Best practices for revenue management using the latest resources and tactics
By Sarah Bartlett, Senior Vice President of Revenue Management of hotelAVE,
Revenue management technology, data and tools can be overwhelming, especially for hotel owners. Hotel owners often ask asset managers what they must do to stay relevant and even participate in their hotel’s revenue management strategy. They want to know to what extent they should be involved or what their role is, as an owner, in revenue management. And they are interested in learning about the revenue management tools that are available and, more importantly, meaningful for owners to use.
The first step in understanding the issue involves understanding everyone’s role in revenue management. The hotel operator or manager should work with the owner or owner representative to align the hotel’s revenue management objectives. We call these objectives the “Big Rocks.” These are the key objectives—maybe only three to five in number—that drive the greatest revenue results.
The operator then establishes strategies to achieve these Big Rock objectives. The strategies must be well-defined and include trackable, measurable results. The tool used to measure those results must also be defined.
Once those objectives and processes are in place, the owner can participate in the Big Rock progress with the hotel operator.
“The Rate Evolution Tool can be helpful when reviewing a past pricing strategy to determine if it was properly implemented and if it worked.”
“And they are interested in learning about the revenue management tools that are available and, more importantly, meaningful for owners to use.”
To demonstrate some of the external tools and reporting that are available and how an owner can use them, consider the case study of a 300-room hotel with 20,000 square feet of meeting space located in a major urban market.
The hotel’s Big Rocks include:
- grow groups on weekends
- drive occupancy on shoulder nights
- increase business travel/corporate business mid-week
- maximize ADR over high-compression periods, when a hotel is approaching 100 percent occupancy.
Given these objectives, what external tools could the owner use to monitor how well the hotel’s management achieves these Big Rocks? Here are some suggestions:
- Kalibri Labs and Smith Travel Research reports can be used to determine overall market demand, including opportunity and risk, future hotel projections, and more accurate forecasting. STR reports that include with market segmentation and ranking can show owners if their hotel is gaining share against the competitive set in weekend group, shoulder night occupancy, and ADR growth over high-compression dates.
- (as well as Smith Travel Research) can be used to monitor group production on the weekends and shoulder occupancy in the hotel and in the competitive set while Travelclick also tracks corporate business demand penetration. Demand360 can also be used to monitor future pace and ADR ranking against the competitive set.The data are available for both past and future and can be sorted in a variety of ways.
- and can help owners gain understanding about the profiles of group meeting in the market and competitive set. However, even more importantly, hotel operators should use these tools to seek out new sales. The tools also allow operators and owners to monitor account loyalty both in the hotel and the competitive set. Both Knowland Insight or Insight Elite data can be used in conjunction with STR to determine past losses and target future group opportunity.
- can be used to monitor business travel and corporate business in the hotel and in the competitive set. Data are available for both past and future and can be sorted in a variety of ways. The hotel operator can also use the data as a sales-prospecting tool.
- can be used to monitor hotel and market pricing to help the operator make faster and more strategic pricing decisions. This suite of tools also provides a variety of ways to sort the data, including monitoring both past and future trends. The Rate Evolution Tool can be helpful when reviewing a past pricing strategy to determine if it was properly implemented and if it worked.
- Owner representatives at the major online travel agencies, including and , offer owner portals that help owners ensure operators use the channels more purposefully and more profitably.
“ With proper alignment between owners and operators, owner participation can be insightful and add value.”
- The hotel can also provide internal reporting to supplement these external sources. Examples of internal reports available from the hotel can include group and transient pace, source of business, and market segment and rate code production including variance to budget and last year.
Spending equal time on tools that report on past trends and tools that highlight the hotel’s current position for future dates is equally important and there is a lot of technology, data and tool options for owners to participate in and monitor their hotels’ revenue management strategies. Also realize that more isn’t necessarily better. Ensuring a hotel’s revenue objectives are aligned and that both owners and operators are on the same page with the objectives is the first and most important step in ownership participation. Without alignment, there is a risk of distracting the operator and creating confusion in the strategy. With proper alignment between owners and operators, owner participation can be insightful and add value.
About the Author
Ms. Sarah Bartlett holds a Bachelor of Science in Hospitality and Tourism from Virginia Tech. As Senior Vice President of Revenue Management for hotelAVE, she is responsible for helping maximize revenue for all assets within the firm’s portfolio. With more than 20 years of multi-brand experience, Bartlett works with brand leaders and property-level directors of revenue and directors of sales and marketing to ensure an optimal mix of sales, an effective distribution strategy, and use of all brand resources.