WELCOME TO REVENUE

MANAGEMENT

WELCOME TO REVENUE

MANAGEMENTExecutive Orientation

AGENDAAGENDA

Revenue Management OverviewTotal Hotel Pricing

Philosophy/Sales StrategiesAdditional Demand & Price

TurndownsFidelio and LHW ReportsOne Yield

AN OVERVIEW

Revenue Revenue Management... Management...

Marriott International Lodging Revenue Management

TOTAL HOTEL FOCUS!

“Selling the right product

to the right customer

at the right time

for the right price.”

Robert G. CrossAeronomics

Revenue Management Revenue Management is ….is ….

A COMBINATION OF

PEOPLE

&

SYSTEMS

Revenue Management is Revenue Management is also...also...

all working toward completion of the revenue cycle

Revenue Cycle Revenue Cycle

CREATE

DEMAND MAXIMIZE

REVENUE SUPERIORSERVICE

EXPERIENCE

Revenue Cycle

MAXIMIZING REVENUE

PRICING

How we price

our product

SELLINGSTRATEGY

How we sell

our product

INVENTORYALLOCATIO

N

What we put on the shelf

Revenue Cycle

Maximizing Revenue through Pricing

How do we price our product?

Using:

•Rational Pricing

•Total Hotel Pricing Process

What is Rational Pricing?

A Logical Reason exists for every rate.

Customers can be segmented according to their needs, buying behavior and willingness to pay

And based on this:– We define variable, market-based pricing

designed to maximize revenue and profits

Rational Pricing Rational Pricing

BENEFITS

Re-establish price integrity in the customer’s eyes.

Logical, consistent reason for getting a discount.

Reverse the trend of trade-down to lower rates (i.e., get travelers

back to paying the benchmark/corporate rate).

Allow a larger segment of rate-sensitive customers to buy the product.

Generation - Grow market share by appealing to new customers.

Share shift - Steal from the competitors.

Make it easier for reservation agents to sell.

Revenue Cycle

MAXIMIZING REVENUE

PRICING

How we price

our product

INVENTORYALLOCATIO

N

What we put on the shelf

SELLINGSTRATEGY

How we sell

our product

Any other ways to maximize Any other ways to maximize revenue ?revenue ?

Maximizing Revenue through SELLING STRATEGY

How do we sell our product?

•CIRCUMSTANC

E

•SEQUENCE

Sell Strategy

Selling based on Circumstance– Weekday and Weekend or 7 days per week (based

on market conditions)– Holidays– Special Events

which may determine…. How to Sequence Rate presentations

– Menu Quote • Offers a set of rates to a customer.

– Assumed Sale

• One rate only, used for promotions or Holidays.

Circumstances & SequencesCircumstances & Sequences

CIRCUMSTANCE

Low Demand

“Thanksgiving Week”

SEQUENCE

Menu QuoteHoliday/Other

Discounts

Also Available

Special Corp Rates

Concierge/Club &

Corporate

CIRCUMSTANCE

Normal Demand

“Typical Tuesday Sellout”

SEQUENCE

Menu Quote

Concierge/Club

Corporate

Also Available

Special Corp Rates

CIRCUMSTANCE

High Demand

“New Year’s Eve”

SEQUENCE

Assumed

Sale

Special Event Rate

Also Available

None

RATE STRUCTURE

Concierge/ Club $150

Corporate Benchmark $135

Special Event $195

Special Corp $120

Holiday/ Other Discounts $100

Desire is to Focus on REVPARDesire is to Focus on REVPAR

REVPAR = Rate x Occupancy

Rate Occupancy

How Does a Property Increase How Does a Property Increase REVPAR ?REVPAR ?

SAFEST

• Increase restrictions on lower rates

• Eliminate last room availability for Special Corporate accounts

• Eliminate non-producing Special Corporate accounts

MODERATE

• Close out lower rates on peak days

• Raise rates for smaller Special Corporate accounts

• Raise prices on discount rates

RISKIEST

• Raise the Corporate Rate

• Eliminate discount rates

Revenue Cycle

MAXIMIZING REVENUE

PRICING

How we price

our product

INVENTORYALLOCATIO

N

What we put on the shelf

SELLINGSTRATEGY

How we sell

our product

How Else Can Revenue Be How Else Can Revenue Be Maximized ?Maximized ?

Maximizing Revenue through INVENTORY ALLOCATION

How much is available at each price point?

YIELD MANAGEMENT PROCESS

Forecasting DemandForecasting Demand

IF WE KNEW . . . .

WE COULD MAKE MUCH BETTER INVENTORY ALLOCATION DECISIONS

Who is coming?

When will they arrive?

How long will they stay?

How much will they pay?

When will they book?

How rate sensitive are they?

Inventory Allocation - ToolsInventory Allocation - Tools

Uses past reservations and Additional Demand to forecast demand

Arrivals Forecast - forecasts transient arrivals by room and rate category and by length-of stay.

Optimizes transient revenue by determining which combination of customers will maximize revenue. Filters out low value reservations.

Provides specific restriction and authorization recommendations for each room/rate category for the next 90 days.

.

Inventory Allocation - ToolsInventory Allocation - Tools

Numerous reports and graphs provide detailed information for analysis purposes.

Audits future Fidelio Inventory nightly to report situations that potentially could result in lost revenue). (System Control)

Alerts allow the user to set thresholds to highlight days that may need immediate attention.

Key to a Successful Revenue Key to a Successful Revenue Management EffortManagement Effort

PEOPLE PROCESSESSYSTEMS

Transient

DOS, Sales TeamRevenue Manager

GM

Group

Sales TeamDOS/RM

GM

Catering

Sales TeamDir. F&BDOS/RM

Catering Sales MgrsGM

The People – In the Past & TodayThe People – In the Past & Today

The People – Today & In the The People – Today & In the FutureFuture

TOTAL HOTEL REVENUE MANAGEMENT

Revenue ManagementSales Strategy Team

Property Sales, Catering & Event Management

General Manager

The People – The Difference?The People – The Difference?

• Teamwork• Communication/feedback

is continuous

Total Hotel – The Functions

Director of Market Strategy

Revenue Analysis

Business EvaluationInventory Management

Property Sales & Event Management -Strategy & Implementation

The ProcessesThe Processes

ANALYSISSTRATEGY CRITIQUE

The ProcessesThe Processes

FUNCTION SPACE

GUEST ROOMS

REVENUEMANAGEMENT

REVENUEMANAGEMENT

SALESEVENT MANAGEMENTRESERVATION AGENTS

CUSTOMER

RecapRecap...

Revenue Managemen

t is...

•Completion of the Revenue Cycle

•Proper pricing, inventory allocation , and selling strategy

•Driving RevPAR

•Risk Management

•Forecasting Demands

•Strategic Planning

Thank You