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. . Feeding the Revenue Elephant . Hotel Revenue Management Summer 2006 |
by Carol Verret, June 2006
Hotel Revenues this summer are anticipated to be gargantuan � high demand and high rates. What more could an hotelier ask? A lot! Hoteliers who blindly accept the demand that comes their way at the rate they ask will never know how good it could have been had they fed the elephant of hotel revenue with guests that were not measure solely by rate but by value. Amitava Chatterhjee in the upcoming edition of Hospitality Upgrade has an excellent article that states, ��a 2% increase in customer retention is equivalent to a 10% reduction in costs.� He goes on to say that �� hospitality enterprises (should) start measuring and tracking a guests profitability � How much money are you leaving on the table? How many of the customers that you get this summer at the rate you are asking will never return? How many of them are not the demographic that will feed the revenue elephant in the future? How much does it cost you when you squeeze out the high value customer for the �one night stand� at a higher rate? What is the cost of constantly appealing to those customers without the potential to return? So what does this have to do with Revenue Management � everything! Most revenue management proponents, (including me � see past articles on this subject) advocate measuring the value of a guest not just in terms of room rate or REVPAR but also in terms of potential for other profit centers such as F&B, the spa, other attractions within the hotel or facility. This is a revenue management function. The more sophisticated revenue management systems can drill this down relatively easily. For those of you who are doing it the �old fashioned way� it isn�t impossible � just a bit more work.
Most franchises focus their efforts on their frequent guests for whom they are able to collect this information relatively easily. However, there is a segment of guest, such as leisure, that may not be a member of the frequent guest program but whose business is valuable and can be targeted from the property level. If you are waiting for the franchise to do all this work for you, you are missing the boat. This is especially critical for independent hotels. I work with many independents. The CRM process is not difficult but needs to be thought out and become a part of the overall marketing and revenue management strategy. It is the most �valuable� guests that feed the Revenue Management elephant
most profitably. The cost of CRM in feeding the elephant is far lower
than the cost associated with most of the other reservation channels.
Carol Verret Feeding the Elephant (South Africa, summer �05) (PS � Have fun and learn a lot at HITEC. I wish I could be there with you and at HSMAI�s Revenue Management conference immediately following. Due to prior commitments, I will be there in spirit!)
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.com. To contact carol send her an email at [email protected] or she can be reached by cell phone (303) 618-4065. copyright © Carol Verret, 2002-2003 -2004 -2005 - 2006 |
Carol Verret 5910 S. University #C-18, PMB 374 Greenwood Village, CO 80121 Telephone: (303) 618-4065 [email protected] Web Site: http://www.carolverret.com/ Email: [email protected] |