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 Hotel Yield Management Professionals Ponder Future; 
HSMAI Revenue Management Strategy Wrap Up

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MCLEAN, VA (July 8, 2004) – The Hospitality Sales & Marketing Association International (HSMAI) and a group of 92 hospitality revenue management professionals met recently for a one-day conference which resulted in attendees suggesting that HSMAI take the lead on building relationships between hotel owners and revenue managers, building communications links between senior management and revenue managers, and providing a broader focus on education and networking opportunities for this vital segment of the hotel industry.

The group also recognized channel management as a complex key to success for hotels and that despite the fact of reports of higher occupancies and ADR’s, the continued success of the hotel industry was dependent on reaching today’s highly knowledgeable consumer.

The first keynote address, titled “The Consumer Understands Our Business Better Than Ever…And That’s BAD News!” was delivered by Scott Anderson, President, High Country Hospitality.  Anderson educated participants about the distribution of travel products via third party Web sites such as Hotels.com, Expedia and Travelocity and provided suggestions for hotel companies to improve their market share via the use of Internet technology.  Anderson spoke of the importance of understanding channel management and building relationships with partners so that hotel companies can convert customers found via the Internet into loyal brand customers. 

Brian Ferguson, vice president, marketing, Smith Travel Research provided the second keynote address called “What’s Happening with Occupancies and ADR’s?”  During his presentation, Ferguson indicated that the hotel industry is rebounding to levels seen in 2000 and earlier.  The projected average daily rate for 2004 is $85.11 which is just off the highest average of $85.37 which was realized in 2000.  Hotel occupancy levels are also on the rise, up from 59.2 percent in 2003 to a projected 60.8 percent for 2004.  The highest occupancy level was in 1998 which peaked at 63.4 percent.  The projected RevPar percent change for the United States in 2004 is 5.2 percent which is up from 0.6 in 2003 and close to the 6.1 percent gain in 2000.  In 2004, it is projected that demand (up 4 percent) for hotel rooms will outpace the supply (up 1.2 percent) of available rooms. 

Conference attendees participated in an “Ideas Fair” which consisted of four 25-minute breakout sessions that addressed the top four issues facing the industry.  Each breakout session moderator reported back to the general session on the ideas that were generated for each topic.  A recap of each session follows:

Channel Management:
Recognizing that channel management is a very complex and challenging area, the group suggested it was important to develop relationships with the various third party channels so that hotels increase third parties’ knowledge of the hotel product.  With the increasing popularity of website bookings, participants recommended that each revenue manager become familiar with a website’s distribution influence.  This would allow a revenue manager to develop key strategies for that site, prioritize the return on investment each site generates, and determine which direct and indirect channels work the best for their product.  In terms of selling rooms via a third party, the recommendation was to know the actual rate the room will be sold for, understand the products and services the third party offers, recognize that there is brand loyalty to the third party sites, and build and pioneer a distribution strategy that works for each hotel product which could potentially convert customers into brand loyal customers.

Helping Owners & Franchisees Understand Revenue Management:
Since hotels are operated in a fragmented world of franchisees, owners and managers, participants in this session identified tools and practices that have helped revenue managers increase profits.  First the group pointed out that there are communication challenges between owners and revenue managers because they each understand different aspects of the business and owners’ decisions are based on different sets of goals than the revenue managers.  In order to improve communications between both groups it was suggested that revenue managers create regular communication with the owners, use tools for tracking progress of projects, create monthly strategies, understand owners’ long-term goals and provide owners with data that is meaningful to them. 

It was suggested that HSMAI can help improve the relationship between owners and revenue managers by creating more direct communication to owner organizations including education pieces designed specifically with owners in mind.  Also, HSMAI can provide an independent third party review which allows for the sharing of data and specific marketing trends.

Leveraging the Revenue Management Role in the Organization:
Participants in this group brainstormed ways for revenue managers to be successful influencers by mastering communication styles in all directions.  In any given setting, a revenue manager has to report to executives on different levels of the management structure.  In order to effectively communicate, a revenue manager must know their respective markets and do their homework in order to establish credibility, listen to all parties involved, educate the decision makers, measure results of decisions and report back and use consistent methods and logic.  The role of the revenue manager must be viewed as a strategist for the total revenue and revenue managers must understand the total goals of the hotels (not just a segmented part) so that they could be shared with all partners and providers. 

HSMAI can help revenue managers leverage their role in their organization by communicating to senior-level decision makers about the roles and functions of the revenue managers which will help validate the mangers.  The creation of the HSMAI Revenue Management Committee also serves to validate the role of the revenue managers.

Role of the HSMAI Revenue Management Committee:
The objective of this workshop was to validate the preliminary strategic objectives of the committee and therefore individuals who participated in this group identified gaps and helped prioritize the direction for the committee’s future.  It was suggested that the committee should focus on education, networking, resources and gaining corporate support.  Under the banner of education, some suggestions included hosting a “Best Practices Think Tank,” using case studies and models to express the value to owners and sales leaders, creating Webinars, newsletters and chat rooms, and providing advanced educational levels.  Another recommendation was to create regional chapters for revenue managers which offer events to discuss specific topics of interest to the membership that don’t necessarily have to tie-in with a conference.  For maintaining and improving resources, the group suggested that the website be kept fresh with search engines and chat boards, all white papers should be posted on the website and a hiring checklist should be created a provided to general managers.  In order to gain corporate support, there needs to be an active membership solicitation to brands, create certification programs which determine core sets of skills and knowledge, and use return on investment case studies to increase bench strength to help people see revenue management as a career option. 

Designed for revenue and yield management professionals, the conference addressed critical issues and offered viable solutions and strategies for this very specific industry segment.  Organized by HSMAI’s new Revenue Management Advisory Board, the conference took place at the Dallas Convention Center in conjunction with the HITEC 2004 conference.

The conference was sponsored by Revenue Management Supporters & Conference Partners: Expedia, Hotwire, Sceptre and Conference Partners: Eye For Travel, Maxim Revenue Management Solutions, IDeaS and VIP International. Companies interested in sponsorship opportunities can contact HSMAI Director of Development Marjorie Lane at mlane@hsmai.org.

The Revenue Management Advisory Committee and Board is a group of HSMAI members who advance the revenue management discipline through education, participation, resources, and guidance, enabling leaders to optimize revenue and performance within their own organizations. The group’s strategic intentions are to: provide education on all levels; develop a sense of community and participation; create tangible resources for revenue management professionals; and give guidance on industry standards and practices. 


 
 
Contact:

HSMAI
8201 Greensboro Drive, Suite 300
McLean, VA 22102, 
phone (703) 610-9024
fax (703) 610-9005
www.hsmai.org
www.revmanagement.org

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Also See: Franchisees on the De-flagging Fence: A Gamble Or A Golden Goose? Former Franchisees Talk Specifics About Channel Loyalty and How They Leverage VIP International Channel Marketing to Succeed as Independents / March 2004
2004 the Year of Direct Online Distribution; Now is the Time to Fight Back with a Smart Direct-to-Consumer Internet Strategy / Max Starkov & Jason Price / February 2004
Hotelier’s 2004 Top Ten Internet Strategy Resolutions / Max Starkov & Jason Price / January 2004
Top Ten Revenue Management Mistakes Hotels Can Make / Dr. Gabor Forgacs / June 2004


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