Controlling price parity is very important and affects ourrelationship with our clients and distributors.

Technological tools exist to compare prices for our own hotel:

• know who we work with• know who are our distributors• know the mark-up on our product• understand the distributor’s model: retail, merchant, opaque...


Introduction to Revenue ManagementParity Disruptors

Some companies willingly perform actions to cause “ParityDisruption”.

Break the parity of your hotel to get benefits from it, decreasingyour margin so clients choose your property.

In other instances, data is aggregated from different channels to show which has the lower prices.Normally, these companies don’t have direct contracts with the hotel and use price comparison to attract clients.

If it’s necessary, make reservations in each channel to get the voucher and know which agency is selling your property in thisway.


Introduction to Revenue ManagementOverbooking

Overbooking isn’t an effect or a consequence. In RM, it is a tool that allows us to get the most ‘play’ out of ourhotel’s availability.

On many occasions, the no-shows, last minute cancellations and shortened stays, affect our profitability.It’s recommended to have an action plan for these occasions.

We need to think about how these deviations will impact:costs of stay, costs of transportation, compensation for servicesor monetary, and possibly sanctions.


Introduction to Revenue ManagementOverbooking

Calculate your level of Overbooking and evaluate risk vs. Profit

Reservations Received > > Arrivals

Not GuaranteedCancellations

No Shows

Rates we chargeTransfer Expenses



Parameters to measure efficacy

REVPAR: REVPAR: REVPAR: REVPAR: RoomRoomRoomRoom Revenue per Revenue per Revenue per Revenue per AvailableAvailableAvailableAvailable RoomRoomRoomRoom

TREVPAR: Total Revenue per TREVPAR: Total Revenue per TREVPAR: Total Revenue per TREVPAR: Total Revenue per AvailableAvailableAvailableAvailable RoomRoomRoomRoom

TREVPEC: Total Revenue per TREVPEC: Total Revenue per TREVPEC: Total Revenue per TREVPEC: Total Revenue per ClientClientClientClient

GOPPAR: GOPPAR: GOPPAR: GOPPAR: GrossGrossGrossGross Operating Operating Operating Operating ProfitProfitProfitProfit per per per per AvailableAvailableAvailableAvailable RoomsRoomsRoomsRooms

REVPAM: REVPAM: REVPAM: REVPAM: ConferenceConferenceConferenceConference////BanquetingBanquetingBanquetingBanqueting Revenue per Revenue per Revenue per Revenue per AvailableAvailableAvailableAvailable M2M2M2M2

REVPASH: F&B Revenue per REVPASH: F&B Revenue per REVPASH: F&B Revenue per REVPASH: F&B Revenue per AvailableAvailableAvailableAvailable seatsseatsseatsseats and and and and hourhourhourhour



When we obtain more by applying RM



Where to obtain more by applying RM



How much you’ve obtained by applying RM



Practice: How to determine our prices


Introduction to Revenue ManagementPricing Matrix

StandardStandard

SuperiorSuperior


200200 160160 140140 120120 110110 100100 9090 8080 7070 6060

215215 175175 155155 135135 125125 115115 105105 9595 8585 7575

SuiteSuite 230230 190190 170170 150150 140140 130130 120120 110110 100100 9090

Pricing Matrix – General



StandardStandard

SuperiorSuperior


200200 160160 140140 120120 110110 100100 9090 8080 7070 6060

215215 175175 155155 135135 125125 115115 105105 9595 8585 7575

SuiteSuite 230230 190190 170170 150150 140140 130130 120120 110110 100100 9090

25% 50% 75% 100% 33% 66% 99%

Pricing Matrix – Very Low Season



StandardStandard

SuperiorSuperior


200200 160160 140140 120120 110110 100100 9090 8080 7070 6060

215215 175175 155155 135135 125125 115115 105105 9595 8585 7575

SuiteSuite 230230 190190 170170 150150 140140 130130 120120 110110 100100 9090

25% 50% 75% 100%

Pricing Matrix – Low Season



StandardStandard

SuperiorSuperior


200200 160160 140140 120120 110110 100100 9090 8080 7070 6060

215215 175175 155155 135135 125125 115115 105105 9595 8585 7575

SuiteSuite 230230 190190 170170 150150 140140 130130 120120 110110 100100 9090

33% 66% 99%

Pricing Matrix – Mid-Season



StandardStandard

SuperiorSuperior


200200 160160 140140 120120 110110 100100 9090 8080 7070 6060

215215 175175 155155 135135 125125 115115 105105 9595 8585 7575

SuiteSuite 230230 190190 170170 150150 140140 130130 120120 110110 100100 9090

25% 50% 75% 100%

Pricing Matrix – Mid-to-High Season



StandardStandard

SuperiorSuperior


200200 160160 140140 120120 110110 100100 9090 8080 7070 6060

215215 175175 155155 135135 125125 115115 105105 9595 8585 7575

SuiteSuite 230230 190190 170170 150150 140140 130130 120120 110110 100100 9090

25% 50% 75% 100%

Pricing Matrix – High Season



Dynamic Pricing

Advantages of Dynamic pricing:

• Eliminate discounts in periods of high demand

• Reduce availability of rooms for groups

• Increase discounts in periods of low demand

• Establish ‘Special Events’ rates or for periods of extraordinary high demand



Revenue Algorhythm

Revenue from ‘automatic application’ functions with analgorhythm of revenue included in the PMS or CRS.

Calculation based on: room type, bands of prices allowed, % occupation or level of actual sales.

Must exclude some reservations from the system so they are notfigured into the the base calculation of revenue. By human orautomatic calculation.

System can become more sophisticated with algorhythms orartificial intelligence by combining: historic data, competitivedata, booking window, pick-up, customer searchs in the reservation booking engine calendar.

Some companies use cookies and add web tracking data as well.



Revenue Algorhythm Example

• 1 hotel with 500 rooms• 5 room types• 150 rooms are doubles• Sales from 1 May 2020: 22% = 33 rooms• Price range: 116$ - 148$• Difference: 32$ • Mid-High Season. Rate change every 20% change in occupation.• Rate change in increases of 6.40$

Prices on display:

1. 0% 116.0 $2. 20% 122.4 $3. 40% 128.8 $4. 60% 135.2 $5. 80% 141.6 $al 100% 148.0 $

Prices on display:

1. 0% 116.0 $2. 20% 122.4 $3. 40% 128.8 $4. 60% 135.2 $5. 80% 141.6 $al 100% 148.0 $



Revenue Algorhythm Example

We can create an algorhythm for our PMS or CRS, or implementnew, easy-to-use RM tools.

Numerical Algorithms Group - Industries


Introduction to Revenue ManagementDay-to-Day Tools


Introduction to Revenue ManagementRemember: Basic Elements of RM

Basic elements of RM are:

• Historic information – statistics, demand and trends• Forecasting• System tools to manage prices• Overall strategy• RM pricing policy

With them, we act upon:

• Fixed and perishable inventory• Anticipated sales• Opportunity to segment customers


Introduction to Revenue ManagementStrategy and Rates

With a simplified rate structure, we increase the ability to sell and provide clarity to customers to make their purchase decision easier.

RATE STRUCTURE

• Double Room 200,50 $

• Superior Room 350,50 $

• Executive Room 510,50 $

• Junior Suite 620,50 $

• Suite 862,50 $

COMPLEMENTARY PRODUCTS & SERVICES

• Airport Transfer 60 $

• Breakfast Buffet 18 $

• Flowers 23 $


Introduction to Revenue ManagementBenchmarking & Compset

Competitive analysis shouldn’t be the only factor used to develop your strategy, but it is a key component.

We can share our results anonymously in order to compare our results with those competitors’ hotels who also share their data anonymously.

This study helps us understand our results in comparison with our compset.


Introduction to Revenue ManagementHistoric Data

Different reports that will help us analyze ‘the past’ by segments, monthly day-to-day, competition, etc.…

DATE LCR LGSIND.

CORP

GRP.

CORPIND. LEIS GRP. LEIS OTH Total LCR LGS

IND.

CORP

GRP.

CORPIND. LEIS GRP. LEIS OTH Total LCR LGS

IND.

CORP

GRP.

CORPIND. LEIS LEIS. GRP OTH Total LCR LGS

IND.

CORP

GRP.

CORPIND. LEIS LEIS. GRP OTH Total

01-nov WED 28 32 12 1 59 0 2 134 93 48 69 15 61 0 0 286 73 38 65 13 39 0 0 228 20 10 4 2 22 0 0 58

02-nov THU 31 32 20 1 84 0 1 169 78 47 49 17 57 0 0 248 50 37 45 15 32 0 0 179 28 10 4 2 25 0 0 69

03-nov FRI 51 32 34 1 114 0 4 236 67 48 30 20 38 0 1 204 41 38 34 16 28 0 1 158 26 10 -4 4 10 0 0 46

04-nov SAT 86 32 68 2 118 0 3 309 83 46 40 25 25 0 0 219 58 37 37 22 15 0 0 169 25 9 3 3 10 0 0 50

05-nov SUN 81 33 33 4 122 0 1 274 103 46 37 33 22 0 0 241 73 37 31 24 14 0 0 179 30 9 6 9 8 0 0 62

06-nov MON 84 34 29 13 107 0 1 268 117 45 51 49 28 0 0 290 86 36 35 43 18 0 0 218 31 9 16 6 10 0 0 72

07-nov TUE 101 35 34 28 95 0 1 294 107 45 51 49 26 0 0 278 79 36 35 32 17 0 0 199 28 9 16 17 9 0 0 79

08-nov WED 106 35 35 33 92 0 1 302 95 45 41 38 31 0 0 250 60 36 32 9 19 0 0 156 35 9 9 29 12 0 0 94

09-nov THU 108 35 39 43 94 0 1 320 66 45 31 27 36 15 0 220 38 36 22 2 20 15 0 133 28 9 9 25 16 0 0 87

10-nov FRI 85 34 43 58 87 0 2 309 40 44 36 21 50 15 0 206 23 35 23 4 34 15 0 134 17 9 13 17 16 0 0 72

11-nov SAT 70 34 24 125 62 0 1 316 51 43 29 46 40 0 0 209 36 34 19 43 29 0 0 161 15 9 10 3 11 0 0 48

12-nov SUN 71 35 28 125 54 0 1 314 64 42 27 49 31 0 0 213 49 33 14 43 24 0 0 163 15 9 13 6 7 0 0 50

13-nov MON 67 35 41 72 64 0 1 280 76 42 30 52 27 0 0 227 59 33 15 43 20 0 0 170 17 9 15 9 7 0 0 57

14-nov TUE 62 37 51 77 68 0 1 296 76 41 34 57 24 0 0 232 56 32 18 52 16 0 0 174 20 9 16 5 8 0 0 58

15-nov WED 55 36 54 81 88 0 1 315 65 38 42 16 24 0 0 185 41 30 28 11 16 0 0 126 24 8 14 5 8 0 0 59

16-nov THU 40 36 57 60 103 0 1 297 58 37 40 17 24 0 0 176 42 29 32 12 14 0 0 129 16 8 8 5 10 0 0 47

17-nov FRI 44 37 80 39 87 0 1 288 59 37 52 41 67 0 0 256 50 29 44 36 59 0 0 218 9 8 8 5 8 0 0 38

18-nov SAT 44 37 89 23 91 0 1 285 49 36 53 75 85 0 0 298 42 28 45 76 71 0 0 262 7 8 8 -1 14 0 0 36

19-nov SUN 50 36 104 19 75 0 1 285 59 38 58 75 95 0 0 325 56 28 49 76 82 0 0 291 3 10 9 -1 13 0 0 34

20-nov MON 54 35 100 20 74 10 1 294 65 37 61 73 98 0 0 334 60 27 49 74 86 0 0 296 5 10 12 -1 12 0 0 38

21-nov TUE 53 35 99 20 68 10 1 286 64 38 55 70 81 0 0 308 63 28 44 72 71 0 0 278 1 10 11 -2 10 0 0 30

22-nov WED 60 35 94 17 65 10 1 282 26 38 41 7 56 0 0 168 22 28 33 7 49 0 0 139 4 10 8 0 7 0 0 29

23-nov THU 52 36 76 14 58 0 1 237 32 38 18 2 30 0 0 120 33 28 11 2 23 0 0 97 -1 10 7 0 7 0 0 23

24-nov FRI 42 37 56 14 48 0 1 198 22 38 9 2 21 0 0 92 19 28 5 2 15 0 0 69 3 10 4 0 6 0 0 23

25-nov SAT 31 36 29 73 48 0 1 218 31 38 13 0 25 0 0 107 21 28 5 40 20 0 0 114 10 10 8 -40 5 0 0 -7

26-nov SUN 48 36 29 60 65 0 1 239 43 36 31 1 23 0 0 134 32 27 14 41 20 0 0 134 11 9 17 -40 3 0 0 0

27-nov MON 53 36 33 43 82 0 1 248 51 36 36 1 25 0 0 149 40 27 19 90 22 0 0 198 11 9 17 -89 3 0 0 -49

28-nov TUE 58 37 33 30 90 0 1 249 38 36 24 1 19 0 0 118 31 27 13 50 15 0 0 136 7 9 11 -49 4 0 0 -18

29-nov WED 48 37 45 20 110 0 2 262 28 36 27 1 17 0 0 109 28 27 15 1 12 0 0 83 0 9 12 0 5 0 0 26

30-nov THU 49 34 61 10 123 0 2 279 30 34 24 0 11 0 0 99 30 25 16 0 5 0 0 76 0 9 8 0 6 0 0 23

1812 1051 1530 1126 2495 30 39 8083 1836 1218 1139 880 1197 30 1 6301 1391 942 847 951 905 30 1 5067 445 276 292 -71 292 0 0 1234

Occupancy 22,42% 13,00% 18,93% 13,93% 30,87% 0,37% 0,48% 83,94% 29,14% 19,33% 18,08% 13,97% 19,00% 0,48% 0,02% 65,43% 27,45% 18,59% 16,72% 18,77% 17,86% 0,59% 0,02% 52,62% 12,81%

8.633.064 6.401.220 5.031.018 1.370.202

1.068,05 1.015,91 992,90 23,01

896,48 664,72 522,43 142,28

Total

Room Revenue

ARR

RevPAR

Last Year Totals On the Books Pick UpOn the Books last week

286248

204 219 241290 278

250220 206 209 213 227 232

185 176

256298

325 334 308

168120

92 107 134 149118 109 99

0

100

200

300

400

01-nov 02-nov 03-nov 04-nov 05-nov 06-nov 07-nov 08-nov 09-nov 10-nov 11-nov 12-nov 13-nov 14-nov 15-nov 16-nov 17-nov 18-nov 19-nov 20-nov 21-nov 22-nov 23-nov 24-nov 25-nov 26-nov 27-nov 28-nov 29-nov 30-nov



Exchange of competitive data



Detailed market segmentation analysis and origins:

Segmentos



Effectively analyze and manage ‘booking trend’

ene-05 ene-06 feb-05 feb-06 mar-05 mar-06 abr-05 abr-06 may-05 may-06 jun-05 jun-06 jul-05 jul-06 ago-05 ago-06 sep-05 sep-06 oct-05 oct-06 nov-05 nov-06 dic-05 dic-06

Occ. 90 days out 25,35% 22,48% 31,39% 15,94% 28,03% 14,36% 14,42% 5,63% 20,66% 8,00% 19,49% 3,54% 15,11% 2,46% 5,65% 8,97% 12,73% 7,93% 7,19% 10,62% 16,55% 14,94% 12,27% 8,98%

Occ. 60 days out 35,05% 31,31% 46,58% 22,30% 10,52% 20,25% 24,62% 11,00% 34,62% 10,52% 22,77% 6,03% 9,02% 12,27% 8,57% 10,71% 20,76% 12,07% 8,58% 12,87% 29,06% 25,23% 18,82% 22,95%

Occ. 30 days out 74,45% 49,49% 79,24% 59,40% 59,52% 35,81% 57,63% 32,61% 50,27% 31,44% 36,13% 34,02% 26,76% 27,96% 26,90% 28,22% 42,62% 34,64% 21,20% 29,89% 62,52% 64,43% 42,15%

Pick up 1st Week 6,21% 1,72% 3,50% 8,86% 11,29% 12,88% 7,40% 14,43% 5,72% 12,06% 6,53% 7,92% 10,25% 9,41% 9,05% 13,94% 9,21% 15,02% 6,68% 8,73% 8,89% 11,98%

Pick up 2nd Week 3,20% 4,14% 8,74% 8,73% 10,05% 15,85% 11,03% 12,15% 12,24% 7,83% 12,23% 9,58% 13,29% 8,16% 12,31% 12,72% 10,23% 15,12% 6,64% 9,12% 6,31% 9,23%

Pick Up 3rd Week 2,31% 6,48% 11,59% 7,33% 5,70% 11,59% 7,10% 10,56% 6,47% 3,70% 7,81% 6,47% 6,48% 5,43% 9,56% 9,23% 7,29% 4,05% 5,04% 8,60% 2,04% 6,46%

Pick Up Final Week 2,79% 4,67% 8,51% 2,46% 3,70% 8,51% 2,04% 5,08% 6,67% 6,40% 6,49% 5,71% 6,12% 7,06% 8,65% 10,69% 7,60% 3,59% 2,79% 2,28% 4,74% 1,97%

Final Occupancy 88,97% 66,50% 81,72% 86,78% 90,25% 81,72% 85,20% 74,83% 81,37% 61,43% 69,19% 63,72% 62,90% 58,01% 66,48% 74,80% 76,95% 72,42% 42,37% 58,62% 84,50% 71,78%

Pick Up Analysis 2005 vs 2006 (Total)

Occupancy Pace Report - 90 Days Out

0,00%

10,00%

20,00%

30,00%

40,00%

1 2 3 4 5 6 7 8 9 10 11 12

2006 2005


0,00%

10,00%

20,00%

30,00%

40,00%

50,00%

1 2 3 4 5 6 7 8 9 10 11 12

2006 2005


0,00%

20,00%

40,00%

60,00%

80,00%

100,00%

1 2 3 4 5 6 7 8 9 10 11 12

2006 2005

Occupancy Pace Report - EOM Figures

0,00%

20,00%

40,00%

60,00%

80,00%

100,00%

1 2 3 4 5 6 7 8 9 10 11 12

2006 2005



Mon Tue Wed Thu Fri Sat Sun

64,88% 71,11% 77,88%

59,03%53,77%62,18%

72,90%

Daily Room Occupancy- Total

5467 77 71

60 53 47


Rooms Occupied - Ind. Corp

41 4140 40

4140

42


Rooms Occupied - Ind. Leis

38 38 40 41 4632 32


Rooms Occupied - Grp. Corp

40 40 44 44

20 24 21


Rooms Occupied - Grp. Leis

43 43 4538

4632

44


Rooms Occupied - Industry

Detailed study, day-to-day, for each season, taking into account the impact of events, festivals and vacation periods on the cityand hotel.



Know our ‘top producers’ with precision


Introduction to Revenue ManagementForecasting

How to develop a good forecasting procedure?Rigorously control daily, weekly and monthly pick-up data

BUSINESS-ON-THE-BOOKS

DATE BAR Guideline IND LEISURE

GRP

LEISUREIND CORP. GRP CORP. OTHER RMS % ADR REV

1.601 24,71% 7.239 11.590.426

01-oct jue BAR 1 60 0 0 0 4 64 30,62% 6.993 447.571

02-oct vie RACK 70 0 0 0 2 72 34,45% 8.881 639.454

03-oct sáb RACK 68 0 0 0 3 71 33,97% 8.832 627.091

WEEK 1 198 0 0 0 9 207 33,01% 8.281 1.714.117

04-oct dom BAR 1 51 0 0 0 7 58 27,75% 7.071 410.091

05-oct lun BAR 1 26 0 0 0 12 38 18,18% 8.093 307.545

06-oct mar BAR 1 33 0 1 0 16 50 23,92% 5.567 278.364

07-oct mié BAR 1 41 0 0 0 13 54 25,84% 5.889 318.000

08-oct jue BAR 1 41 0 0 0 10 51 24,40% 5.376 274.182

09-oct vie RACK 68 0 0 0 1 69 33,01% 8.199 565.728

10-oct sáb RACK 81 0 0 0 1 82 39,23% 8.384 687.454

WEEK 2 341 0 1 0 60 402 27,48% 7.068 2.841.363

11-oct dom BAR 1 82 0 0 0 0 82 39,23% 8.414 689.909

12-oct lun BAR 1 59 0 0 0 0 59 28,23% 7.782 459.127

13-oct mar BAR 1 43 0 0 0 4 47 22,49% 6.210 291.863

14-oct mié BAR 1 45 0 0 0 5 50 23,92% 5.435 271.728

15-oct jue BAR 1 58 0 0 0 5 63 30,14% 6.375 401.637

16-oct vie RACK 71 0 3 0 6 80 38,28% 7.253 580.273

17-oct sáb RACK 76 0 5 0 4 85 40,67% 8.597 730.727

WEEK 3 434 0 8 0 24 466 31,85% 7.350 3.425.265

FORECAST

REVPAR RMS % ADR REV REVPAR P/UP

RNTS

AVG P/UP

%

1.789

2.141 64 30,62% 6.993 447.571 2.141 - 0,00%

3.060 72 34,45% 8.881 639.454 3.060 - 0,00%

3.000 71 33,97% 8.832 627.091 3.000 - 0,00%

2.734 207 33,01% 8.281 1.714.117 2.734 - 0,00%

1.962 58 27,75% 7.071 410.091 1.962 - 0,00%

1.472 38 18,18% 8.093 307.545 1.472 - 0,00%

1.332 50 23,92% 5.567 278.364 1.332 - 0,00%

1.522 54 25,84% 5.889 318.000 1.522 - 0,00%

1.312 51 24,40% 5.376 274.182 1.312 - 0,00%

2.707 69 33,01% 8.199 565.728 2.707 - 0,00%3.289 82 39,23% 8.384 687.454 3.289 - 0,00%

1.942 402 27,48% 7.068 2.841.363 1.942 - 0,00%

3.301 82 39,23% 8.414 689.909 3.301 - 0,00%

2.197 59 28,23% 7.782 459.127 2.197 - 0,00%

1.396 47 22,49% 6.210 291.863 1.396 - 0,00%

1.300 50 23,92% 5.435 271.728 1.300 - 0,00%

1.922 63 30,14% 6.375 401.637 1.922 - 0,00%

2.776 80 38,28% 7.253 580.273 2.776 - 0,00%

3.496 85 40,67% 8.597 730.727 3.496 - 0,00%

2.341 466 31,85% 7.350 3.425.265 2.341 - 0,00%



Competitive Study: my hotel vs. my competitors

Apr May Jun Jul Aug Sep Oct Nov Dec

My Property 284,10 268,93 268,90 222,10 179,60 230,75 238,72 222,16 203,48

SubMarket Class 243,75 246,95 244,40 217,35 186,72 211,18 204,09 180,78 161,84

Index 116,6 108,9 110,0 102,2 96,2 109,3 117,0 122,9 125,7

% Chg

My Property 13,8 -2,3 -10,9 2,0 -2,6 -15,6 -3,2 -4,6 -3,1

SubMarket Class 9,7 -2,8 -5,7 3,5 0,5 -7,2 -8,7 -12,1 -5,8

Index 3,7 0,6 -5,5 -1,4 -3,1 -9,0 6,0 8,6 2,8

Apr May Jun Jul Aug Sep Oct Nov Dec

My Property 211,84 210,15 204,26 184,72 140,30 159,09 172,21 140,45 96,23

SubMarket Class 180,10 187,61 179,93 167,68 136,98 145,83 137,30 100,48 69,23

Index 117,6 112,0 113,5 110,2 102,4 109,1 125,4 139,8 139,0

% Chg

My Property -3,8 -13,1 -24,1 -3,7 -8,4 -28,7 -13,5 -22,4 -14,3

SubMarket Class 5,4 -8,1 -17,6 5,6 1,2 -19,3 -21,5 -35,9 -17,3

Index -8,6 -5,4 -7,9 -8,8 -9,5 -11,7 10,2 21,1 3,7

2008

2008

RevPAR

ADR



ES

29-nov Rank 06-dic Rank 13-dic Rank 20-dic Rank 27-dic Rank 03-ene Rank

Current Subscriber 122% 4 of 7 54% 6 of 7 171% 2 of 7 213% 2 of 7 236% 2 of 7 228% 2 of 7

1 Week Ago Subscriber 119% 4 of 7 50% 5 of 7 209% 2 of 7 201% 2 of 7 236% 1 of 7 204% 2 of 7

2 Weeks Ago Subscriber 129% 3 of 7 49% 5 of 7 268% 1 of 7 224% 2 of 7 222% 1 of 7 151% 2 of 73 Weeks Ago Subscriber 148% 2 of 7 66% 4 of 7 255% 1 of 7 164% 2 of 7 206% 2 of 7 128% 4 of 7

4 Weeks Ago Subscriber 195% 2 of 7 78% 4 of 7 328% 1 of 7 167% 2 of 7 240% 1 of 7 196% 2 of 7

Green: High Market Penetration (greater than 100%) Red: Low Market Penetration (less than 100%)


Current Subscriber 367 3 of 7 365 3 of 7 362 3 of 7 334 2 of 7 418 3 of 7 293 4 of 7

Competitive Set 340 286 290 328 398 344

1 Week Ago Subscriber 363 4 of 7 420 2 of 7 362 4 of 7 334 2 of 7 418 4 of 7 293 5 of 7Competitive Set 343 289 324 331 405 323

2 Weeks Ago Subscriber 359 4 of 7 329 3 of 7 362 3 of 7 339 2 of 7 440 4 of 7 305 4 of 7

Competitive Set 327 279 298 304 380 279


Competitive Set 323 284 286 307 376 277 4 Weeks Ago Subscriber 356 4 of 7 329 2 of 7 321 3 of 7 363 2 of 7 423 4 of 7 373 2 of 7

Competitive Set 329 284 298 309 372 286

Green: Above Comp Set Average Red: Below Comp Set Average


Current Subscriber 56 2 of 7 6 5 of 7 19 1 of 7 53 1 of 7 47 1 of 7 19 1 of 7Competitive Set 199 66 49 79 60 21

1 Week Ago Subscriber 48 2 of 7 4 4 of 7 19 1 of 7 53 1 of 7 47 1 of 7 19 1 of 7Competitive Set 173 55 32 86 59 27


Competitive Set 138 34 22 73 63 35


Competitive Set 116 24 22 65 46 30 4 Weeks Ago Subscriber 38 1 of 7 3 3 of 7 28 1 of 7 25 2 of 7 32 1 of 7 11 1 of 7

Competitive Set 69 20 18 63 43 24

Week of Week of

Room Nights

Week of

A

L

L

Average Daily Rate (USD)

Market Penetration - Revenue

A

L

L

A

L

L

Week ofWeek of Week of

PACE TREND –how reservation trends are consolidated for a specific date



Lead Time –informs us of customer demand for a specific date

Lead Time Statistics 0-3 4-7 8-14 15-30 31+

(Based on Room Nights) Days Days Days Days Days

Room Nights 19 18 63 73 310

Average Room Rate in USD 436,37 318,51 375,33 449,75 366,96

Average Length of Stay 2,11 1,50 2,17 2,70 2,79

Market Penetration (Room Nights) 45,3% 35,0% 82,5% 63,2% 110,9%

Total Room Nights 202 253 340 536 1.164

Average Room Rate in USD 457,18 425,99 397,12 426,85 448,39

Average Length of Stay 1,60 1,71 2,18 2,81 2,58

Subs

Comp

Set

ALL



Study of events in the hotel, city, conferences, festivals and vacations

Month/Day1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

January B S S S S S S S S S D D D S S S S S S S S D S S S S D S S S SSpecials

MLS

FebruaryE E E E E E E E C C C C E E E E E E E S E E E E E E E ESpecials

MLS

March E D X X A C X X X X X C C X X X X X C C X X C C C C C C C C CSpecials

MLS

April D C C D D D D C C D D D D D C C D D D D D C C D D D D D C CSpecials

MLS

May C C C C A A A A C C C C C C C C C C C C C C C C C C C C C C CSpecials

MLS

Jun C C C C D D D D D D D D B B B C C D D D D D D D D D D D D DSpecials

MLS

Jul D D C C C E E D D E E E E E D D E E E E E D D E E E E E D D ESpecials

MLS

Aug E E E E D D E E E E E D D E E E E E D D E E E E E D D E E E ESpecials

MLS

Sep E D D E D D D D D D D D D D D D D D D D D D D D D D D D D DSpecials

MLS

Oct X X X D D D D D D D D D D D D D D D D D D D D D C C C C C C DSpecials

MLS

Nov C E E E E E E E E E E E E E E E E E E E E E E E E C C C B BSpecials

MLS

Dec B C C C E E E E E E E E E E E E E E E E E E E D D D D D D B BSpecialsEvent

MLS

Event

Event

Event

Christmas

Event

Event Event Event

Easter

Event

Event



Internal reports that cross-check annual data such as inquiries for other areas of the hotel alba, apartments, spa


Introduction to Revenue ManagementOrganigram

DOSMDOSM

MarketingManager

MarketingManager

RevenueManagerRevenueManager

eCommerceManager

eCommerceManager

Dtor. VentasAdjunto

Dtor. VentasAdjunto

AssistantAssistant Assistant 1Assistant 1 Assistant 2Assistant 2 Assistant 1Assistant 1 Assistant 2Assistant 2Rvas. Indiv.

CRS(EQUIPO)

Rvas. Indiv.CRS

(EQUIPO)

ReservasGrupos(EQUIPO)

ReservasGrupos(EQUIPO)

EquipoVentas

EquipoVentas


Introduction to Revenue ManagementExercise 1


Introduction to Revenue ManagementExercises

Reactive measures, short-term



Proactive measures – long-term



Required Analysis Reports and Actions



Daily Tasks

Weekly Tasks



Monthly Tasks

Annual Tasks



Daily Management

Reservations

Website

Reception


Introduction to Revenue ManagementExercise

Position your hotel…possible improvements

• Type of hotel

• Positioning

• Characteristics

• Company to which it belongs

• Objectives of hotel management



Annual Calendar of Actions

Hotel Month Segment Activity Objetive R/NgtsExpectedRevenue

Who Cost Status

When we use it…



Hotel room structure:

What is the hotel room structure of a ‘exemplary’ hotel like?

What is the structure of supplementary products like?

What is the objective of the ‘extras’?



Practical exercise in groups:

• Our hotel has 100 rooms

• 14-21 January in Barcelona with events, conferences, weekends, etc.

• Use BAR of A-D (A is the highest price = 400 and D the lowest = 100)

• Mobile World Congress: 14-17 January we are at 90%

• Group confirmed for 75 rooms 19-20 January

• Average occupation the remainder of January isn’t over 50%

141141141141Curso Formación de Revenue Management – Madrid 9,10 y 11 Noviembre 2012 Impartido por: Tomeu Pons [email protected]


Glossary: Describe y Order by FamiliesAAVV

ADR

ALGORITMO

ARI

BAR

BOOKING ENGINE

BOOKING PACE

CANAL

CHANNEL MANAGER

CMS

CONSORTIA

CORPORATE

ERP

GDS

GOPPAR

IDS

MPI

ORIGEN

OTA

PMS

RATE PARITY

REVPAR

REVPAV

RGI

RM

SERMENTACION

TTOO

YM


Introduction to Revenue ManagementSummary: Revenue Management Concepts


Introduction to Revenue ManagementExam

Questions:

1. When should you activate an offer?

2. From where does the data from the flow of reservations come from?

3. How do you control the costs of distribution?

4. Besides rooms, to what else can you apply RM in hotels?

5. How do you know if you are selling at prices that are too low?

6. How do you know if you are selling at prices that are too high?

7. How do ‘save’ inventory and why?

8. To whom must availability be given to?

9. When should be create a new type of hotel room?

10. How do you control sales price and who usually lets them get out of control?

11. What are the 5 most important variables of RM? (glossary)

12. When should you reject reservations at low prices and at high prices?

13. What is auto allotment?

14. About your hotel: do a SWOT analysis

15. Make prices for: 1 hotel with 1 room and 1 salon


Introduction to Revenue ManagementSummary: Revenue Management Concepts

Free Downloads:

http://www.adhp.org/pdf/1-theBasicsofRM.pdf

http://revenueanalytics.com/pdf/Cornell%20February%202009.pdf

http://cqx.sagepub.com/

http://www.hammerman.com/files/occtrack/forecasting.pdf

http://www.hsmai.org/members/SIGRevManagement.cfm


Introduction to Revenue ManagementRecommended Reading



Professor: Tomeu Pons Professor: Tomeu Pons Professor: Tomeu Pons Professor: Tomeu Pons [email protected]@[email protected]@gmail.com

LinkedIn: http://es.linkedin.com/in/tomeupons

Blog: http://flamingohotelier.wordpress.com/

Thanks for your attention.


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