When the world is facing high levels of volatility, uncertainty, complexity and ambiguity (VUCA), in part thanks to fast-changing technological, social and business environments, leaders and companies must be prepared to increasingly adjust to unanticipated events. VUCA in hospitality manifests on different levels and can affect individual hotel properties, tourism and entire companies, on a global basis. Many today would assert that, given the current geopolitical climate, the world's VUCA level has again spiked to higher than normal levels. People and corporations must increasingly adjust to unpredictable events. The hospitality sector is no exception. Read on...
Revenue Management: Focus On Profit
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Profit maximizing is the goal of the hotel owner; however, incentives or lack of information may lead the revenue manager to revenue-maximize instead. This paper examines a theoretical model of the differences in the approaches and suggests a simple statistical model to estimate the outer bounds of premia or discounts that should be applied to the revenue-maximizing ADR to achieve profit-maximizing. The model is applied to hotel statements, and I find that the amount charged in extended stay and limited-service hotels should be higher, full-service somewhat higher, and resort hotels the same or lower to maximize profit. READ MORE
Your property's bottom line is defined and measured for success if you as the property revenue manager implement a good revenue management strategy with the help of other departments in your property. The strategy of implementing good revenue management has been tried and approved of success is true through the regular revenue management measurement, but there is another and more efficient way to influence your property's yields. We call the strategy profit management which determines a property's net revenue after taking into consideration the costs of acquisition by channel, opportunity costs, and target audiences. READ MORE
A surefire way to drive additional revenue and profit is to include Value Add Packages as part of Hotel Revenue Strategy. Value Add Packages are a unique way to pique guest attention, provide them with an experience that is more than just your typical overnight stay and create a perception of value. Additionally, it drives guests to our own more profitable website that has fewer associated costs than an OTA or other more costly channels. The hotel not only has an opportunity to drive more occupancy, but the cost associated with the rooms is lower thus the rooms are more profitable. READ MORE
More often now the term 'revenue strategy' is being used to describe the process of creating, capturing and managing demand. It's a broader, all-encompassing expression than 'revenue management' and implies a more comprehensive approach to optimizing revenues and profit. But in changing the nomenclature, are hotels really changing the way they do business? Some are, most are not. And why is that? Well, the hard truth is that the industry faces many barriers to fully adopting a total revenue management approach; however, articulating and acknowledging those barriers is a good first step to overcoming them. READ MORE
Modern-day revenue management already relies on substantial number crunching, including sophisticated predictive analyses that help determine the optimal room mix and pricing-with the goal of achieving maximal RevPAR. Now, advanced metrics are pushing the revenue management envelope even farther, focusing on determining the complete costs of acquiring any given reservation. At the same time, advanced operational benchmarks are giving revenue managers, property general managers and the entire executive team a better handle on whether a given quoted rate is supportable in the overall quest for profitability and return on investment. READ MORE
Balanced Scorecards have been a widely used strategic management system, namely in large-scale corporations and institutions in the last 30 years. They were designed to align short-term practices with long-term vision and strategies. That alignment is a kind of cement between the corporate and operations level in any organization, holding the two levels together and increasing the organization's efficiency and effectiveness. Transparent and results-driven reward systems come as a consequence. This methodology is now ripe to go into new depths, by applying it to data-intensive and reward-prone operations, at a tactical and day-to-day level. Revenue Management qualifies perfectly! READ MORE
The amount of internal and external channels a hotel revenue manager has to juggle to make a profit is no joke these days. As Marriot, Hilton and Intercontinental Hotels Groups advance management tools to battle this constant operational nightmare. The franchisors need to start connecting systems that will save on expenses. Managers must manually check these systems daily and it's a daunting task to complete this all in a day. Why isn't there a computer program that will connect all revenue management tasks automatically without switching screens to increase productivity & profit? READ MORE
It's hard to imagine a time when revenue management wasn't the key to running a successful hotel. As a profession, revenue management is continuing to develop and evolve at a frantic pace with Occupancy rate, ADR and RevPAR as the most widely used key performance indicators and measures of success. However, none of these metrics actually measure business success. Profit is the reason why investors build hotels. Revenue management and hotel operations are evolving to include a focus on developing revenue strategies such as GOPPAR or Gross Operating Profit Per Available Room to measure business success. READ MORE
The landscape of revenue management is everchanging, and revenue managers must stay at the forefront of these changes as Key Performance Indicators (KPIs) continue to evolve. It seems like only yesterday that Revenue Per Available Room (RevPAR) was the end all be all KPI. Then came Total Revenue Per Available Room (TRevPAR) and now we review Gross Operation Profit Per Available Room (GOPPAR) as an additional metric for growth. There are many ways to maximize GOPPAR, and through proper management of your property resources, your team will find success. READ MORE
As it has over the past three decades, revenue management will continue to evolve in the one that follows. Changes in this field are likely to be far reaching and those that prepare now will be well positioned to thrive in the future. Organizational structure, education, hiring practices, guest engagement, pricing practices and performance metrics are just a few of the areas that will be significantly impacted. This article delves into possible scenarios and issues that practitioners and others will face in the years to come. READ MORE
Revenue Management Professionals have been talking about 'Total Hotel Revenue Management' for well over a decade. There have been multiple presentations and academic articles on Total Hotel Revenue Management, yet based on the research we have conducted, our observations and conversations we have had, not too much progress has occurred. The question is why have hotels been so slow in achieving the goal of Total Hotel Revenue Management? In this article, we discuss some of the obstacles and impediments to success and offer some suggestions and proven tips for success. READ MORE
The old thinking of hotel revenue management within the silo of revenue per available room may have been acceptable in the past, but times have changed. No longer is it adequate to measure success through key performance indicators such as RevPAR or TrevPAR. Today, hotel revenue managers must look through a different lens finding innovative ways to produce profit in all areas of hotel operations, demonstrating ROI to ownership. Creative opportunities to grow profit exist all over your property; they are just often overlooked. It's time to capture real, reachable revenue - starting now. READ MORE