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Revenue Management and Group Sales - 
The Partnership Not the Disconnect
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by Carol Verret, November 2005

Groups and conventions are booming – a significant increase over previous years. Competition is stiff and the window to submit proposals is shortening. Evaluating the quality of a group booking for all profit centers is critical.

For those of you with sophisticated revenue management systems this process is not as difficult as for some hotels who are doing revenue management the ‘old fashioned’ way and there are more of those than you might think – even among large group houses and companies! 
However, even some sophisticated revenue management systems struggle with the integration and analysis of the value of catering revenue and it’s impact on the overall revenue management strategy. I often hear that catering revenue has a high cost associated with it and is therefore not as important as rooms with a lower cost. Until someone develops a formula for evaluating the cost of room sales from all channels as a factor in revenue management decisions, catering revenue must be considered. 

Sales managers now not only have to sell the client or meeting planner but also sell the revenue manager on the ‘worthiness’ of a piece of business. This has always been the case to some extent but it is more critical than ever that sales understands the revenue management strategy and process.

We have discussed in prior articles the tension and sometimes (sometimes?) disconnect between the two departments. That is not the issue here – it is the partnership of the two functions that will produce the greatest maximization of revenue for the property. It is imperative that we get beyond REVPAR and evaluate the revenue potential for all profit centers, not just rooms.

Below are a few considerations for sales managers to evaluate a group if you don’t have a sophisticated revenue management system to work with. In making a case for a specific group whose rate may fall at or below the RM parameters but has a significant impact on the other profit centers requires research and diplomacy. It is also a valuable process when you want to make a case for an ‘exception’ for a group.

  • Evaluate Past Revenue History of the Property. Pull the revenue history for all profit centers, rooms, catering, F&B outlets, spa, etc., for the past two years. Were there groups in house that influenced this revenue and, if so, what was the revenue profile of the past group in terms of room rate, etc.? How does the current group’s revenue contribution compare to previous groups? You will also need to source the rest of the sales department in relation to group bids others may be working on for the same dates and which may have better overall revenue potential for the hotel. 
  • Understand the Revenue Goals of Each Profit Center. Here is where diplomacy plays a major role. Each profit center may become an ally if you know how this group is going to make a significant contribution to their revenue goals for the period. Helping other departments get what they want is a great way to get what you want. 
  • Obtain the Group’s Past History. Most companies and organizations know exactly what they spent on this meeting or similar ones in the past in terms of rooms, F&B, catering, etc. If the history varies significantly from what they have told you they anticipate, it should set off a ‘red flag’ – ask them why they believe this group or meeting will be different from past ones. 
  • Qualify for Future Potential. This requires that you completely qualify the account for future business prior to booking this group. Be careful – it’s like the contractor who went to purchase 5 refrigerators for a development he was building but told the salesman he needed five hundred. The salesman put together his best deal. The contractor took only the five and never went back for the other 495. We’ve all been on the short end of this tactic at one time or the other. If they are asking for concessions on this group, tie it to a contract on a future group – have them sign both contracts. 
  • Be Prepared to Walk Away. This is a tough one. Good sales people love to book business and then there is the question of the quota and/or bonus for the period. The faster you walk away from a piece of business that is not aligned with the hotel’s revenue management strategy the faster you can move on to other prospects. In addition, if the bonus or incentive system is not aligned with the revenue management strategy, and many are not, it is a huge source of contention and the source of the ‘disconnect’ between sales and revenue management, therefore making the sales person even more reluctant to walk away. 
The incentive system should reward revenue (notice I said revenue and not rooms) booked during opportunity periods at a higher value than business booked in peak season. It doesn’t take a great deal of talent to sell business in periods of high demand and, if the bonus is based on rooms not revenue, that business may be sold at a lower than optimal rate and still be rewarded. Total disconnect with the revenue management strategy!




Carol Verret and Associates Consulting and Training offers training services and consulting in the areas of sales, revenue management and customer service primarily but not exclusively to the hospitality industry. To find out more abut the company click on www.carolverret.com. To contact Carol, send her an email at carol@carolverret.com or call phone (303) 618-4065.

copyright © Carol Verret, 2002-2003 -2004 -2005


 
Contact:
Carol Verret, Consulting and Training
Carol Verret
5910 S. University #C-18, PMB 374
Greenwood Village, CO 80121
Telephone: (303) 618-4065
carol@carolverret.com
Web Site: http://www.carolverret.com/
Email: carol@carolverret.com
Also See: Habits of Highly Successful Hotel Sales People / Carol Verret / September 2005
Triple Witching Hour - The Marketing Plan, Revenue Management Strategy and RFPs for '06 / Carol Verret / August 2005
"Smile" is a Learned Behavior - Creating a Culture of Customer Service / Carol Verret / July 2005
Revenue Management Systems -- Considerations for Evaluation / Carol Verret / June 2005
Disconnect -- Aligning the Revenue Management and Sales Strategies / Carol Verret / May 2005
Independent Hotels & Resorts; Ride the Wave or Float with the Tide? / Carol Verret / March 2005
Hospitality Sales Training Companies Reach Across the Competitive Playing Field to Combine Live Seminar Expertise with  the Convenience of the Internet / Carol Verret / January 2005
Revenue Management - The Challenge for Hotel Sales / Carol Verret / January 2005
Hotel Sales Departments -- Issues in Processes and Functionality / Carol Verret / November 2004
The GM'S Role in Revenue Management / Carol Verret / October 2004
Transforming the Hotel Sales Organization; Alignment with the New Realities of Sales / Carol Verret / August 2004
The Revenue Management Strategy - The Pre-Plan Marketing Plan / Carol Verret / July 2004
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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