hotel revenue management consulting

hotel revenue management consulting

Optimizing Hotel Revenue: A Comprehensive Guide to Revenue Management Consulting

1. Introduction to Hotel Revenue Management Consulting

We started hotel revenue management consulting in 1994. Back in the early 80s and 90s, we earned our professional spurs as hotel executives in several rooms, yielding management projects and as corporate revenue management – a position that was novel at the time – of a specific hotel company. The business consulting activities began to pick up in confidence, gradually attracting clients seeking specialist assistance. As interest in revenue management strategies broadened to hotels and conferences, both our service portfolios and clientele reflected increased sophistication in the hotel sector. Nevertheless, our core portfolio covers loyalty program applications in the hotel industry and hotel revenue management decisions, for which we are holding about 95 percent of hotels in Greece, using or having them under training period.

As a chief executive officer or general manager of a hotel, you have to contend not only with just your hotel’s operations, but also many services and products that contribute to the profitability and the health of your organization. As the leader of hotel revenue management consulting, our work bridges revenue management concepts between clients, drawing on our abundant hotel-related professional qualifications and experience. In the sixteen years since its founding, our company has been a pioneer in introducing revenue management strategies in the hotel industry, and part of a select group of specialized companies in the global hotel consulting business.

2. Key Strategies and Techniques in Revenue Management Consulting

2.1. Determining Room Pricing One of the first tasks when embarking on a revenue management consulting is to assist with the determination of room pricing. This means setting a price for rooms, which will allow your hotel business to reach its revenue targets. Fundamentally, this can be achieved by identifying key business requirements such as profit goals, occupancy targets, market conditions, customer types, and the value perceptions of different guests. The foundational tool in this process is a price sensitivity model that can help you predict customer responses to various pricing alternatives. Such models that are well-informed can give you a good idea of when to discount or when to charge a premium. Remember one of the key principles of revenue management, which is that customers who book earlier should get a lower price.

In this section, we’ll consider the most important strategies and techniques hotel consulting firms use to help businesses achieve their RevPAR and other revenue management-related targets. In particular, it aims to explore a range of techniques and strategies that can help your hotel business. They can include determining room pricing, establishing pricing strategies, controlling inventory and room allocation, managing length of stay, forecasting and optimizing demand, as well as determining customer acquisition costs and creating marketing strategies. Groups also look at identifying market trends, adopting and developing new technologies, and of course, predicting future revenue.

3. Implementing Revenue Management Systems and Technologies

While a more comprehensive systems investment typically occurs when setting up a new property, independent hotels – consider your central reservation systems, GDS, property management system, Internet booking engine, rate shopping tools, business intelligence, segmentation analysis, demand factors, forecasting tools, risk tolerance – risk management of optimum protection and revenue maximization, and customer/guest relationship management when you embark on your revenue management implementation. Small properties may possibly require fewer systems and less sophisticated, but still, implement them in order to gain organized performance measurements essential for the practice of Total Revenue Management. Upon installation, the chosen systems will operate as the organizational information network for communicating with multiple distribution channels. When service properly, the direct interaction between hotel and customers and the multiple distribution channels surrounding the reservation process will increase hotel demand, occupancy, REVPAR, and profits.

When a hotel owner contacts me to discuss revenue management consulting, one of the first questions they ask is, “How long should it take to implement?” Truth is, setting up a revenue management and pricing strategy comes down to systems and people. In the hospitality industry, you must have good technology. A successful revenue management strategy requires many pieces working together in real time. You may not need to invest as much in the programming of the system, but you must invest in the best quality revenue management system that you are able to. I believe that data is historical and should not be used to deter main property decisions. However, systems such as business intelligence, data mining, and revenue management software are essential for organizing, analyzing, and preparing data in a manner whereby your hotel can produce reliable and consistent performance measures.

4. Case Studies and Best Practices in Hotel Revenue Management Consulting

Hotel Week vs. Incentives In this particular case, at a non-glamorous but otherwise delightful regional casino resort, there were two issues: 1) the midweek was down, and 2) some rooms were being blocked by a group paying $99 instead of allowing the rooms to stay at a much higher rack rate. This particular casino has a very limited convention center and very few amenities such as pools or hanging out space. From a life cycle perspective, the casino was within the top quartile of the number of months after opening, and so many of the “residual” casino premium rooms were becoming available to fill the weekdays.

Introduction to Case Studies In the previous chapters, the methodology used to optimize hotel revenues was described. The first two chapters dealt mainly with details of modeling to optimize revenues, while the third and fourth chapters provided insights on how to model sales. Once the models have been established, the challenging part comes: the introduction of best practices and ongoing analysis and support. In this chapter, case studies and best practices are put forward, providing guidance to readers on how to use the knowledge and models that have been presented in their implementation process.

Chapter 4: Case Studies and Best Practices in Hotel Revenue Management Consulting