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What’s Hot: Total Profit Optimization. What’s Not: Room Rate Optimization
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Experienced gaming and hospitality companies use the Total Customer Value approach
to maximize profitability for the enterprise, not just the rooms division
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ATLANTA, GA May 15, 2009 --Trying to maximize your hotel’s revenue without measuring and forecasting the total value of each guest to your entire property is like trying to take a photograph with the lens half covered – you are not seeing the whole picture. That is the judgment of a growing number of revenue management professionals who are using technology to measure Total Customer Value and employing it to set room rates and allocate availability to maximize revenue across a multiple profit-center enterprise. 

Basing rates and availability on Total Customer Value began in casino properties where the rooms division was not the primary source of revenue.  Revenue managers at companies like MGM Resorts, Boyd Gaming, Trump Entertainment Resorts, and Foxwoods utilize Total Customer Value analysis as an integral part of the room rate setting process.  This approach can benefit any hotel operator who understands the importance of using total guest segment spend on food and beverage, entertainment, spa and other incidentals as the foundation of room price setting. 

Traditional hotel industry revenue management practices base room rates on the source of business, such as Internet, wholesale, guest type (such as transient or corporate), and the availability on any specific day or date range.  For example, when a date reaches 80 percent booking, a revenue management system may be configured to increase rates by $30.  This traditional strategy will optimize room rate, but may actually cost a hotel money because it does not consider a guest’s value to property outlets and other profit centers, which in many hotels could be substantial.  When viewed from the Total Guest Value perspective, it makes a stronger business case to fill rooms with guests who are forecasted to make the most revenue for the entire hotel, even if the property sometimes offers a discounted rate to attract them. 

Optimize total guest profit – Not just room revenue 

“Casino properties can frequently forecast a guest’s revenue potential to the enterprise from their player history and other non-room revenue sources, so our segmentation and room pricing is based on ‘total customer value,” said Ravneet Bhandari, senior vice president of revenue strategy for Trump Entertainment Resorts, Inc. in Atlantic City.  “All our forecasts are predicated on the ‘expected total profit’ value from each customer. This process ensures that we are not solely focused on the room rate, it is about the guest.” 

Since nearly all of Trump’s customers have a player card which records their guest spend on property, the company can track all customer transactions with its properties, and then use the data as a foundation to forecast each guest segment’s expected future value. “We use a specialized revenue management system called revolutionSM  from The Rainmaker Group that pulls in a guest’s expected value from the player tracking system as well as data from other sources, then factors in comp-set data, demand forecasts, price-elasticity, and other variable influences to set the room rate,” said Bhandari.

“We can set our room rates to deliver optimal revenue to the entire enterprise while ensuring our highest valued gamers will always find an available room. To put it in simple terms, if a guest’s forecasted total value for a certain date is $200 and the ‘value threshold’ or ‘bid price’ for that day is $300, the room rate is calculated to make up the difference.”

Tightly focused marketing

The approach is also paying off for Connecticut’s Foxwoods Resort Casino, the third largest gaming floor in the world, helping keep occupancy high in the company’s 2,221 rooms, and RevPAR maximized. Like Trump, Foxwoods uses the revolution system and the Total Customer Value approach to build demand forecasts and recommend rates based on the historical and projected value of each customer segment.

Foxwoods is also using the system to optimize its marketing efforts. “We have a weekly yield meeting where I lay out my 90-day forecast with current rates and availability by segment,” said Rob Bunker, executive director of revenue management and call center operations. “The Foxwoods email marketing team and I work together to determine the promotions for each segment, focusing on the best way to draw them to Foxwoods on specific days that show soft availability. Our goal is to attract segments that normally would not come without an incentive, which optimizes our marketing investment by making our promotions more effective.”

Foxwoods’ promotions are precisely targeted incentives that drive incidental revenue from dining, spas and the gaming floor. The property rarely mandates a minimum length of stay, because average length of stay is only about 1.2 days. “I watch our ‘promoted demand’ pick-up from guests who are with us because of a promotion, and when I think we have recognized a sufficient number of these guests to meet my occupancy goals, I close the promotions down and fill the remaining rooms on un-incented guests,” Bunker said. “Occupancy is up and our forecast for summer is optimistic—thanks to intelligent promotions that are focused where and when they will have the greatest impact.”

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Contact:

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

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

Media Contact – Asia Markets
Wye Leng Wong
LEAP Integrated Marketing Solutions
Phone:  (65) 9826-4097
Email: wyeleng(at)leapmarketing(dot)com(dot)sg

 

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Also See: Harrah's Cherokee Casino Hotel: A Winner with Total Customer Value; Property leverages revenue management software to strengthen marketing promotions, maintains leadership in Harrah's portfolio / May 2009
The Rainmaker Group Approved as Microsoft Certified Partner; Certification strengthens revenue management leader’s partnership with Microsoft / May 2009
The Rainmaker Group Announces revolution SM 1.6 Revenue Management; #1 Leader in Total Customer Value Revenue Management Implements Promoted Demand and Multiple Forecasting Models / April 2009
Windsor Communities Implements Rainmaker revolution LROTM Revenue Optimization at 10,000 Units; LRO demonstrates lease rent lift in conclusive pilot test / February 2009
Multifamily Revenue Management Leader Annie-Laurie McCulloh Joins The Rainmaker Group; McCulloh brings operations and pricing expertise to LRO provider / February 2009
Omni Hotels Advances Revenue Management Systems with Rainmaker; Two-Way Interface Between Rainmaker and Omni’s CRS Powers New System / January 2009
The Rainmaker Group, Leader in Profit Optimization Software, Opens Regional Office in Singapore; Expands Global Presence, Hires Managing Director Vivek Bhalla to Bring 'Total Customer Value' Revenue Strategy to Casino Hotels and Gaming in Asia Pacific Market / November 2008
The Rainmaker Group, Microsoft Team to Leverage Future Products for Gaming Hospitality Operators; Partnership Will Enable Operators to Extend Enterprise Data beyond Revenue Management / November 2008
Foxwoods Installs The Rainmaker Group's revolution Revenue Management System; Largest casino in North America uses Rainmaker to optimize profitability at 4 hotels with 2,221 rooms / October 2008
The Rainmaker Group 5th Annual Client Steering Committee Meeting Taps Financial Analysts for Revenue Think Tank; Wall Street analysts urge adoption of technology to drive greater revenue / October 2008
Carmel Partners Selects Rainmaker revolution LROTM Revenue Optimization Solution for 57 Communities; LRO delivers 3.55% lift in revenue billed per unit in 8 community pilot test / September 2008
Hollywood Casino Tunica Installs Rainmaker revolutionsm Revenue Management, Optimizes Rates, Occupancy; 494-room Hollywood / September 2008
Multifamily Housing Organizations Maintain Momentum; Revenue Management Strategies and Technologies Make Good Partners in Today's Economy / August 2008
Casino Hotel Operators Wield Strategies and Technology to Tame a Softening Market; Savvy revenue managers increase 'cash' customers, leverage revenue optimization technology to minimize the downturn's effect / August 2008
The Rainmaker Group Announces revolutionsm Product Suite on Microsoft Software Platform; Microsoft relationship enables flexible hosting options for Rainmaker’s profit optimization clients / June 2008
Wynn Las Vegas Implements Rainmaker revolution  Revenue Management; Rainmaker tapped by Wynn to optimize total customer value for 5-Star, 5-Diamond resort - / June 2008
Follow the Money: 10 Years of Profit Optimization Progress Pays Off for Operators; Customer service, revenue management focus in two markets a winning strategy for The Rainmaker Group and its clients / April 2008
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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