Managing Hotel Revenue

Hotels are being pummeled by the economy, and the hospitality industry is suffering in every corner of the globe – what else is new?
In the current climate, most hotel experts are expecting RevPar (revenue per available room) to drop by as much as 11%, perhaps even more.And with occupancy rates already at all-time lows, this isn’t good news for the hotel business. In such a climate, many hoteliers will compete on rate, but this only creates a downward spiral of price competitiveness, and more pain for the long-term growth and sustainability of hotels’ revenues once the economy bounces back.
So how can hotels compete in this weak economy, looking beyond discounts? Is it possible to flourish, even during such a travel slowdown?The answer is yes! I have seen proper revenue management take a struggling hotel from barely surviving to thriving, even as the recession bites deeper.
One Miami-based property was struggling to maintain a 45% occupancy rate. After overhauling its revenue management system, occupancy jumped to 90 to 94%, with an increase in revenues of 70%. Too good to be true? Absolutely not!
A fundamental building block of revenue management, RevPar is one of the most important metrics of the hospitality industry and absolutely possible with the right system in place.For hotels, RevPar is key determinant of profitability. It’s what keeps the doors open, yet many hotels and chains still handle room occupancy and pricing in an old-fashioned and haphazard manner – reactively and rarely scientifically.
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Times like these require greater efficiencies in everything from improving customer relationships and boosting loyalty initiatives, to improving direct marketing programs and not cutting back on service. None of these, however, can be sustained without optimizing cost centers and profits. And on that basis, effective revenue management becomes an operational imperative, not an option.
It’s time for hoteliers to think beyond discounts and so I have created a list of tips on how hotels can increase their RevPar, without sacrificing margins or brand value:Supercharge your internet salesOnly web-based internet sales can compensate for what has not been sold in advance to fill your hotel. In 2009, the meetings and corporate market is slowing even more so sales efforts should be focused on the internet.
This is the channel that discount-hungry travelers are using more and more frequently when booking travel, so it is vital to manage your hotel’s web presence to gain greater visibility and better positioning… which of course, means more sales.Open your sales office at nightHotel staff cannot manage Online Travel Agencies (OTA) allotments 24/7. So if you’re not adapting in real-time and making updates as travelers are out there shopping (even internationally) when you’re asleep, you are missing out on valuable RevPar dollars.
As supply and demand fluctuate non-stop, you need to automate your pricing at night to increase your hotel’s profitability.Increase sales by changing your rates more oftenOnce the OTA allotments are filled, your hotel is closed for business, with no one to reopen the online booking allotment.
But as more bookings arrive, hotel rates should successively increase. Many hotels, however, leave money on the table because there is no one to change prices in real-time. In this economic environment where every dollar can make the difference between boom or bust, changing rates only once or twice a day does not make sense, or cents, anymore.Use today’s technology tools to sell your roomsRevenue and reservations managers get overwhelmed by day-to-day data entry. The manipulation of extranets, rate buckets, rate codes, allotments, promotions and page positioning has become so complicated that many leave rates stagnant in fear of changing the wrong codes or buttons. But no action can lead to no business.
By automating the process, staff can focus their time and energy on the ‘big picture’ such as strategy development, OTA market manager relationships, promotions, packaging, implementation, group values, etc. You know, all the good stuff.Re-direct sales from your online competitors to your hotelThe evolution of the internet and the growth of online bookings, has made every hotel’s list of direct competition grow dramatically. But online is now a lifeline for the lodgings industry.
There are many hotels to choose from in any particular area, but by increasing your hotel’s online visibility, managing complicated internet opaque channels, and having the perfect competitive rate always listed on your website while keeping rate parity and best rate guarantee, will lead to a substantial increase in sales.
Pricing competitively at all times will keep your hotel in the front of your online competitors, and will re-direct guests to your hotel, keeping your rooms full and profits ticking over.While this may sound like a lot of work, having the right revenue management system in place can wring the maximum amount of revenue from any hotel property – automatically – and free of human error.
The added benefit of having such a system is that it frees managers to control pricing and other crucial variables in a proactive rather than reactive manner. Hotels can increase their occupancy rates and manage their distribution costs like never before.Given the effects of the global economic downturn, managing RevPar intelligently and effectively is a necessity and savvy hoteliers are embracing this business practice in their own properties. Rather than discounting in an effort to increase bookings (and decreasing their profit margins in the process), they are optimizing their pricing and their online presence for increased bookings and revenue. They are thriving even as consumer and business travel continues to decline. So now the only question is – will you be one of them?
Jean Francois Mourier is CEO & Founder of RevPar Guru, a company that has developed an alternative type of revenue management and real-time pricing solution (combined with automated online distribution) to help hotels maximize occupancy and increase their profits. The company’s Yield Dynamic Price Engine, an integrated revenue management and pricing solution, adds unprecedented power and real-time adaptability to the pricing process, leaving managers more time to run their hotels. Reach him at jfmourier@revparguru.com or visit www.revparguru.com for more information about the company’s services.

REVPAR GURU recognizes the growing need for a competitive pricing system that updates the rates automatically in real time. It is reacting to the changing consumer purchasing behavior and delivers results that are based on current supply and demand instead of poor performing forecasts.
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Article by Mon “Hotel” New hotel classification in France

A reform of the hotel classification has been on the news since more than a year: Indeed until now there were no five stars hotels in France, but since the beginning of 2009 the change is on: Hotels that volunteer will be rated from one to five stars for a minimum of three years and a maximum of five years. The evaluation will be done, at the expense of the volunteers. Moreover the ratings will have to be approved by the French government
The point of this new classification system is simply to mix different point of views related to norms and understand and respond better to the clients’ needs by responding better to the comfort criteria that are a “must have” and other criteria that can please the clients.
The move was of course orchestrated by the French government whose goal is to place tourism “at the heart of the economical growth “ by defining a new political plan concerning tourism: “destination France 2020 “the matter was discussed this summer at the “Assises nationale du tourisme” that took place this summer.
The challenge is to support tourism which is the first industry of France: With the globalisation and the client’s changing needs France has to be competitive with other destinations concerning the clients’ behaviours and needs. (Not having a five star rating is a serious handicap considering that the client doesn’t always know the fact that France’s highest class of hotel is “four star luxe”).
Objectively what is going to be different about this new classification? Firstly it is interesting to know that it is the first time in twenty two years that the classification grid is being changed: And indeed clients needs have changed a lot in twenty two years!.
The new classification is bringing major changes to satisfy the clients: - no star hotels will disappear: The hotels that volunteer will all be classified one star consequently a fifth star has been added to replace the “four star luxe” appellation. This is useful to hotel owners; it will allow French hotels to be competitive compared to hotel in competing countries. - The new classification system promises to be more exigent : let’s do a little comparison with the old classification
Old classification New classification For a first star rating 30 criteria were needed First star rating:61 criteria needed For a two star rating 30 criteria were needed two star rating:68 criteria needed For a three star rating 30 criteria were needed three star rating:75 criteria needed For a four star rating 33 criteria were needed Four star rating:94 criteria needed For a four star luxe rating 33 criteria were needed Five star rating:124 criteria needed
The classification will also comprise of optional points: Every hotels that volunteer to get reclassified will have the chance to have optional points, these optional criteria will give establishments the chance to differentiate themselves from their competitors and to show the client the diversity of French hostelry (These optional criteria will not be imposed, hotel managers will choose them). Let’s take a moment to summarise and understand this new classification: To be rated hotels will have to respond to the following exigencies: - they will have to be compliant to a number of obligatory criteria (See above page) - they will have to be compliant to a number of optional criteria
These criteria will give hotels points, and it will be the points that will be taken into account for the ratings:
Note: hotels will be given a 5% flexibility margin: if they can not comply to all the points needed to be rated in one category they can make up for these criteria by adding optional points ,but optional points and obligatory points do not have the same value: One obligatory point is equal to three optional points. The heart of this new classification is the client: While the previous classification paid particular attention to surfaces and equipments the new classification pays particular attention to services proposed to the client (in addition to paying attention to the equipment and surfaces.) In addition to that the client will be informed about the new classification and can be solicited to make suggestions about it. Note: hotels will be given a 5% flexibility margin: if they can not comply to all the points needed to be rated in one category they can make up for these criteria by adding optional points ,but optional points and obligatory points do not have the same value: One obligatory point is equal to three optional points.
The heart of this new classification is the client: While the previous classification paid particular attention to surfaces and equipments the new classification pays particular attention to services proposed to the client (in addition to paying attention to the equipment and surfaces.) In addition to that the client will be informed about the new classification and can be solicited to make suggestions about it. monhotel.fr
In terms of competitive positioning a change was inevitable: The hotels of the world’s first tourism destination could no longer afford to avoid comparisons with their international competitors! Indeed the creation or more appropriately the adoption of the fifth star will change this fact.
What exactly does the fifth star represent? It will represent the best of French hostelry, the fifth star will be the distinction of excellence and it will of course offer a better readability to international clients. What exactly does the fifth star represent? It will represent the best of French hostelry, the fifth star will be the distinction of excellence and it will of course offer a better readability to international clients.
monhotel.fr
A new classification procedure: If the new classification is supposed to make French hotels compliant to international standards the attributions of stars would also be made according to the techniques used by our international competitors. The evaluation will be done by specialised audit firms which will visit hotels regularly and will be more or less exigent (depending on the rating of the hotel), moreover surprise visit will be made to hotels rated four stars and above
Every five years the classification will be subjected to changes (according to the progress or regression of the establishments). The “Agence de developpement touristique” or Tourism development agency in English will have to support the procedure and animate it. Transition phase: Given the time that hotels will need to adopt the classification the new and the old classification will co exist during three years strating from the publication of the “Loi Tourisme” or tourism law (which I will present later in this article). After three years the old classification will cease to exist.
A point on investments: As I said earlier the point of this classification is mostly to modernize French Hotels and it will ssdetermine new economical parameters on which establishments will build their new economical system, and to build a new economical system one needs funds. Two organisms will help hotels to find funds: -OSEO -caisse des depots The Loi Tourisme This law will modernize the regulations for professionals working in the travel business to allow them to be more competitive in the international sector.
This law’s aim is to make easy the sales of tickets for travel agencies: -this law will suppress the four steps that one had to pass to have authorisation to sell trips – Every operator wanting to sale trip formulas will have to declare his activity to a national register managed by the future “Agence de developpement Touristique”. The law will be according to reports constituted of thirteen articles. an article by “Mon Hotel” Don’t forget to visit our website: monhotel.fr

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