Hotel Online  Special Report
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Follow the Money: 10 Years of Profit Optimization Progress Pays Off for Operators

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Customer service, revenue management focus in two markets a
winning strategy for The Rainmaker Group and its clients
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April 2008 - When Tammy Farley, principal at The Rainmaker Group, considered Rainmaker’s ten year anniversary this spring, she realized that her company, its clients and the global profit optimization industry have each shaped one another positively. 

“In the past ten years, the industry has progressed from yield management to profit optimization, and the most significant change has been in the users themselves,” said Farley.  “Revenue management professionals are becoming more sophisticated strategic thinkers.” Farley observed that Rainmaker’s customers have a hunger for both a wider variety of analytical data to optimize their profitability, and for real-time visibility into competitors’ positioning. 

Rainmaker, a profit optimization software company serving the gaming hospitality and multifamily housing industries, originally provided yield management and sales and marketing solutions to the airline industry.  Farley and Bruce Barfield, Rainmaker’s president, shifted the company’s focus to the casino gaming industry when Manugistics, since acquired by JDA Software, needed a partner to support its customer base in hospitality.

“We saw an opportunity with the Hotel Gaming Revenue Management product that Harrah’s and others were using, and took on responsibility for developing , supporting and marketing the system in the casino gaming industry.  We branded our new product revolutionSM,” Farley explained. 

Farley and Barfield are both strong believers in personal client service.  After taking over the product “we pulled our customers together and asked them to tell us what their critical issues were.’  They told us; and we tackled the top ten items.  Eight months later we delivered the changes,” said Farley.

Rainmaker’s success with its first two gaming hotel clients quickly attracted the attention of other companies also seeking proven hotel revenue management strategies. The company’s new clients included:

  • Boyd Gaming, with its guest-value focus, which reduced comp expenses 35 percent and increased cash revenue four percent by automating its revenue management strategy; 
  • IP Casino Resort Spa in Biloxi, Mississippi, with its post-Katrina resurgence including Average Daily Rates up 30% and very high occupancies;
  • Isle of Capri;
  • MGM MIRAGE;
  • Trump Entertainment Resorts; and 
  • Hollywood Casino Tunica.
Along the way Rainmaker began hosting Client Steering Committee meetings.  “We started to collectively get feedback from our customers at these user groups and to plan our product roadmap.  This was instrumental to our success because our clients knew what they needed to be more profitable” said Farley.  Another key factor to Rainmaker’s momentum is “the incredible staff of people who have joined our team over the years,” Farley noted.  “Without them, we would not be where we are today.  We have best-in-class talent in many areas.” 

Multifamily Housing Market Ripe for Lease Rent Options

In 2005, Rainmaker entered the profit optimization field in the multifamily housing industry by assuming responsibility for the development and support of Archstone’s Lease Rent Options (LRO) software.  “The LRO system, which we branded revolution LRO SM, had much in common with our other profit optimization system.  The multifamily housing industry was ready for automated lease-rent optimization.  Suddenly we had new business coming our way faster than in the casino gaming hotel side,” said Farley.

Multifamily companies that soon became LRO users included:

  • Post Properties, with lift rates of 4 - 5% in key locations; 
  • Simpson Properties, with 3.6 – 4.1% Lease/ Rent Lift rates; 
  • Mid-America Apartment Communities;
  • Equity Residential;
  • Archstone;
  • Home Properties; and
  • Julian LeCraw Company.
Revenue Management is a Way of Doing Business

In both markets, a shift in thinking was required.  “Revenue Management is not just a software system, it is a way of doing business,” said Farley.  “It requires a cultural change at most companies; we made that education part of our training plan.”  Rainmaker provides best practices consulting to help clients become organizationally ready for the new information profit optimization software delivers.

Profit Optimization Boot Camp Helps Shift Corporate Cultures 

Farley outlined three ways a company can ready its culture to leverage profit optimization software: 

1. Shift your focus from occupancy and rate to profitability. 
As an example, for Las Vegas casino hotels, think profitability instead of separate food and beverage, show, and spa spends. Farley noted industry champions of this approach include Gary Loveman, chairman, CEO and president of Harrah’s Entertainment, Inc., who brilliantly told Wall Street analysts their metrics do not fit the casino gaming industry.  “He said to look at gaming profit per room and gaming win per room instead of Average Daily Rate and occupancy,” said Farley.   “Harrah’s annual report talks about lifts in those metrics.” 
2. Move from silos to integrated departments. Consider letting the revenue management team report through sales and marketing instead of operations.  This creates clear communication between the casino sales and marketing department, revenue managers and hotel operations. 

3. Recognize the day in the life of a Revenue Manager has changed from crunching numbers to strategic thinking.

“Companies that develop a focused revenue management philosophy and appoint an experienced executive to manage the process realize the greatest return from a profit optimization system,” said Farley. 
Tips for Optimizing Revenue in a Soft Market

Farley noted that when Rainmaker started with casino hotels, the market was still reeling from 9/11.  “Later, we experienced a terrific ride where the market was just explosive,” said Farley.  Out of that range of experience come the following tips for companies that want to optimize their profitability during a possible market softening.

  1. Identify areas with less optimal demand early enough to make an impact with marketing.
  2. Avoid overreacting to competitors’ price reductions.
  3. Resist taking low yield business when there is more valuable business yet to come.
Whether advising, training, speaking at industry events, or developing new versions of the software, customer service remains the central focus of Rainmaker’s culture and success.

“The most important thing for us is to stay intimate with our customers; we never want to lose sight of that,” concluded Farley. “Even though Rainmaker has experienced a lot of growth and expansion, Bruce Barfield and I are always on a road show; we still visit each of our customers on a regular basis.” 

As the revenue management discipline globalizes, Rainmaker will continue to follow new corridors including, possibly, a new Silk Road in Asia that is emerging.



Tammy Farley is co-founder of The Rainmaker Group, a world leader in profit optimization software and services for casino gaming hotels, multifamily housing and other industries. Hospitality clients include Boyd Gaming, Harrah’s Entertainment, Omni Hotels, MGM MIRAGE, Trump Entertainment Resorts and other major hotel companies.   Multifamily housing clients include Archstone, Equity Residential, Post Properties, Simpson Properties, Mid-America Apartment Communities and a number of other leading multifamily housing companies. Tammy Farley may be reached at tfarley@letitrain.com.
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Contact:

 The Rainmaker Group
Tammy Farley
5755 North Point Parkway
Suite 77
Alpharetta, GA  30022
Phone:  678-578-5777
Email:  sales@letitrain.com
http://www.letitrain.com

Media Contact:
Julie Keyser-Squires
Softscribe Inc.
Julie@softscribeinc.com
(404)256-5512
http://www.softscribeinc.com
 

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Also See: The Rainmaker Group Welcomes Rod Collier and John W. Wallace to its Management Team; New top-level talent adds to Rainmaker's 250 years of combined profit optimization expertise in the revenue management community / March 2008
Rainmaker Transitions Post Properties' LRO Lease Optimization System to SunGard Hosting; SunGard frees Post team from system responsibilities, hosts application and database / January 2008
Rainmaker Group Leads Revenue Management Panel at GA Tech Conference; Rainmaker hosts Harrah's, MGM MIRAGE, Archstone-Smith execs for Revenue Management thought leadership event / October 2007
'Increasing Revenue' is Focus of Rainmaker Group Client Steering Committee Meeting; Multi-family executives assemble to shape future revenue optimization innovations / September 2007
Four Major Multi-Family Housing Operators Select The Rainmaker Group for Revenue Management Pilot Launch; Revenue Management specialist, Rainmaker, tapped for lease/rent rate lift programs by REITs and independents / August 2007
Mid-America Apartment Communities Installs Rainmaker revolution LRO SM Revenue Management Throughout 140 Properties; revolution LRO delivers a 3% rate increase to Mid-America in pilot test / August 2007
The Rainmaker Group and Realty DataTrust Partner to Introduce Optimized Multi-Dimensional Online Pricing for the Apartment Industry; Revolution LRO clients now able to market optimized rental rates on the Internet through VaultWare™ online leasing solution / June 2007
Trump Entertainment Resorts Installs Rainmaker Group revolutionsm Revenue Management Suite in All Atlantic City Properties; Trump uses revolution RM to optimize rates, manage increased demand for three properties and 2,900 rooms / June 2007
The Rainmaker Group Launches New Version of Multi-Family Housing Revenue Management System, revolution LRO; Revenue Management leader taps two math Ph.D.s, leverages data for more profitable business decisions by MFH operators / May 2007
The Rainmaker Group's 2007 Client Steering Committee Conference Expands 'Product Roadmap'; Revenue Management leader listens to users for product development guidance / April 2007
Casino Hotels Boost Profits with Rainmaker Group, Agilysys Tech Collaboration; Revenue Management and Property Management Systems identify profitable gamers / March 2007
The Rainmaker Group Hosts 3rd Annual Client Steering Committee Meeting; User Input to Guide Development; Revenue Management leader taps users for 'Project Roadmap,' assesses client priorities / March 2007
The Rainmaker Group Increases Staff 30%, Relocates to Larger Offices; Revenue Management leader adds business unit, expands to service growing client demand / March 2007
The Rainmaker Group Launches Revenue Management Pilots with Four Major Multi-Family Housing Operators; Rainmaker revolution LROsm system demonstrates immediate lease/rent revenue lift / January 2007
Boyd Gaming Hits 'Jackpot' With Revenue Management Strategy; Focus on guest value gives the advantage to the house / September 2006
The Rainmaker Group to Share Expertise at Revenue Management and Pricing Conference; Rainmaker Executive VP, Tom Walker, will speak at EyeforTravel Revenue Management and Pricing in Travel 2006 Conference / August 2006


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