News for the Hospitality Executive
Good News Formula For RevPar in 2009
|by Doug Kennedy
January 7, 2009
With all the bad economic news in the media lately, and with most industry experts expecting RevPar to drop by as much as 5%-10% here in 2009, there are few if any hotels that are projecting a good financial performance this year. Yet in the real world it’s a great time to remember that as with life in general, success in the hotel industry is an “I’ll See It When I Believe It” opportunity, not the opposite!
If you as a hotel leader still believe it’s possible to have a reasonably solid year even in the face of declining demand, here’s a good news formula for you to consider as you think about RevPar for next year.
Let’s take a look at a model for the “Anytown Hotel” as an example. Currently, this hotel has a transient average rate of $100 and a transient average stay of 1.5 nights; so each reservations inquiry generates $150 in revenue. Let’s say this hotel current converts 30% of its reservations inquiry calls. For every 100 calls, they would convert 30 reservations, thus generating $4,500.
Now let’s say that this hotel experiences a 5% decline in call volume; yet their transient sales team is able to increase call conversion by the same 5%. So out of 95 calls the hotel would convert 33.25 reservations, thus generating $4,987.50. Not bad.
Let us now assume the expert’s worst expectations prove out and this hotel experiences a drop of 10% in inquiry calls; yet the team is more focused than ever and is able to increase call conversion by 10% to now convert 40% of inquiries. This scenario would be excellent news actually. Although the hotel now only received 90 calls, they were able to convert 36, for a grand total of $5,400.
These model formulas don’t even factor in the RevPAR impact of an effective upselling program, which will move the potential opportunity even higher.
However the base numbers in the formula work out for your actual hotel or call center, the main takeaway here is that plenty of hotels can and will have good – if not stellar – financial years in 2009. Those that do will achieve it through hard work, focus, and a true team effort to maximize the return on each and every reservations inquiry. Plenty of other hotels will continue doing exactly what they have done in the past, and these organizations will likely experience exactly what the experts are predicting, which is an off year that is down 5-10%.
If you’re looking to help your team maximize their call conversions while at the same time to become more proficient at upselling and revenue optimization, here are some considerations for your future planning sessions and training meetings:
Doug Kennedy, President
|Also See:||Alluring Descriptions Are Key To Converting Hotel Reservation Callers / Doug Kennedy / November 2008|
|Bringing Out The Best from Our Most Negative Hotel Guests - Brings Out The Best In Ourselves / Doug Kennedy / October 2008|
|Profit Optimization Is Everyone's Job / Doug Kennedy / August 2008|
|Hotel Lessons Learned Growing Up In Kennedy Craft Shop / Doug Kennedy / July 2008|
|Personalized Hospitality Excellence Still A Deliverable! / Doug Kennedy / June 2008|
|Real Conversations vs Rigid Scripting Increases Reservations Productivity / Doug Kennedy / May 2008|
|Hotel Lessons Learned From A Five-Star School Principal / Doug Kennedy / April 2008|
|Road Warrior Shares Tips On How Hotel Guests Can Minimize Environmental Impact / Doug Kennedy / March 2008|
|Right-Sized Staffing Ensures Front Desk Sales & Service Success / Doug Kennedy / December 2007|