Follow the Money: 10 Years of Profit Optimization Progress Pays Off for Operators
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:
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:
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.Tips for Optimizing Revenue in a Soft MarketAs 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.
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.
“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
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 email@example.com.
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|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|