Carol Verret Consulting 
and Training
Consulting
Training Seminars
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Managing Revenue by Market Segment – 

The Recovery Challenge for Sales
and Revenue Managers

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September, 2009 - A lot of mixed signals are being sent to revenue managers and sales departments.  Lower rates --  don’t lower rates but increase revenue – offer moderate but not deep discounts but how much and when  -- discount but protect group blocks – the list goes on and on!   

This recession has been a ‘game changer’ for revenue management and the game has changed for the foreseeable future.  PKF predicts soft demand and soft rates through 2013. “We don’t see national average room rates getting back to 2008 levels until sometime in 2012 or even 2013,” Mark Woodworth, president of PKF Hospitality Research, said in an interview. (Bloomberg, X)  He goes on to say that “There’s a profound disconnect between the property cycle and the business cycle,” Woodworth said. “As the economy contracts, (hotel) openings accelerated. It will be 31 months before industry occupancy levels return, which is much longer than the last two downturns.” (HotelNewsNow, August 13, 2009)

Despite the forecast there is good news!  The good news is that year over year numbers are almost certainly to be higher next year.  The key will be to maximize and manage rates by market segments – protecting each segment from cannibalizing the other with discounts that are being offered in other segments.   This is delicate balancing act given the rate transparency through the OTAs both merchant and opaque.

Leisure travel is expected to recover first and we have already seen that this summer.  Corporate will follow although will continue to be rate sensitive.  Corporate groups will be the lagging market segment to recover in both demand and rate.  

Here is a short list of how to maximize revenues from all three segments without compromising any of them:

  • Take Advantage of increased Demand in Leisure.   Whatever worked this summer – do more of it!  Appeal to senior travel that usually kicks in the fall by doubling or tripling the AARP discount percentage versus lowering the price of a room.  Add value based on what seniors want – first floor rooms, breakfast, etc ( I know everyone including me has been saying to add value versus lowered rate but some people still don’t get it).   Make special offers to targeted segments – don’t just throw a number out there to everyone.  Different leisure segments find value in different things.  Cut off the opaques that are lower than the special when occupancy reaches a certain threshold.
  • Corporate Demand is Firming up.  According to a recent survey of unmanaged business travelers that compromise the majority of al business travelers according to Henry Harteveldt, vice president and principal analyst of airline and travel research for Forrester that conducted this research.  In addition, 80 percent plan to travel for business as much or more than they did last fall and 75 percent have not been asked to dramatically reduce business travel spending or provide more justification for trips in the last six months.  (Forrester research for Best Western, Hotel Resource, August 25, 2009)  Go after these small to medium sized businesses to reduce dependency on the RFP side.  However, protect these higher rated corporate travelers on peak mid week nights – do not have lower rates discounts out on the OTAs, opaque channels or anywhere else. 
  • Groups -- Maximizing Opportunities in a Lagging Segment.   Scott Berman of PricewaterhouseCoopers predicts that …” Group behavior is the complete inverse of leisure—ADR decreases and modest occupancy decreases—with an occupancy freefall, while rate is relatively unchanged because business in the group segment is largely contractual.  …. Corporate travel executives are targeting internal meetings for cuts, which can be as much as 40 percent of their travel budgets and 83 percent (of those planners surveyed) have focused on hotels as the most likely source of savings.”   (HotelNewsNow, August 31, 2009). While that appears to be a  grim forecast there are still groups out there meeting – nurturing and treating them well will enhanced the hotel’s position when this segments begins coming back.   Protect group blocks with fences and hurdles – don’t offer a discounted leisure rate on nights the group is in house or put a fence around the offer that won’t appeal to the group participant.  Put minimum stay requirements and ‘no arrivals’ on any other discounted segment that may overlap or ‘bleed’ into a group block.   Close off or raise rates commensurate to the group rate on all other channels – especially the opaques. 
A simple chart can assist you in graphically seeing what changes in occupancy and rate by market segment can do to assist in maximizing all three indices –occupancy, rate and REVPAR. 

The day after Labor Day is the day when everyone comes back refreshed and ready to carry on business after a long summer – maybe it should be called New Year’s Day!  The worst is over in terms of the recession – let’s get to work!

In response to many requests for resources from revenue managers, CVCT has begun to form Revenue Management Master Mind groups.  These will be facilitated by twice monthly collaborative teleconference calls and web based programs, featuring best practices and guest experts.  Space is limited in each group and also defined by not having competitors or revenue managers from companies that have competing hotels in a member’s market in the same group.  For more info contact Carol Verret at carol@carolverret.com 

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 about the company click on www.carolverret.net. To contact Carol send her an email at carol@carolverret.com or she can be reached by cell phone (303) 618-4065.  

 


 
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
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Also See: The Mindset of the 2010 Business Plan – Survival Mode or Recovery Mode? / Carol Verret / August 2009
The New 'Tipping Points' in the Planners Decision Process - You May be Surprised! / Carol Verret / June 2009
The New Normal – What Does the New Normal Look Like for Hotel Sales and Revenue Management / Carol Verret / May 2009
The New Hotel Sales and Revenue Management Metrics - This Could save Your Job! / Carol Verret / April 2009
Back to Hotel Sales Basics: The Basics Have Changed Big Time!  / Carol verret / March 2009
Stimulate Hotel Revenue -- The Economic Stimulus Package Opportunities / Carol Verret / February 2009
2009 The Game Changer for Innovation in Hotel Sales Processes / Carol Verret / January 2009
Contrarian Strategies for Hotel Sales Departments to Thrive in an Economic Downturn / Carol Verret / December 2008
‘Selling Into’ a Bad Economy – Overcoming Fear and Stealing Share / Carol Verret / October 2008
Habits of Highly Successful Hotel Sales People – Accelerated Sense of Urgency / Carol Verret / September 2008
The Challenges and Opportunities for Independent and Boutique Hotels in a Difficult Economy / Carol Verret / August 2008
The Science of Hotel Sales* – The Benchmarking Imperative for Success in a Difficult Economy / Carol Verret / July 2008
Marketing & Revenue Management Plan 2009 - Succeeding in a Difficult Year / Carol Verret / July 2008
Tactics to Drive Business in a ‘Not So Hot’ Summer / Carol Verret / May 2008
All Marketers Are Liars - Web 2.0 Strategies for Hotel Sales and Marketing / Carol Verret / April 2008
Contingency Hotel Revenue Management Strategies 'I Will not Cut Prices'/ Carol Verret / March 2008
The Contingency Hotel Sales and Marketing Plan - Hope for the Best, Plan for the Worst / Carol Verret / February 2008
Change is the Buzz – Rebooting Hotel Sales Activity at the Property Level / Carol Verret / January 2008
Habits of Highly Successful Revenue Managers Ramped Up for 2008 / Carol Verret / November 2007
Five Tips to Improving Hotel Customer Service with User Generated Reviews / Carol Verret / October 2007
Habits of Highly Successful Hotel Sales People – A Seismic Shift in 2008! / Carol Verret / September 2007
GMs – How User Generated Review Sites Can Make you a Better Manager! / Carol Verret / September 2007
Web 2.0 and Hotel Sales Strategies for '08; What Are Your Clients Saying About You? / Carol Verret / August 2007
“It’s not the big that eat the small, it’s the fast that eat the slow” -- Five Revenue Management Tactics for Independent Hotels / Carol Verett / June 2007
Developing New Hotel Business Using Client DNA / Carol Verret / May 2007
The Jigsaw Puzzle – The Fit of the Revenue Management and Internet Group Sales Pieces / Carol Verret / April 2007
Client DNA - The Gold Standard for New Business Development / Carol Verret / March 2007
The 'I Hate Cold Calls' Web Cast - The New Paradigm of Sales! / Carol Verret / February 2007
Hate Cold Calls? - Discover the New Paradigm of Hotel Sales / Carol Verret / January 2007
Issues in Hotel Sales Training - Metics for Success / Carol Verret / December 2006
Is the Party Over?; The Challenge of Decreasing Hotel Room Demand / Carol Verret / October 2006
The Habits of Highly Successful Hotel Sales People Ramp Up for 2006! / Carol Verret / September 2006
Identifying the WIIFM Factor – The Essential of Hotel Sales Success / Carol Verret / August 2006
Revenue Management for Hotel GMs – What You Don’t Know Can Jump Up and Bite You!/ Carol Verret / July 2006
Feeding the Revenue Elephant; Hotel Revenue Management / Summer 2006
The "Tipping Point" - Identifying the Touch Points in Hotel Sales / Carol Verret / May 2006
The "Tipping Point" - Touch Points Make a Difference in Customer Service Training / Carol Verret / April 2006
Selling Up! Taking Group Room Revenue to a New Level / Carol Verret / February 2006
Revenue Management 2006; The Risks and Rewards / Carol Verret /January 2006 
Revenue Management and Group Sales - The Partnership Not the Disconnect / Carol Verret / November 2005
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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