Carol Verret Consulting 
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Revenue Management
The Integration of Revenue Drivers
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Carol Verret / March 2004
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March 2004

As peak season nears for many hotels, revenue management is the key to a successful summer season. Leisure remains strong even as business travel continues to disappoint and it is imperative that in March the pieces are in place to maximize revenue.

Potential customers are much smarter than they used to be about locating, qualifying and making their hotel choice. In many cases, this process is completed without ever contacting the hotel.

The term revenue management means many things to different people -- whatever the definition, the intended end result of the process is increased REVPAR for the organization. It is increasingly clear from feedback that I receive at seminars and from my consulting clients that there is often a lack of co-ordination and/or consultation on the rate and offering through all of the revenue drivers.

Revenue drivers are defined as all areas of revenue generation within the organization. This includes central reservations, property-level reservations, the sales department, the electronic distribution channels and the web site. While franchised properties have a higher level of consistency through the GDS, it still requires monitoring and management at the company or property levels.

At a recent sales seminar, participants expressed frustration that they are largely unaware of, nor are they consulted about the rates that are posted on the electronic distribution channels. One result is a very high attrition rate in meetings and conventions as attendees book their hotel at these lower rates and "fall" off the group block. Another consequence is when the rate posted is lower than what has been negotiated with third-party suppliers such as wholesalers.

A coaching client of mine expressed frustration over his lack of consultation in the development of the new property web site and the rates that are being quoted through the site. First of all, the content was skewed to a specific market segment that was not representative of the core business segment and secondly, the copy changes disrupted the optimization strategy.

Secondly, the rates that were quoted were not at all aligned with the rates being quoted at the property level or through the central reservations agent and many room descriptions were inaccurate. The end result was that not only was this hotel  nowhere to be found on the key word searches in the major search engines -- a potential disaster for this independent property, but fewer reservations were being made through the site.

Collaboration across all departments that generate revenue is the only way to ensure continuity. This need not be a tedious process of endless meetings. A few things put into place and adjusted periodically, based on market conditions and forecasts, are sufficient:

  • Product/Rate Positioning: A plan for product/rate positioning is ideally developed as part of the Business/Marketing plan process and includes consideration of the product/rate positioning of the competitive set, group bookings, rate resistance input from reservations and past history. Once the strategy is developed, it then only needs to be adjusted periodically. Don't forget to monitor the franchise yield management system in light of groups or events in previous years that may not be a factor in the present year.
  • Existing and Anticipated Contracts: These include group contracts, volume contracts with LNRs, wholesalers and any other rate commitments. Just as the sales department makes decisions based on the rate structure, so should consideration be given to any agreements made thorough sales. It is one thing to adjust rates on the web site or distribution channels to drive volume at a slow time but if it undermines the agreements above, it is counter productive.
  • Web Site Presence and Reservations: Many leisure customers locate the hotel through key word searches on the search engines. Others locate the hotel on the electronic distribution channels then access the hotel's proprietary web site. Still others will pick up the phone after visiting both and call reservations to see if they can cut a better deal. It is essential that the "message" of rate and offering be relatively consistent across all channels to be effective. The rates on the web site need to be adjusted in tandem with the electronic distribution channels and reservations needs to be aware of what's appearing on both.
Another consideration in web site development is the increased use of the site as a sales tool. It becomes the electronic brochure. The sales department's inclusion in its development is essential to the site's secondary role as the electronic brochure. Sales people should be accessing the site with their clients to moderate the virtual tour. If there is a special rate posted that is inconsistent with the rates sales are quoting, it blows them out of the water and appears to the client that the hotel doesn't know what it is doing.

The process of collecting the information is about communication and collaboration and can be accomplished through periodic updates from the revenue drivers to the revenue management team. This swings both ways as revenue management needs to keep the revenue drivers informed of their proposed tactics in order to solicit input and buy in.

The consequence of not doing this is to present an inconsistent message to the public who is in the position of making selections without any direct contact with the property thus depriving the hotel from any opportunity to make adjustments or explain the disconnect. In the consumer's mind, a hotel that can't get its act together to project consistent rates may have the same problem when it comes to servicing them as guests.

The issue is more than rate parity, it is aligning the rate structures between all revenue generating departments so that each is maximizing their contribution to revenue.

copyright © Carol Verret, 2002-2003-2004

Carol Verret is President of Carol Verret Consulting and Training, a company offering consulting and training seminars to the hospitality industry in the areas of sales and marketing and customer service.  If you missed attending our live webcasts in the Training Byte Series in 2003, you will be glad to know that we are now offering each "Training Byte" in PDF format on our web site. We will not be repeating these webcasts in 2004. To order your copy, please visit http://www.carolverret.com/webcast_training.htm

Watch for our new Training Byte Series for 2004

Verret is a twenty-year veteran of the hotel industry. She arrived in Denver in the midst of an economic downturn and quickly established herself as an expert in sales and marketing in hotel turn-around situations, applying her formula for REVPAR improvement. To learn more about Carol Verret, Consulting and Training, visit her web site at http://www.carolverret.com


 
Contact:
Carol Verret
  3140 S. Peoria St, PMB 436
  Aurora, CO 80014
(303) 618-4065
Web Site: http://www.carolverret.biz
Email: carol@carolverret.biz
Also See: CYBER SALES -- Hotel Sales in an Internet World is the New Reality / Carol Verret / February 2004
The New Realities of Hotel Sales - Focus on Revenue Generation / Carol Verret / January 2004
Hotel Sales -- Innovation in the Face of Limitations / Carol Verret / November 2003
The Good News & the Bad News; Improving Economy = New Hotel Development / Carol Verret / October 2003
Leadership - General Managers Managing the Sales Process / Carol Verret  / October 2003
When the Crystal Ball is Cloudy; Marketing Plans for 2004 / Carol Verret / July 2003
Partnership of Sales and Technology; Using Tech Tools to "Sell" the Hotels / Carol Verret  / July 2003
Back to the Basics? The Basics of Hotel Sales Have Changed! / May 2003
Creating Sales "HUNTERS": The Skill Sets Required in the New Hotel Sales Environment / April 2003
Heightened Security Requires New Strategies in Hotels Sales / Carol Verret Consulting and Training / Mar 2003
Revenue Recovery - Building The ‘A’ Team in Sales / Carol Verret / January 2003
Contingency Marketing Plan – War In Iraq! / Carol Verret / November 2002
Playing the Rate Game - Positioning -- Positioning -- Positioning! / Carol Verret / October 2002
The Rate Game - Playing to Win / Carol Verret / October 2002
The Challenge of Marketing Independent Boutique Hotels / Carol Verett / August 2002
Hotel Sales in a Limited Service Environment - The Rules Have Changed / Carol Verett / August 2002
The General Manager’s Role in Sales -Chief Marketing Officer of the Hotel / Carol Verret / April 2002
100% Market Share Penetration is Not Good Enough / Carol Verett / January 2002
The Key to REVPAR Recovery –  New Business Development / Carol Verett / December  2001
Trash the 2002 Marketing Plan - And Just Start Over / Carol Verett / September 2001
How to Use Consultants Effectively –  A View From the Other Side  / Carol Verret / August 2001
How Soft Is Your Hotel's Economic Landing?  / Carol Verret / Aprl 2001
The ‘Value Proposition’: Marketing Yourself to Prospective Employees / Carol Verret / January 2001
Generation Y:  Motivating and Training a New Generation of Employees / Carol Verret / November  2000
Why Customer Service Seminars Don't Work / Carol Verret / October 2000
Creating a Culture of Customer Service / Carol Verret Consulting and Training / Sept 2000 
FAT, DUMB AND HAPPY – The Seasonal Boom and  Bust Cycle / Carol Verret / August 2000
Surf's Up - Ride the Wave or Miss the Boat -The Effective Use of Technology in Hotel Sales / Carol Verret / July 2000 
Measuring Effectiveness of  Hotel Sales Departments / Carol Verret / June 2000
Hotel Sales Training - The Need for Immediate Results / Carol Verret/ May 2000



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