Hospitalitytrainingsession.
Introduc4on.Part1.RevenueManagement(RM).Part2.Hotelapplica4onofRMstrategyandtechniques.
• WhoisJohnKennedy?
• LearningObjec-ves– Understandthecharacteris4csofthehospitalityindustry.– LearnaboutRevenueManagement.– Understandwhatinfluencesacustomertobuy.– Understandpricingandtheimpactofdemandperiods.
• Whatwillyouneedtodo?– Glossary– Exercises
Whatarewegoingtodo?
INTRODUCTIONHospitality.
Sec4onObjec4ves:-Evolu4onofhospitality
Hospitalityindustry(hotels)
Goldenperiod1850–1960.
Jetsetperiod1960–now.
Innova4onperiod
1980/90’stonow.
Introduc4ontohospitality.
Hospitalityeduca4on
Hotels
Travel&Tourism
Events
Shops
Cooking
Business
• Hotelmanagement,Food&beverage,Frontoffice,Revenuemanagement,etc.
• Luxuryretail,brandmanagement,customerservice,PR,sales&marke4ng
• Airlines• Carrental• Resorts• Cruiseships• Travelagency• Touroperators
• Sports/stadiums• Conven4ons/
Conferences• Acrac4ons
• Finance• Realestate• Businessdev.• Educa4on• Consultancy
• Restaurants• Bars• Cafes• Banquets• Kitchen
JobswithinHospitality.
Whatwouldyouwantfromahotelstay?
Examplesofdifferenthotelstostayat.
Thefollowingaretypesofhotelthatyoucouldstayat.
• Luxury• Lifestyle/bou4que• Upscale• Mid-market• Budget/economy• Bed&breakfast• Hostel
• Airport• Conferencecentre• City• Resort• Themed• Chain(brand)• Independent
PART1RevenueManagement.
Sec4onObjec4ves:-UnderstandthebasicsofRevenueManagement
Historyofrevenuemanagement–the1980’s.
USGovernment
airlinederegula4on
Introduc4onofHotelrevenuemanagement1990’s.
Highlevelofsophis4ca4on
Backtobasics-howdoesahotelmakemoney?
• Revenue• Variablecosts(thatchangewithsales)– Suchasguestroomcleaning,laundryandenergyconsumed,etc.
• Fixedcosts(thattypicallydonotchange)– Suchasrent
• Profit(Revenue-variable&fixedcosts=profitsorloss)
WhydidhotelsintroduceRevenueManagement?
• Fixedcapacity(cannotremoveoraddroomsquicklyduetochangesindemand).
• Highfixedcosttypicallyofabuilding.• Perishableinventory(cannotsellittwicenextnight).
• Reserva4onsaremadeinadvance.• Seasonalitythroughtheyear.• Customerscanbepricesensi4ve–butarepreparedtopaydifferentrates.
WhatdoesRevenueManagementhelpwith?
• Helpssetrateandpricingstrategy.• Tellsyouwhere,whenandhowtosellroomnightsthroughdifferentsaleschannels.
• Decidingthebestmixofhotelbusinesstohave.
• Benchmarkingyourperformance.
Defini4onofRevenueManagement
• Analysisofdatatounderstand,an4cipateandreacttosupply&demandto hotelspacetomakerevenueandprofits.
• Rightproduct(room),rightprice(rate),right4me(tosell),rightchannel(tosellthrough)andrightperson(guest)!
Exampleofrevenuemanagement=supply&demand.
• Season• Sales(000’s)• Consumerbehaviour(what,how,when,why,etc.)
Externalfactors-Compe4tors-Guests-Seasonality
ConsumerBehaviour- Bookinglead4me- Lengthofstay- Readinesstobuy- Pricesensi4vity- Valuepercep4on- Ajtudes
Data- Roomssold- Roomrate- Availablerooms- Occupancy- AverageDailyRate- RevPAR
Lookatdatatoseeapacernofbehaviourtohelpyoumakeabusinessdecision.
Analyseallthe
sefa
ctorstogethe
r
Collec-onofdata
Whatwouldbeyourexampleofmanagingrevenue?
• Take5minutes• Thinkofyourexample(i.e.cinema,carrental,etc):– Externalfactors– Data– Customerbehaviour
Whydoesahotelop4miseit’sspace?
Tomaximiserevenueperavailableroomover4me=$$.
Guest=$$revenue
Time=howlongyoustay
Space=Hotelroom
Businessneverstops–soRevenueManagementhastochangeallthe4me.
Datacollec4on
Dataanalysis
Forecast
SpacemanagementPricing
Roomnights$$
Measure&report
WhatisRevenueManagementmadeupof?
1) Marketsegmenta4on(typeofbusiness).
2) Pricingandratesstrategy.
3) Budgets,forecas4nganddemandcalendar.
4) Analysisofresults.
5) Compe4torsitua4on.
1)WhatisMarketsegmenta4on?
• Sellingtoarangeofcustomersthatbehavedifferently.
• Makeanofferthatmatchestheiruniqueneeds.
• Iden4fythepurposeofthetrip.
• Normallyaguestisonbusiness,mee4ngs,leisureorjustea4ngatthehotel.
1)Howwouldyouiden4fyaguestsmarketsegmenta4on?Leisureguests• Individualcustomersthatbookthroughtheweborcalldirect.
• Tourgroupsthathavemadeablockbooking.
Businessguests• Individuals(contractors,consultants,self-employedandsmallbusinessowners)thatstaymid-week.
• Largercompaniesthathavenego4atedrates.
1)Howwouldyouiden4fyaguestsmarketsegmenta4on?Mee-ngs• Individuals/delegatesorcontractedcompaniesthatbookamee4ngroom.
Food&beveragecustomers• Guests,mee4ngdelegatesor“passers-by”whopopinforbreakfast,lunch,fika,dinneroradrinkatthebar.
Whichtypeofguestaretheseimages?
Whowouldyougivewhichrate?
A. Mid-weekrateof100B. Aweekendrateof80C. Midweekratewithaconferenceroom120D. Twopeopleeatforthepriceof1
1 432
Maslow’shierarchyofneeds.
2)Thefollowingaretypicalcustomerneeds.
1) Valueformoney.2) Aloca4onneartothingstodoandseeasatourist.3) Convenientloca4ontovisitlocalcompaniesoffices.4) Asafeandsecureenvironmenttostayin.5) Neartotransporta4onhub,restaurantsandshops.6) AfastandreliableWIFInetworkforInternetaccess.7) Accesstoalargeroomforpeopletomeetin.8) Aswimmingpoolandgymforexercise.9) Afancyrestaurant.
Take5minutestoputanumberfromthepreviousslideagainstthefollowingtravellers.
2)Whatshouldyouconsiderifyouaresejngapricingstrategy?
• Roomdemand.• Seasonality.• Businesscycle.• Compe4torenvironment.• Productposi4oning.• Effec4venessofmarke4ngac4vi4es.• Costsofdoingbusiness.• Commercialobjec4ves.
2)Whatisrateop4misa4on?
• Isitthehighestratethatmakesthemostrevenueforahotel?
• No,itcanbeamediumratethatsellsatbecervolume–ratherthanahighratethatdoesnotsellatall.
2)Whatorderofimportancewouldyouputthefollowingfactorswhensejngroomrates?a) Whatroomsdoyounormallysellfirstandlast?b) Corporatedealcommitments–istherea
percentage%perdayofoccupancythatneedstobeblocked?
c) Forhowlonginadvanceofbookingsbeforeanyratereduc4onsorincreases?
d) Doesmid-weekbusinesspayhigherratesthanonaweekend?
e) Whatistheforecastofthenumberofreserva4ons?f) Arethereanymajoreventshappening?
3)Whatisthedifferencebetweenbudgets,forecas4ngandademandcalendar?
Thebudgetismadeonceayear.• Normallyitusesroomnightsandrevenue,basedonpastandfuturees4mates.
Amonthlyforecastreflectstheexpectedsitua4onintheshortterm(1to3months).• Forecastsarecomparedtothebudgettoshowanydownorupwardstrends.
3)Whatisthedifferencebetweenbudgets,forecas4ngandademandcalendar?
Ademandcalendarisawaytoshowpastdemandandfutureeventsmappedtogether.• Anassessmentofdemandcanbemappedandupdatedregularlyonthecalendar.
DAY2
Whydoesahotelop4miseit’sspace?
Tomaximiserevenueperavailableroomover4me=$$.
Guest=$$revenue
Time=howlongyoustay
Space=Hotelroom
Exampleofrevenuemanagement=supply&demand.
• Season• Sales(000’s)• Consumerbehaviour(what,how,when,why,etc.)
LetspretendyouownahotelinÖrebroandcreateademandcalendar.• Data:
– SchoolHolidays– Eventsintheyear– Seasons
• Writedown12monthsfrom1,2,.….12
• Sourcesofinforma4on:www.orebro.seandwww.orebro750.seandwww.orebrokompaniet.se
• ThenputanXonwhatyouthinkwouldbeabusymonthandaYforaslowmonth.
4)WhattoolsareavailabletomeasureandseetheimpactofRevenueManagement?
• Googleanaly4cs.• Rateshoppingsearches.• Propertymanagementsystems• Centralreserva4onsystemrepor4ng.
5)Ques4onsyoushouldaskaboutyourcompe4tors.• Whenaretheyfullybooked?• Aretheychangingtheirsellingstrategyforcertaindaysoftheweek?
• AretheirLoworHighratesperiodsthesameasyourhotel?
• Arethereanycompe4torsbeingtakenoverwithnewmanagementorrenova4ons?
• Aretheiranynewcorporatecontractsopening?
5)Benchmarkingyourperformancemeasures.
Youcanregularlybenchmarkonvariouscriteriasuchas:• Prices.• Occupancy.• Hotelfacili4esandservices.• Distribu4onchannelsthattheyareavailableon.• Guestsa4sfac4onscoresonprogramslikeTripadvisor.com
Roomsmanagementexercise.
The 5 room hotel - five nights to maximise revenue
Demand Length of stay in room nights
Arrivals on: 3 2 1
Monday 1 2 2
Tuesday 1 3 3
Wednesday 1 4 1
Thursday 1 4 4
Friday 1 4 3
Monday Tuesday Wednesday Thursday Friday
PART2HotelsystemsandRevenueManagement
Sec4onObjec4ves:-RevenueManagement
- Hotelsystems- HotelMission
- Hotelcasestudy
Part2overview
• Revenuemanagementreminders• Understandinghotelsystems• Hotelmission• Classcasestudyexercise
WhydidhotelsintroduceRevenueManagement?
• Fixedcapacity(cannotremoveoraddroomsquickly).
• Highfixedcosttypicallyofabuilding.• Perishableinventory(cannotsellittwicenextnight).
• Reserva4onsaremadeinadvance.• Seasonalitythroughtheyear.• Customerscanbepricesensi4ve.
Findingahotelroom.
• Youneedtousewww.booking.com• NeedtosearchinÖrebro.• Findarate(s)andhotelnameforyourclient
AndrewSmithaged44
CarolineSmithaged40
EmilySmithaged10
DavidSmithaged8Requirements:
Summerholiday,takeoneweekinJulyfor7nightsstar4ngonaMonday.
Need:
Indoorswimmingpool.
Familyroom.
Beabletobringtheirpetdog.
Mar4nJonesaged50
CathyJonesaged46
WillJonesaged16
RebeccaJonesaged14
Requirements:
Easterholidayforaweek,7nightsstar4ngonaMonday.
Musthavetworoomsavailable
Restaurantatthehotel
Fitnesscentre
Parkingfacili4es
TomParkeraged25
JennyWestaged23
Requirements:WeekendinApril,2nightsFridayandSaturday.
Non-smokingroom
Restaurant
Spaandwellnesscentre
BenMeersaged19
ScocDavisonaged19
GracePetersaged19
ShonaRodgersaged19
Requirements:
WanttostayforaweekendinJune,SaturdayandSundaynight.Theyneedtohavethecheapestrate,canbehotelroomsorhostelbeds.Theyneedtosee4ratestocomparewhichisthecheapest.
HowdoweuseRevenueManagement?
• Datathatisbothhistoricalandforwardlooking(forecas4ng).
• Allowhotelierstoquicklyadapttoanychanges.
• Usetools/systemsdesignedtomanagelength-of-stay,roomavailabilityandapplyeffec4vepricingstrategies.
Glossaryexercise
• Asateamtranslateandexplainasec4onoftheglossary.
RevPAR(orRevenuePerAvailableroom)calcula4on
• Roomsrevenue/roomsavailableExampleA100roomhotelinMayis50%occupancyatanaveragerateof100SEK.100roomsx31days=3.100roomnightsavailable.50%areoccupied=1.5501.550roomnightsxSEK100=SEK155.000SEK155.000/3.100rooms=SEK50RevPAR
Hot,warmandcolddayswithRevPAR.
Somehotelswillassignavaluetoeachday• Hotdates–90%orgreateroccupancy• Warmsdates–70to89%occupancy• Colddates–lessthan70%occupancyRevPARcangenerallybeimprovedbyincreasingoccupancyoncolddaysandADRonHotdays.
Distribu4onandsaleschannels
• CustomersbuyhotelnightsthroughaDistribu4onsystemthatoffersdifferentsaleschannelstoyourhotel.
• RM(RevenueManagementSystem)/PMS(PropertyManagementSystem)/CRS(CentralReserva4onSystem)aresystemshotelsusetomanagethebusiness.
CentralReserva4onSystem(CRS).• Whatdoesitdo?AsimpleexampleofhowtounderstandtheCRSisbylookingatthecompanyAppleInc.
– JoeBlogsisaconsumer=Hotel.– Theirmainopera4ngsystemorplaxormisAppleISO=CRS.– TheirindividualproductsalluseAppleISO.– Iphone,MacAir,IPad,MacintoshComputer=WBE,GDS,Direct
Connect,etc.
WhataretheChannelsofdistribu4on?
• Whatisdistribu4on?• Whatisachannel?• WhydoIneedtomanagethechannels?
GDS
+1Reserva-on
-1Inventory
XpressChannelManager:Seamlesslyupdatedinventory
-1Inventory
-1Inventory
-1Inventory
WebBookingEngine
-1Inventory
MobileBookingEngine
-1Inventory
Plusmanymore…
-1Inventory
Channelmanager
Howdoesahotelupdatewhatroomsithas?
GDS/IDS
RateUpdated
RateUpdated
XpressChannelManager:Incorporateexis4ngbackofficesystems
RateUpdated
RateUpdated
RateUpdated
WebBookingEngine
RateUpdated
MobileBookingEngine
RateUpdated
Plusmanymore…
RateUpdated
Channelmanager
PMS
NewRate
Howdoesahotelupdateit’srates?
OverviewofRateshopping
• Whyrateshop–futurerates?• Compe44veset• Distribu4onchannels(typesandrole)• Benchmarking
Hotelmission
• Exerciseoutofschoolwherestudentsvisitalocalhoteltoextractcertaininforma4on
• Usetheinforma4onaspartofanexercisebackatschool
Summarisewhatwehavebeenoversofar.
5minutesummaryoftoday.