Carol Verret Consulting 
and Training
Consulting
Training Seminars
.
The Revenue Management
Strategy
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- The Pre-Plan Marketing Plan
.


Carol Verret / July 2004
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July 2004

Why would the development of a revenue management strategy be important prior to the marketing plan development -- and why is a revenue management strategy different from the budget?

A revenue management strategy that incorporates all of the revenue drivers such as GDS, the web site and the electronic distribution channels is key. However, it requires the involvement of the sales department and all other profit centers of the hotel. This is unlike a budget in that a revenue strategy is renewable and adjustable where a budget is usually written in stone.

A sound revenue management strategy includes the optimum revenue mix and the tactics to achieve it -- this is where the marketing plan comes in! "Managing" revenue is just that -- it assumes an element of control in the revenue that you accept from various sources based upon cost of reservation, commissions, etc.

A revenue management strategy establishes "target" numbers to be achieved through a variety of ways; sales, manipulating the GDS, controlling the allocation and rate in the electronic distribution channels, etc. In other words, it is a pro-active rather than reactive function that simply turns the faucets on and off.

The sales strategies in the marketing plan flow from the revenue management strategy although sales is critical in developing it. The sales department is critical in that they have their fingers on the pulse of the market. They are responsible for assembling the economic information on market conditions and analyzing the potential threats to the market as well as identifying the opportunities. The sales department knows the potential of each market segment and the rate that each one will bear.

The development of the revenue management strategy allows sales to gage how many rooms in a given period they can book by market segment and at what rate. It also insures that existing and future group blocks won't be sabotaged by lower rates on the web site or distribution channels.

How exactly should this process work?

Gathering the info: Each member of the team, but especially sales, should have been keeping information in regard to the market such as trends indicated by the STR reports and other industry sources. Sales should take the temperature of top accounts to see what their forecasts for travel next year look like. The group logs pace reports for this year and next year should also be put into the file. Sales should also have the situation analysis completed as well as identified challenges and opportunities for the upcoming year.

Analyzing the Revenue Data: The revenue reports should be analyzed to indicate the percentages currently generated by all revenue drivers. This, of course assumes that the data is accurate. If anyone has any doubts about the importance of proper market segment coding by reservations and the front desk they should end here. It is "GIGO" (garbage in -- garbage out)! If there aren't accurate numbers, you will be playing a SWAG game (I am not going to explain that one).

The Facilitation: This is the meeting of the minds, GM, sales, reservations and any other interested party such as the owner. They take a look at the budget, market conditions, all sources of revenue, etc. and begin projecting the revenue strategy by segment. This can be a contentious process as the sales department fights for accounts and room allocations by rate. However, as an associate once said, harmony is vastly overrated. This process can take several days as all of the evidence is presented and numbers are plugged into the model and adjusted -- yada, yada. It never hurts to have an outside consultant facilitate this process to provide objective third party input.

The Final Product: The spreadsheet, created from compromise that fulfills the requirement of the budget, becomes the basis of the revenue strategy. Every revenue driver is identified and the ideal mix of revenue and rate is there to yield the targeted REVPAR. Every revenue driver in the revenue strategy should have its own strategy and tactics section in the marketing plan -- including the web site, the GDS strategy and the electronic distribution channels (don't make the mistake of leaving it up to the franchise).

The Review Process: The same fractious group that designed the strategy should meet periodically, it could be monthly or quarterly, to make adjustments based upon reality. In the initial development, "triggers" should have been identified that would automatically call for adjustments. Those triggers include unanticipated market changes, good or bad, changes in the economy and any national security breaches (God forbid!).

It's a "messy" process, but a necessary one for the marketing plan to be developed. It then becomes the road map for the coming year. The marketing plan is not just about sales but the revenue management strategy for the entire hotel.
 

"A dynamic marketing plan must include the strategies and actions for generating and managing revenue across all the revenue channels -- sales, electronic distribution channels, the web site and include the revenue management and CRM strategy as well. Learn how a marketing plan can maximize all of the opportunities that present themselves in a recovering economy."  Carol Verret


If you would like Carol or one of her associates to conduct a marketing plan seminar for your company like the one mentioned above or a facilitation, as mentioned in this article, contact her at carol@carolverret.com. Don't delay -- September is filling up fast!

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 offer 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!

Give your team the advantage - get help from a Pro!

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

Send email to carol@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: Hotel Revenue Management this Summer - a Game of Skill, Art and Most of All Nerves / Carol Verett / May 2004
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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