What is Revenue Management?

1. What is Revenue Management? The goal of this presentation is for the learner to understand the purpose of, and processes involved with revenue management.

2. Lesson Objectives After completing this lesson the learner will be able to: • Explain the role of the revenue manager. • Define the 9 meeting basics. • Explain strategies to maximize revenue.

3. What is Revenue Management? • Simply stated, it is a technique used to maximize revenues. • Other terms used are yield management. • It should take into consideration as many factors as possible to determine the rate. • It also is useful as an evaluative tool to determine standards for which actual results can be compared.

4. Why do hotels need Revenue Management? • To improve revenue – beyond transient rooms revenue • Improve communications among revenue generating departments • Identify the most productive channels of distribution (both room nights and rate) • Establish clear roles and responsibilities among staff

5. The Role of Revenue Manager • Focal point of the revenue management function • Keep track of property’s competitive position – RevPar • Mange channel distribution process • Impartial manager – guides revenue generating process

6. Revenue Management Tools • Revenue Meeting • External Reports • Internal Reports (history, forecasts, bookings, and budgets) • Competitive Surveys • Internet • GDS • Call arounds • Strategies and Tactics

7. The Revenue Meeting • Purpose • Identify revenue opportunities for the property • Held at a frequency equal to the booking pace of the hotel • Attendees • GM, Rev. Manager, DOS, Sales and Catering managers, Res. Manager, Controller

8. The Meeting Basics • Start with discussion of m-t-d occupancy, ADR, RevPar against budget and forecast • Bring accurate 7- or 30 day forecast • Periodic review of rolling 12 month forecast • Invite any staff member who can block revenue opportunities • Have history used to make of the forecasts – notes, PMS and CRS reports

9. The Meeting Basics • Discuss current sales leads • Discuss peaks and valleys of business along with strategies to improve outlook • Include booking pace report • Be sure everyone is prepared and ready to participate

10. RevPar • Calculation • Total rooms revenue/ total rooms available Or • ADR multiplies by the Occupancy %

11. External Reports • Star Reports • Provided by Smith Travel Research • Show’s relative position of property against “competitive set” • Shows RevPar penetration • Is historical data • Smith Travel Research

12. Internal Reports • History – last 2 years • Forecasts – 7 and 30 day • PMS • Booking Pace • Chain or Property Revenue Management • Budget

13. Competive Surveys • Global Distribution Systems (GDS) • How are you positioned? • How are your competitors positioned? • What rates are available? • Starwood GDS information

14. Strategies to Maximize Revenue • What Channels to use • How will you position the property • Routinely review property information in all channels (monthly) • Determine best mix of group and transient • Determine mix of catering

15. Strategies (Continued) • Set a “Hurdle Rate” and communicate it to all revenue producing departments • Discount management • Minimum length of stay • “Sell-Thru” • Length of stay rate sensitivity (tiers) • Closed to arrival • Determine total revenue potential of business