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.

John.kennedy@kennedyandersson.comwww.kennedyandersson.com