Hotel Online  Special Report

Top Five "Must Dos" to Raise Room Profitability
Revenue Management Viewpoint

By Kelly Blake and Bonnie Buckhiester

June 14, 2005 - The industry is in a healthy recovery. According to the Travel Industry Association of America, Americans will be traveling in record numbers this summer, building on the momentum in travel recovery from 2004 with an expected 2.3 percent increase in leisure travel. Nevertheless, you might find yourself asking, "The hotel market is finally booming; so why is everyone’s revenue up but mine?" 

The answer has a lot to do with how well you forecast demand and manage your rates, and how clearly you understand your markets and the channels you use to sell rooms. Optimizing profitable revenue requires a blend of sweat equity and automation, and a conscious decision to devote more time and attention to how you run your businesses. Take a close look at the revenue management tools and processes available to leverage the upturn in travel and boost your bottom line. Here are five things you must do to start heading in the right direction.

1.  Build a Revenue Management Team 

Revenue management is a discipline; it is a structured business process. Put responsibility in the hands of your top managers and create a revenue management team that is personally involved in goal setting, decision-making and pricing management. Then give them the tools they need to put a systematic approach in place. Systems are key because they lift rate optimization from guesswork and finger-crossing to a checklist of best practices that result in increased revenue.

2.  Know Yourself and Your Competitors

Know what kind of hotel you operate and assess if you are doing all you can to meet your customers’ needs. If other properties in your market offer free Internet connections, do the same to build parity, or go further to differentiate your hotel as a foundation for higher rates. This leads to the next step: competitive performance comparisons that let you know what properties like yours charge for each segment in your market, their RevPAR and occupancies. This gives you a valid benchmark against which to measure your strategy’s success. Remember these numbers change weekly, so assign someone on your revenue management team to build an index of competitors’ performances and track how your property stacks up over time. 

3.  Set Prices Strategically

Once you understand your own property and how your competition is setting rates, you can use the information to price your property’s segments strategically. To do so you need to know which booking channels your customer segments use and the costs of these channels. With this knowledge, you can structure your rate offerings intelligently for each individual sales channel, such as call center, Travelocity or walk-in, to get the maximum revenue possible. Since different segments of your business use different sales channels to book, evaluate your business mix and price channels to optimize your rates for each segment

4.  Determine Which Guests Are Most Valuable

Assess your business segments for their value. Does your corporate segment book more rooms at higher rates than your package or leisure guest segments? Do you know what channels they use? Use caution, however, as online distribution has changed traditional segmentation. Twenty-something business travelers do not call the 800 number like their more seasoned colleagues; they are more likely to log on and book through a different channel. Most revenue management teams are surprised to learn where the majority of their business originates. The most profitable segments and channels are different for every property. When you run the numbers and know the answer for your hotel, you will see where to allocate your sales resources to drive the most potentially lucrative business mix. Watch out for ‘transient displacement,’ though, as this is what happens when discounted wholesaler groups push out higher paying business segments. 

5.  Forecast Demand, Not Just Occupancy

Above all, become an expert at forecasting demand, not just occupancy. When you know your demand you can take the right action to manage your rates and stay controls. Forecasting demand allows you to intelligently balance what your competitors are doing with your customers’ expectations and the overall demand in the market place. For example, projecting a future date at 101 percent might not be high enough when you consider no shows, early departures and cancellations. But a forecasted demand level of 110 or 130 percent suggests you not only have the opportunity to drive rate, but also duration, and you therefore need to set up significant stay controls and increase rates. Your goal, of course, is always to get the highest rate while still selling out your property. 

Bonus: ‘How To’ Revenue Management School

If you are serious about leveraging the current economy to optimize your profitable revenue, you should attend Vantis and Buckhiester Management’s online webinar series that focuses on the critical elements of revenue management. There is no question – businesses that successfully practice revenue management now will have a significant advantage in the marketplace well into the future.

Graphic by Buckhiester and Vantis
Kelly Blake is president of Vantis (, a marketing and revenue management consulting organization for hotels, car rental companies and airlines. Founded in 1979, the privately held Calgary, Alberta-based firm partners with its clients to optimize their profitable revenue. To learn more about Vantis and how the company helps clients optimize their profitable revenue, visit Vantis at HITEC, Booth #427, in Los Angeles, California, June 20-23.

Bonnie Buckhiester is the principal of Buckhiester Management USA Inc. (, the leading Revenue Management consulting firm in North America for the hospitality industry. Founded in 1995, now with offices in Seattle, Vancouver and Washington, DC, Buckhiester Management specializes in developing customized Revenue Management solutions at the corporate and property level. 



Rick Shaum 
Senior Vice President Sales and Marketing
Tel: 719-487-0789
e-mail: [email protected]

Kevin Looney
Director of Business Development
Tel: +61 2 9211 0999
e-mail: [email protected]

Also See Vantis Expands Relationship with SKYCITY Entertainment Group in New Zealand SKYCITY Grand Hotel Selects Vantis for Internet, GDS, Voice and Booking Engine Services / June 2005
A Partnership of Historic Proportions: Historic Hotels of America Selects Vantis as its New Partner in Reservations and Revenue Optimization / May 2005
Aspen Hotels Doubles Daily Internet Reservations;  Independent Alaska Chain Aims to Book 4,300 Additional Room Nights in 2005; Partners with Vantis to Create Centralized Web Booking Strategy / May 2005
Rack is The Rule: The Napa River Inn Takes Internet Risks to Raise Rates and Boost Reservations by 33% / April 2005
Asset Managers and Owners Bound to Benefit from Vantis and Buckhiester Management USA Revenue Management Owners’ Series / March 2005
Vantis Expands Services with Viz-it, Rich Media Site Content to Boost Online Hotel Reservations / February 2005
Vantis and Buckhiester Management USA Offer Unique Online Seminar on Revenue Management Business Process / January 2005
Vantis Launches ‘Package Select’ Dynamic Online Booking Engine / November 2004
Vantis Gets Aggressive, Applies Travel Agent Incentives, GDS Promotions to Pull Guests to Golf Destinations / November 2004
Vantis Partners with VFM Interactive to offer Hotel Clients Rich Media Solutions / October 2004
Melrose Taps Vantis For Revenue Management, Multi-Channel Reservations / October 2004
Vantis Launched from VIP International, Lexington Services / October 2004
Industry First: VIP International Inks Strategic Alliance with Buckhiester Management to Optimize Profitable Revenue for Operators / September 2004
VIP International Continues Strategic Travel Industry Expansion, Tapped by Harmony Airways for Call Center Reservation Services / August 2004
Lexington Services Boosts Internet Bookings and Revenue for Clients through Targeted Promotions, and Hands-On Channel Management / July 2004
Lexington Services Introduces First-To-Market Hotel Website Package Booking Engine / June 2004
VIP Adds Website Services and Merchant Express to Drive Property Bookings, Maximize Rates / May 2004
336 New Properties Chose VIP International to Drive Channel Reservation Sales in First Quarter of 2004 / April 2004
Franchisees on the De-flagging Fence: A Gamble Or A Golden Goose? Former Franchisees Talk Specifics About Channel Loyalty and How They Leverage VIP International Channel Marketing to Succeed as Independents / March 2004
Lexington Services Launches Galileo's Next-Generation Seamless Solution, Inside Shopper™; Gains Access to Real-Time Rates and Availability / March 2004
Midscale Franchisor Hands Franchisees 22% Increase in Internet Bookings; Country Hearth Inn Fuels 22% Growth in 2003 with New Internet Booking Technology, Branding Strategy for Franchisees; Projects 28% Growth in 2004 / February 2004
Study: Room Rates 6.5% Higher For Reservations Booked From Hotel Sites - VIP International Launches Website Services to Drive Traffic to Property Sites / December 2003
An Affiliate of VIP International, Reaches Definitive Agreement to Acquire Lexington Services / November 2003
VIP International Boosts Hotel Reservation Services, Selects Voxify to Reduce Costs for Clients, Enhance Call Center Efficiency / October 2003
#1 Provider of Car Rental Software Teams with VIP International to Fuel Independents’ Reservation Volume / October 2003
Business Travelers, Consumers Grab Lower Rental Car Rates, Book Online from Independent Agency Site / September 2003
E-Z Rent A Car Perfects Internet Strategy to Boost Reservations 20% in 2003 / September 2003
WorldRes Agreement Gives VIP International Hotels Second ‘Low-Fee’ Merchant Model Program / Aug 2003
Top Channel Marketing Provider VIP International Taps Industry Veteran to Power Marketing Efforts, Funnel 158% Growth  / Aug 2003
VIP International Cements Reputation as Leading GDS and Channel Marketing Provider for Asia Pacific / Aug 2003
Hotel Owner/Operators Disclose Secrets of Web Booking Success / June 2003
Dave Crawford Appointed Director of Airline and Auto Rental Business Development for VIP International / June 2003
Hotel Company Sharpens Channel Management for 22% Increase in Average Length of Stay for GDS Bookings, 14% Jump in ADR / June 2003
Interstate Hotels, Candlewood Suites, Regal Hotels, Canadian North Airlines Shift Call Center Responsibility to VIP: Interstate To Pass Along 8% to 10% Savings to Properties; Regal Hotels up 26% / May 2003
Zero Transaction Fees: Independent Hotels, Chains Profit from Landmark Agreement; Manage Discounted Rooms Through Central Res Systems at No Cost / May 2003
Interstate Hotels & Resorts Signs Five-Year Agreement with VIP International to Outsource Call Center; Expects to Pass Along 8 Percent to 10 Percent Savings, Increased Revenue to Hotels / April 2003
Hong Kong’s Largest Hotel Operator Sees Reservation Numbers Jump 26 Percent In First 10 Months of 2002, Increases Global Presence with New Reservation Sales Provider / February 2003
Canadian North Chooses Calgary-based VIP International to Provide Voice Reservation and Support services / January 2003
Midwestern Chain Targets Value-Conscious Senior Market; Picks New Channel Marketing Provider to Power Goal of 100% Increase in Bookings / January 2003
Midwestern Management Firm Gains 69% Increase in GDS Reservations YTD at 12 ‘Enhanced Limited-Service’ Properties / Dec 2002
Texas-Based Hotel Chain Captures 104% More GDS Reservations YTD, Speeds Ahead of Economy / Dec 2002
Four Star Calgary Hotel Reports 42% Increase in Bookings During Initial Period With New Channel Marketing Provider / Nov 2002

To search Hotel Online data base of News and Trends Go to Hotel.Online Search

Home | Welcome! | Hospitality News | Classifieds | Catalogs & Pricing | Viewpoint Forum | Ideas/Trends
Please contact Hotel.Online with your comments and suggestions.