| by Carol Verret, November 2005
Groups and conventions are booming � a significant increase over previous
years. Competition is stiff and the window to submit proposals is shortening.
Evaluating the quality of a group booking for all profit centers is critical.
For those of you with sophisticated revenue management systems this
process is not as difficult as for some hotels who are doing revenue management
the �old fashioned� way and there are more of those than you might think
� even among large group houses and companies!
However, even some sophisticated revenue management systems struggle
with the integration and analysis of the value of catering revenue and
it�s impact on the overall revenue management strategy. I often hear that
catering revenue has a high cost associated with it and is therefore not
as important as rooms with a lower cost. Until someone develops a formula
for evaluating the cost of room sales from all channels as a factor in
revenue management decisions, catering revenue must be considered.
Sales managers now not only have to sell the client or meeting planner
but also sell the revenue manager on the �worthiness� of a piece of business.
This has always been the case to some extent but it is more critical than
ever that sales understands the revenue management strategy and process.
We have discussed in prior articles the tension and sometimes (sometimes?)
disconnect between the two departments. That is not the issue here � it
is the partnership of the two functions that will produce the greatest
maximization of revenue for the property. It is imperative that we get
beyond REVPAR and evaluate the revenue potential for all profit centers,
not just rooms.
Below are a few considerations for sales managers to evaluate a group
if you don�t have a sophisticated revenue management system to work with.
In making a case for a specific group whose rate may fall at or below the
RM parameters but has a significant impact on the other profit centers
requires research and diplomacy. It is also a valuable process when you
want to make a case for an �exception� for a group.
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Evaluate Past Revenue History of the Property. Pull the revenue
history for all profit centers, rooms, catering, F&B outlets, spa,
etc., for the past two years. Were there groups in house that influenced
this revenue and, if so, what was the revenue profile of the past group
in terms of room rate, etc.? How does the current group�s revenue contribution
compare to previous groups? You will also need to source the rest of the
sales department in relation to group bids others may be working on for
the same dates and which may have better overall revenue potential for
the hotel.
-
Understand the Revenue Goals of Each Profit Center. Here is where
diplomacy plays a major role. Each profit center may become an ally if
you know how this group is going to make a significant contribution to
their revenue goals for the period. Helping other departments get what
they want is a great way to get what you want.
-
Obtain the Group�s Past History. Most companies and organizations
know exactly what they spent on this meeting or similar ones in the past
in terms of rooms, F&B, catering, etc. If the history varies significantly
from what they have told you they anticipate, it should set off a �red
flag� � ask them why they believe this group or meeting will be different
from past ones.
-
Qualify for Future Potential. This requires that you completely
qualify the account for future business prior to booking this group. Be
careful � it�s like the contractor who went to purchase 5 refrigerators
for a development he was building but told the salesman he needed five
hundred. The salesman put together his best deal. The contractor took only
the five and never went back for the other 495. We�ve all been on the short
end of this tactic at one time or the other. If they are asking for concessions
on this group, tie it to a contract on a future group � have them sign
both contracts.
-
Be Prepared to Walk Away. This is a tough one. Good sales people
love to book business and then there is the question of the quota and/or
bonus for the period. The faster you walk away from a piece of business
that is not aligned with the hotel�s revenue management strategy the faster
you can move on to other prospects. In addition, if the bonus or incentive
system is not aligned with the revenue management strategy, and many are
not, it is a huge source of contention and the source of the �disconnect�
between sales and revenue management, therefore making the sales person
even more reluctant to walk away.
The incentive system should reward revenue (notice I said revenue and not
rooms) booked during opportunity periods at a higher value than business
booked in peak season. It doesn�t take a great deal of talent to sell business
in periods of high demand and, if the bonus is based on rooms not revenue,
that business may be sold at a lower than optimal rate and still be rewarded.
Total disconnect with the revenue management strategy!
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 abut the company click on www.carolverret.com.
To contact Carol, send her an email at [email protected]
or call phone (303) 618-4065.
copyright © Carol Verret, 2002-2003 -2004 -2005 |
