Carol Verret Consulting 
and Training
Consulting
Training Seminars
.
Hotel Revenue Management
this Summer
.
- a Game of Skill, Art and Most of All Nerves
.


Carol Verret / May 2004
.
May 2004

Recent studies by several respected research firms indicate both good news and reasons to be cautious about the 2004 summer travel season.  Both the TIA and Yesawich, Pepperdine, Brown forecast an increase in leisure travel for 2004. TIA forecasts an increase of 3.2% over 2003, which is an improvement although certainly not stunning given last year's lackluster performance.

Yesawhich and partners indicate that 33% of leisure travelers anticipate more trips this year compared to last year while 38% intend to take about the same. Twenty-nine percent expect to take fewer trips.  Both of these surveys are good news for hoteliers.

Two other surveys, while not conflicting with the above, offer a few cautionary tales for hoteliers. The Myvesta Summer Vacation survey of 1000 adult Americans conducted May 14-16 indicates that the average American is planning to spend 5.3% less this year than last year on summer vacations. With the rising cost of gasoline, guess where they will attempt to trim their spending.

In addition, Yeaswhich and partners research on the use of the Internet in travel planning by leisure travelers indicates that 63% use the internet to plan travel and 45%, up from 32% in 2002, will book travel services online. This indicates that the leisure traveler will compare price and product to make their decisions.

Many hoteliers, flushed by this surge of good news and an opportunity to recoup some of their profitability from a lackluster 2003, are rushing to push rates. There is an inherent danger of pushing rates too far and too fast, especially on the part of those hoteliers whose market share penetration is languishing at or below 100%.

It is imperative to remember that REVPAR is a combination of both occupancy and rate. An ADR index often rises in inverse relation to market share penetration when rate is driven too radically thus leaving the REVPAR needle unmoved. In addition, it is important to retain positioning in the market, especially as it is presented on the electronic distribution channels.

If memory serves, we were seeing some of the same trends in the forecasts for 2003 -- more leisure travel and more price sensitivity.  The trend was derailed by the war in Iraq and a stagnant economy.  While the economy is showing bright spots, the stock market is waffling, the war continues and the price of gas is escalating.
It is at this juncture that revenue management becomes a game of skill, art and most of all nerves. It is a high stakes game. There are several variables to consider in playing this game:

  • Market Share Penetration and ADR Index. Ideally, the market share index and ADR index should be tight. That is, the percentages should be within a few percentage points of each other. If market share is well over 100% (110% or more) the hotel should be pushing rate but be prepared to lose to a certain number of market share penetration points. Decide in advance how many percentage points you are prepared to decline in market share. When you reach that hurdle, leave the rate level. If you are below that market share threshold, drive rate very conservatively and be prepared to back off when you get rate resistance and denials.
  • Position on the Electronic Distribution Channels. If you are well positioned on the EDCs in terms of rate and product don't be lulled into a false sense of security. The positioning needs to be checked and evaluated with more frequency given the short lead times we are now experiencing. This is the only way to maximize the seasonal opportunity. In periods of high demand, adjust rate and inventory allocation on a daily basis if necessary. This also applies to the franchise web site. Check your positioning in relation to the other franchise products in your market -- the select serve hotels are well positioned to take market share from full serves in a price sensitive climate.
  • Check the Pulse of the Market Daily. If you have access to Day STR reports, use them and analyze them every day. Have the night audit drive to work fifteen minutes earlier and count cars in the competitors lots as well as note any tour buses or other marked vehicles. By keeping your finger on the pulse of the market every day, you can adjust course and remain nimble in the reservation system, EDCs and rates quoted across the desk for walk-ins. Blind shop the competitors every day for their walk-in rates.
  • Gamble Based on Calculated Risk. Don't be too cautious -- overbook on high demand nights but do so based on facts. What is the average no-show factor for that night of the week under similar conditions; look at last years demand patterns. Those who don't examine and learn the lessons of their past history are doomed to repeat it!
  • Listen to your Revenue Manager. If you are fortunate enough to have a revenue manager who attends to all of the above, analyzes the numbers and makes recommendations -- listen to what is said. It is tempting to put someone in an advisory position who tells you only what you want to hear. It is equally tempting to have someone who will tell you what they think and then disregard it when you don't agree. Ask for the facts and figures but don't filter out the ones that point in the opposite direction of what you want to believe.
It is not my objective to throw cold water on positive exuberance, but there are some warning signs in the positive trends. Disregard them at your peril. Make money but don't jeopardize your long-term revenue potential for the sake of the summer season.
The Memorial Weekend will give us an indication of what lies in store for the rest of summer season. Enjoy it and may it be the beginning of a positive trend!

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

Our Training Bytes Series for 2004 has begun! 

Skill Sets for Hunters Training Bytes Schedule:

  • June: Presenting the Product and Closing the Sale
The following webcasts were filled and will be repeated:
  • May: Effective Qualifying and Approaching Prospects and Customers
  • April: Prospecting- New Business Development 
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: What Do Meeting Planners Want? Hotel Sales Managers Want to Know! / Carol Verret / May 2004
Revenue Management -- The Integration of Revenue Drivers / Carol Verret / March 2004
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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