and Reservations Staff To “Maintain The Rate Fences”
|By Doug Kennedy , July 2006
For more than a decade hotels have invested heavily in the technology and systems needed for effective revenue management. As a result, we as an industry are better than ever before at forecasting demand, tracking booking pace trends, and adjusting rate availability upward or downward accordingly. Now in order to further optimize the profit potential of each distribution channel, RM professionals are looking at all possible solutions for stratifying their rate structures to ascertain more control of how inventory is priced and distributed.
Certainly this is not a completely new concept. Resorts and upscale hotels have traditionally differentiated the price of their product based on room type (i.e. standard, superior, deluxe, suite) and company/consortia/group affiliation. Likewise, the concepts of varying rate based on day of the week, season, and even length of stay have been around seemingly forever. So it has always been necessary for front desk associates to explain rate differentials and justify them to guests; it’s just that there’s a whole lot more of explaining to do these days!
In today’s highly competitive environment wherein customers can so easily price-shop a large number of hotels at once and can even shop their targeted hotel by more than one of it’s own distribution channels, RM professionals are increasingly innovative at establishing rate differentials (or “fences”) based on the unique opportunities presented by their inventory and market conditions.
For example, the industry is seeing the come-back of the “advance purchase/non-refundable” reservation, which was first established on a wide scale by companies like Marriott International and Hilton in the early 1990’s. This option offers consumers a lower-tiered rate in exchange for booking restrictions that exclude the less price-sensitive business travelers who book late and need the flexibility to change dates.
It is true that these rate-option based pricing plans represent creative ways for hotels to market just the right rate to just the right market segment. Yet explaining all the rules/restrictions surrounding these accommodation types and rate-options can create significant challenges for reservations and front desk agents who have not been property prepared via training. What’s even more challenging is trying to uphold these fences when customers try later to circumvent them by cajoling or complaining.
Besides advance purchase restrictions, here is a list of other examples of rate fences that today’s front desk associates might potentially need to uphold:
Depending on factors such as your hotel’s inventory of accommodations, distribution channels, market mixes and property type, here are some strategies and tactics to review with your front desk and reservations agents.
- It’s The Customer’s Job To Ask For The Discount. Never voluntarily mention discounts when the customer hasn’t objected to the initial offer. Perhaps it’s because they themselves aren’t convinced of the price/value proposition, but too many front desk and reservations agents voluntarily offer discount rates/options before it is necessary or appropriate to do so.Finally, remind your team that more often than not the consumer is asking for the discounted rate or better terms for one reason and one reason only; to check their reaction. Smart consumers know there’s no harm in asking, and in many cases they get what they ask for.
By covering this subject at your next reservations or front desk meeting,
you’ll be giving your agents the tools they need to maintain the fences
around the rate plans, allowing your hotel to optimize its revenue while
minimizing the negative impact on hospitality and customer service.
|Also See:||Beyond “Outrageous,” and “Legendary” Customer Service Training: Creating “Ordinary Excellence, Daily!” / Doug Kennedy / June 2006|
|The Politics of Revenue Management / Doug Kennedy / June 2006|
|Hotel Sales “Steps” and “Processes” Are Out; Today’s Inquiry Caller’s Want A Personalized Sales Experience / Doug Kennedy / June 2006|