by Dr.
John
Hogan, CHE, CHA, CMHS
November 9, 2011
Maximizing Revenues does not
automatically mean raising prices, but means reacting to the market, to
your
competitors to some degree and to the uniqueness of your hotel’s
clientele.
Most markets have some kind of
seasonal demand. When it is off-season, some rates naturally tend to
drop due
to lower demand. A proven practice even in off-season is to maintain
some high
rates because rate alone is not the only driver of business to our
hotels.
Customers choose hotels partially because of price, but also because of
location, brand preference, previous positive experience or simply
availability.
Maintaining higher rack rates also allows you the option of some
discounting
percentages from the higher rates, achieving better REVPAR and
operating
results. Part 1 of this 2 part short
series provided tips to maximize
revenues in periods of lower demand or weaker shoulder seasons.
Part 2 of
this series looks at High and Excess
Demand Strategies
- High
Demand Tactics: (use when
you expect 85% occupancy or higher)
- Close deep discounts (honoring mandatory
discounts such as AAA and AARP, discount from the rack rate), but
recognize a
Manager’s Special at a 20% discount could be a good business decision
to fill
those last 5 rooms
- Use
minimum length of stay restrictions carefully
- Reduce group allocations if not picked up
according to agreements
- Reduce or
completely eliminate 4 or 6 p.m. holds
- Apply
stricter guarantee/cancellation policies, i.e. accept only credit card
guaranteed reservations with 24- or 48-hour cancellation requirements
- Raise
rates to be consistent with your competition
- Evaluate
and possibly raise rates for all packages, or limit their availability
on
certain days
- Save
suites/executive room types for full price
- Don’t automatically
eliminate sell-through reservations, as a multi-night stay that
coincides with
high demand night could net a week long stay.
Look carefully at recent history of no-shows and cancellations
- Double
check all corporate and credit card guarantees - be certain to fill all
those
rooms
- Excess
Demand Tactics: (use when demand exceeds availability)
- Put in all of the restrictions as
you would for high demand
- Be sure you know what is causing
demand, e.g.: a one-day vs. a three-day special event
- Apply minimum length of stay restrictions
- Use these tactics during forecasted
sold-out days
- Consider weekend stay-overs and
shoulder nights
Follow
up on all Situations
- Continually monitor your PMS and CRO
statistics
- If you part of a chain or brand ,
work with your Reservations and Revenue Representatives at the CRO -
they are
your experts and can greatly assist you with their experience
- Ensure appropriate restrictions are consistent
between all channels of distribution (GDS, CRO, PMS, OTA)
- Review and revise strategies
- Communicate strategies to the Front Desk.
Think Tank Question
We provide questions to stimulate discussion about the way we do
business.
There is not necessarily only one "correct" answer - the reason for
this section of the column is to promote an awareness of how we might
all
improve our operations.
Topic: Maximizing Revenues
- Does someone with responsibility at your hotel specifically
review the next
90 to 180 days at least once a week? If so, do they identify trends and
take
steps to maximize revenues? If not, why not?
- How often is the marketing plan (or sales action plan)
reviewed? Who is
charged with this task?
- When was the last time the topic of "sales" and "maximizing
revenues" was presented to the entire hotel staff? It is the best
interest
of everyone to be thinking "sales" and staff often have GREAT ideas,
as they are close to the customers daily.
Hospitality
Tip of the Week™: Focus on Planning AND Action
“People
blame their environment. There is only one person to blame -- and only
one --
themselves.”
Robert Collier (
1885 – 1950) author of self help, and New Thought metaphysical books in
the
20th century.
This is especially true in paying
attention to trends in demand and adjusting pricing in hotel revenue
management.
At least 25% of our weekly tips focus on sales
and marketing.
We must remember that we
must focus on delivering the right services to the right customer at
the right
price, which means attentiveness to sales and marketing efforts are
essential.
HospitalityEducators.com
was created to help hospitality businesses address problems via a
training and
information resource site to help you increase your Hotel's revenue,
market share and profitability. With more than 950 pages of tips,
guides,
best practices, strategies, plans, budgets, videos and resources,
HospitalityEducators.com
has become the #1 independent website for
hotel owners and managers. This site can help you solve your
problems now!
Read
More
KEYS TO
SUCCESS is the
umbrella title for my 2011-2012 programs, hospitality services and
columns.
This
year’s writings focus on a variety of topics for hotel owners, managers
and
professionals including both my "HOW
TO" articles, HOSPITALITY CONVERSATIONS™, Lessons from the Field™,
Hotel Common Sense™ , THE P-A-R
PRINCIPLE™ and Principles for Success.
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Feel
free to share an idea for a column at [email protected]
anytime or contact me regarding consulting,
customized workshops, speaking engagements … And remember – we all need
a
regular dose of common sense.
John Hogan is a successful
hospitality executive, educator, author and consultant and is a
frequent
keynote speaker and seminar leader at many hospitality industry events.
He is
Co-Founder of www.HospitalityEducators.com
, which delivers focused and affordable counsel in
solving specific challenges facing hospitality today.
Consulting Expertise and Research Interest
1.
Turn-around and
revenue management
2.
Professional
Development for the Organization and the Individual
3.
Customer Service
4.
Making Cultural
Diversity Real
5.
Developing
Academic Hospitality programs
6.
Medical Lodging
Consulting
7.
Sales Management
and training
If you need assistance in any of these areas or simply an
independent review or opinion on a hospitality challenge, contact me
directly
for a prompt response and very personalized attention.
www.HospitalityEducators.com
is a membership site offering a wide range of
information, forms, best practices and ideas designed to help
individual
hoteliers and hospitality businesses improve their market penetration,
deliver
service excellence and increase their profitability.
www.HoganHospitality.com
Your Hospitality Resource for
the Hotel Owner, Innkeeper, Manager and Hospitality Industry
Associations.
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