use data to drive revenue management decision...

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Tuesday, July 27, 2010Tuesday, July 27, 20102:00 2:00 –– 3:30 PM EDT3:30 PM EDT

Use Data to Drive Revenue Management Decision Making

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Overview of Format and TopicOverview of Format and Topic

Webinar ModeratorFran BrasseuxExecutive Vice President, HSMAI

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POLL QUESTION #1POLL QUESTION #1How many people are participating in

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Panel Moderator: Jeff Higley, VP,

Digital Media & Communications

HotelNewsNow/STR STR/STR Global

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TodayToday’’s Presenters: s Presenters: Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global

Panelists:

Jan Freitag

Vice President,

Global Development

Smith Travel Research

Jon Eliot, Director, Revenue Optimization, Carlson Hotels Worldwide

Michelle Marquis,

Vice President, Sales, NAVIS

Tabatha Kidder, Business Development Manager,

The Saint Paul Hotel

Jan D. Freitag

Vice President

Agenda

• Total US• Oil Spill Impact• Chain Scales• Segmentation• Forecast

www.hotelnewsnow.comClick on “Industry Presentations”

US Hotel Trends

% Change

• Hotels 52.4k 2.4%• Room Supply 869 mm 2.5%• Room Demand 490 mm 7.0%• Occupancy 56% 4.4%• Average Daily Rate $97 - 2.0%• RevPAR $55 2.3%

Total US Industry - Key StatisticsYTD June 2010

Supply Growth Stubborn - Strong Demand Rebound

2.8%

1.4%

-4.7%

-6.9%

* Total US, Supply & Demand % Change, 12 MMA, Jan ’89 – Jun ’10

ADR Declines Accelerate In Each Downturn

+0.1%

-4.7%

-8.9%

* Total US, ADR & Demand % Change, 12 MMA, Jan ’89 – Jun ’10

41 Months

21 Months

* Total US, ADR, 12 MMA, Jan ’00 – Jun ’10

Absolute ADR Will Not Recover for At Least 2 Years

-$3.70

-$10.73

Oil Spill Impact

Source: www.nytimes.com

Gulf Coast OCC has Held (So Far)

* Occupancy, Selected Gulf Coast Tracts, by State, 28 Days Ending July 17th

Gulf Coast ADR – No Strong Impact (Yet)

* ADR, Selected Gulf Coast Tracts, by State, 28 Days Ending July 17th

Chain Scales

Chain Scale Recovery Skewed Towards Higher End

*US Chain Scales, Supply & Demand % Change, YTD June 2010

Chain Scale ADR Growth Lacking

*US Chain Scales, ADR & OCC % Change, YTD June 2010

June 2010: “Positive” Chain Scale ADR Trends

*US Chain Scales, ADR % Change, June 2010

Chain Scale ADR Compression: Threat? Opportunity?

*US Chain Scales, ADR, Peak vs June 2010

USSegmentation

Trends

Transient Demand: What Recession?

* Transient Demand by Month, Jan’08 – Jun’10

Vs ’09: +3.8 mm RoomsVs ’08: +4.0 mm Rooms

2010 Smith Travel Research, Inc.

Transient ADR: Buying Demand At A High Price

* Transient ADR By Month, Jan’08 – June’10

- $13 = -12%


Group Demand: Coming Back Strong(er)

* Group Demand by Month, Jan’08 – June’10

-2.6 mm Rooms


Group ADR: A Rough Road Ahead

* Group ADR By Month, Jan’08 – June ’10

- $4 = - 4%


ADR by Segment: Group > Transient ???

* Total US, Segmentation ADR YTD June’08 - ’10


U.S. Lodging Industry Projections

As of June 2, 2010

* STR/TWR/Dodge Pipeline by Phase, Rooms in’000, June 2010

Pipeline: Final Planning Stage Growing

Phase May 2010 May 2009 % Change

In Construction 71 159 -55.3%

Final Planning 92 66 38.6%

Active Pipeline 365 523 -30.3%

Total 465 646 -28.1%

*Total US, Key Performance Indicator Outlook Scenario (% change vs. Prior Year), 2010-2011F

Hotel Industry Performance Scenarios

2010 2011Low

GrowthForecast

HighGrowth

LowGrowth

ForecastHigh

Growth

Supply 2.2 2.0 1.8 1.0 0.6 0.4

Demand 5.2 5.7 6.0 2.7 3.1 3.4

Occupancy 3.0 3.6 4.1 1.7 2.5 3.0

ADR -1.1 -0.6 -0.3 3.6 3.9 4.4

RevPAR 2.0 3.0 3.8 5.4 6.5 7.4

Forecast: Rate Growth Only In 2011

Total United StatesKey Performance Indicator Outlook Scenario

2010E by Chain Scale

2010 Year End Outlook

Chain Scale

Occupancy

(% chg)

ADR

(% chg)RevPAR (%chg)

Luxury 8.2 0.3 8.5

Upper Upscale 6.0 -0.7 5.4

Upscale 4.7 -1.2 3.5

Midscale w/ F&B 0.8 -1.6 -0.8

Midscale w/o F&B 3.4 0.8 4.2

Economy 2.8 -3.2 -0.4

Independent 3.6 -0.3 3.4

Harvard Business Review, May 2010

Thoughts on Discounting (The Ivory Tower)

Thoughts on Discounting (The Real World)

* Total US 2009 Year End Performance, ADR and RevPAR Index, % ChangeSource: STR Analytics

Takeaways

• Global Hotel Industry Recovers• Demand is Back – Pricing is Not• RevPAR Growth all Occupancy Driven• Room Rate Growth Trajectory Will

Determine Magnitude of Recovery

www.hotelnewsnow.comClick on “Industry Presentations”

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Jon Eliot, Director,

Revenue Optimization, Carlson Hotels Worldwide

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Data-Driven Revenue Decisions

� Value of data-driven decisions

� Self assessment

� Making it happen

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The Value of Data-Driven Decisions

� Challenges Assumptions

� Removes emotion and tempers conflict

� Provides checks and balances

� Builds credibility

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Self Assessment

� How are your decisions currently made?

� Does the data you have meet your needs?

� How are you measuring success?

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Current Situation

� How much of your team’s decision making is done based on instinct? Facts? Both?

� Consider the “gut” decisions and how they could be backed up with facts

� Are you asking the right questions and using the right information to validate decisions?

� Are you setting appropriate expectations?

� Example: by discounting our rates we expect to pick up X rooms and increase market share Y points

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Do You Have the Right Data?

� Are your reports and tools being used?

� Are you utilizing subscription based reports appropriately?

� What information is missing?

� What other sources of information are available to you?

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Performance Analysis

� What are the factors that will show whether a strategy or tactic is effective or not?

� What are the expectations?

� Are you considering all factors?

� Are these expectations being achieved?

� What data shows this?

� How do you react if the answer is no?

� What can you learn from what happened?

� What needs to change?

� What can you replicate?

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Making it Happen

� Challenge your own instincts with data

� Challenge the assumptions of others with data

� Explain why you are making your recommendations and decisions with the facts

� Stop using terms like “I think” and “I believe”

� Ensure expectations are clear

� Track results

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Tabatha Kidder,

Business Development Manager,


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Looking Beyond ADR

How Ancillary Revenue and Cost Comparisons Can Change the Picture

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Mr. Smith and Mr. Jones

Mr. Smith’s Stay

� One Night

� $150 Negotiated Rate

� $100 Ancillary Revenue

� Books Through Hotel Directly

Mr. Jones’ Stay

� One Night

� $229 BAR Rate

� $25 Ancillary Revenue

� Books Through Travel Agent

So which guest should you choose. . .

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Mr. Smith Just Became Your New Best Friend!

Mr. Smith Mr. JonesRoom Revenue $ 150.00 $ 229.00 Reservation Expense $ - $ (10.00)Commission $ - $ (22.90)Cost Per Occupied Room $ (40.00) $ (40.00)Ancillary Revenue $ 100.00 $ 25.00 Ancillary Cost Assumption $ (30.00) $ (7.50)

Profit $ 180.00 $ 173.60

Sample costs for illustration purposes.

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Where Do You Get The Data?

� Database Query

� Guest Reports (Top 100, Guest Stay Summary, Guest History, etc.)

� Marketing Reports (Market Segmentation, Source of Business, Rate Analysis, etc.)

� Financial Statements/Daily Reports

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I Found the Data. . .Now What?� Validate It!

� Consolidate It!

� Focus on statistical relevance and ease of use

� Excel PivotTables are your friend

� Share It!

� Share with Department Heads/Revenue Centers

� Reference in Financial Review

� Use It!

� Pricing Decisions

� Displacement Analysis

� Yield Strategies

� Marketing Initiatives

� Budgeting & Forecasting

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Michelle Marquis,


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Typical Revenue Data to Evaluate

� Historical Revenue Data

� Current year’s pace

� By Market

� By Channel

� Competitive set data

� GRC

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Paradigm Shift

NAVIS Research

Google Research

Y Partners

PhoCusWright Research

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Old Data is the New Data

� Call Volume Reports

� Total calls

� Time of Day

� Abandon Rate

� Evaluate Evening Volume

� Agent Key Performance Metrics

� Conversion by agent

� Revenue per call taken

� Lost Revenue per agent

� Prospect Data

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Call Volume

5% decrease in call volume requires 1.5% increase in conversion to be even with previous year’s bookings

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Call Volume

1,000 900 -10%

20%

25%

$200,000 $180,000 -10%

$225,000 +12.5%

$1,000 ASV

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Historical Conversion

1,000 1,000 Flat

20%

25%

$200,000 $200,000 Flat

$250,000 +25%

$1,000 ASV

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Abandon Calls

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Night Audit?

� How many calls is the night audit taking?

� What is their conversion?

� Would outsourcing make more sense?

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Weekly KPI

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Top Agents by Gross Revenue

AgentName Answered Revenue

Gina Jackson 205 $70,535.22

Christina Kelly 187 $60,557.25

Leslie Ledbetter 133 $44,127.99

Nickia Padgett 133 $37,399.80

Erika Abbott 99 $36,100.39

Stephanie Harn 95 $35,709.80

Mike Stone 126 $29,287.58

Amy Robinson 112 $28,733.48

Sydney Columbus 110 $28,129.60

Cathy Resch 111 $27,913.25

Nicole Pratt 72 $24,796.00

Gretchen Shook 136 $21,505.22

Christa Lee 87 $19,454.50

Lindsay Messenger 85 $12,088.20

Markata Campbell 42 $12,011.75

Brandi Grover 32 $10,886.57

Navis 38 $10,312.00

Jackie Walker 12 $6,784.00

Melanie Henry 5 $4,570.20

Melissa Stone 19 $3,582.60

Shana Sargent 16 $3,284.00

Stacey Michelle Smith

16 $3,012.76

April Farmer 7 $2,401.10

Coral Holland 12 $2,094.94

Georgan Mason 9 $1,311.00

Rachel Turney 6 $952.00

Total 1,905 $537,541.20

Top Producers

…or are they?

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Top Agents by Close Ratio

AgentName Answered Revenue Conv% Booked

Jackie Walker 12 $6,784.00 50 6

Sydney Columbus

110 $28,129.60 44.55 49

Georgan Mason 9 $1,311.00 44.44 4

Stephanie Harn 95 $35,709.80 44.21 42

Stacey Michelle Smith

16 $3,012.76 43.75 7

April Farmer 7 $2,401.10 42.86 3

Melanie Henry 5 $4,570.20 40 2

Navis 38 $10,312.00 39.47 15

Erika Abbott 99 $36,100.39 39.39 39

Nickia Padgett 133 $37,399.80 39.1 52

Christa Lee 87 $19,454.50 39.08 34

Nicole Pratt 72 $24,796.00 37.5 27

Cathy Resch 111 $27,913.25 36.94 41

Melissa Stone 19 $3,582.60 36.84 7

Christina Kelly 187 $60,557.25 35.83 67

Markata Campbell

42 $12,011.75 35.71 15

Gina Jackson 205 $70,535.22 33.66 69

Rachel Turney 6 $952.00 33.33 2

Leslie Ledbetter 133 $44,127.99 33.08 44

Lindsay Messenger

85 $12,088.20 32.94 28

Amy Robinson 112 $28,733.48 32.14 36

Mike Stone 126 $29,287.58 31.75 40

Brandi Grover 32 $10,886.57 31.25 10

Shana Sargent 16 $3,284.00 31.25 5

Gretchen Shook 136 $21,505.22 28.68 39

Coral Holland 12 $2,094.94 25 3

Total 1,905 $537,541.20 36.0% 686

• Gina, Christina, Leslie and Nickia

are not the top producers, yet they

take 35% of the total calls.

• 39.47% - Lost Revenue of $81,991

• Mike, Amy, Gretchen and Cathy

take 29% of the calls. All are

performing 10% - 16% below the top

performers. Their average

conversion is 32%. Getting them up

to the base line would produce

another $34,279 in revenue.

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What About Not-Booked Calls?

� If conversion is 20%, what are you doing with the data from the other 80% of your calls?

� Why didn’t they book?

� Are the reasons agent dependent?

� Are you capturing and tracking true denial and regrets? By date? Is it reportable? Are you acting on it?

� Can you listen to the calls to get a clear understanding?

� Can you make outbound calls?

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These are new times!

� “If you do what you have always done, you will get what you always got!”

� “Inspect what you Expect to get Respect.”

� Doing the same thing over and over again and expecting different results is the clear definition of insanity.”

� “Hope is not a strategy!”

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Questions? Questions? Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global

Panelists:

Jan Freitag

Vice President,

Global Development

Smith Travel Research

Jon Eliot, Director, Revenue Optimization, Carlson Hotels Worldwide

Michelle Marquis,


Tabatha Kidder, Business Development Manager,


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Upcoming HSMAI University ProgramsUpcoming HSMAI University Programs

If you haven’t registered for the entire 10-part Revenue Management series going through December 14, 2010, you can do so now. Details on this series and other upcoming webinars at www.hsmaiuniversity.org

Next session: August 31, 2010 –

“Close the Divide Between Revenue Management and Customer Loyalty”

August 17, 2010 – Cross-Channel Marketing: The Email Preference Center

August 26, 2010 – Driving Results Through Website Design

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The Evolving Dynamics of Revenue Management:

A Comprehensive Revenue Optimization Road Map for Hotel Owners, Operators and Practitioners

By Kathleen Cullen & Caryl Helsel

Published by HSMAI Foundation in partnership with the HSMAI Revenue Management SIG Advisory Board and TravelCLICK

Revenue Management has continued to grow as a science and an art over the past several years in many industries, and especially in the hospitality industry. On the most fundamental level, the basis for success is to have the right revenue management organization in place to support the revenue strategy. A solid understanding of revenue management is critical throughout an organization, from top to bottom. This HSMAI Foundation publication brings you and your property the very latest information on understanding the market, market segmentation, forecasting, revenue strategy, pricing, inventory control strategies, and performance analysis. Included are a plethora of case studies to help you optimize revenue at all levels.

Order today at www.hsmaipublications.com.

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TodayToday ’’s webinar is copyright 2010 by the Hospitality Sale s & Marketings webinar is copyright 2010 by the Hospitality Sale s & Marketing Association International Association International with All Rights Reserved.with All Rights Reserved.

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