Wes AndersonRegional Director Revenue Management, North America
InterContinental Hotels
Caribbean Hotel & Tourism Association Agenda
• The New Revenue Management• Linkages to Marketing/Sales• Questions
Revenue Management Fundamentals
• Price Optimization
• Optimize Channels of Distribution
• Optimal Business Mix & Yielding
• Product Class Opportunity
Revenue Management Methodology
• Data Consolidation and Analysis
• Strategy Development and Buy-in
• Tactical Application
• Measure Success (via Data Consolidation and Analysis)
Revenue Management FundamentalsPrice Optimization
• Consumer Based Pricing Model
• Competitive Based Pricing Model
• Niche Pricing Model
• Margin Based Pricing Model
Consumer Based Pricing Model
• Pricing Elasticity of Demand
– When markets are elastic, lower rates
– When markets are inelastic, raise rates
Competitor Based Pricing Model
• Peg rates off of competitor’s rates
• Assumes you are not the market leader
• Risk of “Greater Fool” effect
– Use a rate shopping service to ensure no anti-trust infringement
Niche Pricing Model
You’ve got to pay my rates to keep the company I’m offering at my hotels…
-Isadore Sharp, Founder of Four Seasons Hotels
• Risk of occupancy depletion in Elastic Markets• Requires clear marketing message or
positioning
Margin Based Pricing Model
• Fluctuates by Supply and Demand
• Assumes minimum acceptable profit level
• Works for mid market and luxury hotels
Optimizing Channels of Distribution
Its about Discovery and Persuasion
Optimizing Channels of Distribution
Demand is inherent in channels
Optimizing Channels of Distribution
• GDS
• Retail Internet (Expedia/Travelocity)
• Opaque (Priceline/Hotwire)
• Hotel Web Site
• Hotel Direct (Voice Reservation Services)
Optimizing Channels, GDS
• Discovery– Marketing in the GDS
– Biasing shelf space placement
• Persuasion– Content and Pricing
Optimizing Channels, Retail Internet
• Discovery– Conversion Percentage– Social Media Presence– Parity Compliance / discount online forwarding – Market Manager Involvement– TravelAds
• Persuasion– Content and Pricing
Optimizing Channels, Opaque
• Discovery– Pricing
• Persuasion– Pricing and Content
Optimizing Channels, Hotel Web Site
• Discovery– Search Engine Optimization
• Organic vs. Pay Per Click
– Measuring Effectiveness• Google Analytics
• Persuasion– Content & Pricing
Optimizing Channels, Hotel Direct
• Discovery– Marketing– Public Relations– Sales Efforts– Affiliation with Associations
• Persuasion– Well Trained Staff– Staff Incentives– Promotions
Optimizing Business Mix
• Yielding, the root of Revenue Management
• Segmenting your business
• Business Mix / Channels of Distribution / Lead Time
Product Class Optimization
• Product Class - rooms priced at different levels
• Goal against ADR capture of Price Differential
• Balanced Inventory vs. Fractured Inventory
Linkages Between Revenue Management and Marketing
• Marketing/PR generates Demand
• Revenue Management manipulates Demand
Linkages Between Revenue Management and Marketing
• Social Media Responsibilities– Incoming (Trip Advisor)
vs.– Outgoing (Facebook)
Marketing owns Facebook/Twitter
Outgoing Social Media
• Marketing owns Facebook / Twitter, etc
• Revenue Management prices offers
Incoming Social Media
• PR or Departments owns review response
• Revenue Management owns increasing review volume (Optimizing Channels)
