Nail Salon | Hair Salon | Spa: Are we suitable for Revenue Management

With the upcoming Beauty Fair Middle East, many people inquire us: does my salon qualified for Revenue Management?

The key to revenue management for salon (nail bar / hair salon...) is how to balance between price, space, and time to be in line with perishable inventory (your seat), distribution methods and variable demand (Days of week, Time of days, months, events calendar...).

Should price be more expensive for more difficult the service that requires longer time? It is important to set your prices according to your fix (Rent, DEWA, Equipments depreciation) and variable costs (labors, ingredients...).

Don't be stress, if your Salon struggle with those 3 key challenges to generate extra cash:
1) Anticipate your demand:
That is a difficult one for small businesses, some customers reserve in advance, some just walk in.

2) Different skill sets:
Some practitioners may be faster than others or some layout designs are more study than others. The staff skill set may be very different, their expertise is difficult to assess during an interview (Asia). One possibility would be to standardize your operations in order to gain more control on the duration (15mn, 30mn, 45mn, 90mn...)

3) Different strategies:
Busy beauty salons that want to increase their revenues and experience may afford to have 4 staffs for 1 client for a complete manicure and pedicure set. Whereas, in a smaller structure you may only have one staff devote for many clients, so it takes longer to perform the job.

Time allocation is not practiced as much in Dubai nail's bar or hair salon, as compared to Spa operators.

But, one company found a better way to control time. The N.Bar (http://www.thegroomingco.com/nbar) differentiates itself from competitors through the use of technology and the proliferation of social media as new distribution channels. First of all, the company defines time explicit for all services including nail art. How? it defined all procedures for each service to come up with a set price and time package. It penetrates well in social media, Facebook, Twitter. The company puts great efforts in managing time variability, it can schedule staff more efficiently, reduce waiting time between customers and increase service duration.

Some Spa Operators like Sensasia (http://www.sensasiaspas.com) in Dubai are more advance with revenue management concepts. No wonder it is a success story in the Emirate. Regardless of the menu, time is accurately define per treatment per time duration such as 30mn, 60mn, 90mn, 120mn, 150mn. By stipulating time, the operators gain more control over time which allows them to increase productivity of their therapists, service more customers which increase the bottom line. Have a look to their site, with a online booking systems along with a friendly social media plan. Well done!

In other words, this is Revenue Management! For more information, register at Beauty Fair Middle East (May 30-31, 2012).

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Revenue Management and Parking elements

Put your books and pencils away, just an early morning question...define Revenue Management.

zzz...boring! Yea, the topic of revenue management may be the perfect cure for your latest insomnia but it's also become critical in your profit generations. Revenue management, also known as yield management, is the process of understanding, anticipating and reacting to consumer behavior in order to maximize revenues or profits. I will use other words, by manipulating your price, companies can maximize their profits.

So let's put our attention with Hotel Parking to determine if revenue management is appropriate:

1) The product or service is perishable. Parking spaces are a perishable commodity - if a space sits empty, the lost income cannot be made.

2) Capacity of the product is limited. A parking facility has a certain number of spaces and more cannot be added without additional costs or construction.

3) Market Segmentation - There are discounts and early bird specials, but with RM consulting, the potential for parking facilities to increase revenue is even greater.

4) Advance purchase - Often done through reservation systems, to enable forecasting and manipulate price and demand.

5) Variable cost of a parking spot is low - the main parking variable cost for parking attendants and maintenance. Sell an additional parking spot, and the revenue contribution to the profit is up.

6) Demand Variation - demand for parking varies throughout the day. Revenue Management parking consulting can smooth the demand curve by stimulating demand during low demand times and increasing revenue during high demand times.

The parking industry is the prime candidate for RM approach. 

Now stop a good minute, grab your notes and think your respective parking facilities in your hotel. How many parking spots do you have? Do you have a control system (parking, tickets, watchman...). What are your costs associated to it? Do you pay a rent for it? What's your pricing?

Contact us, for your Parking Revenue management project, and we will organize it for you.

Profit Regards,

Maxime @ RSVP - Hospitality

Beautyworld Conferences: May 30-31, 2012 - Learn to grow your revenue profit!

This year's summit is designed to educate owners, directors, managers and practitioners on how to become proficient in all aspects of business operations.

Whether you own or operate a spa or salon your ultimate goal is to run a profitable business.

How can I professionally manage and achieve my business, full potential while competing in an already very competitive market? 

How do I stay one step ahead of my competitors? 

How important is guest satisfaction, retention and referrals to the ongoing success of my business? 

Do I understand staff training, and how to engage my staff? 

Do I understand how to create an effective menu? 

Are you utilising social media as you should be? 

Is my Facebook page made up only of a few friends and clients? 

Do I understand brand communication, how to be consistent and have a solid concept? At the summit, these questions and others will be answered, aiming to give you practical ideas and strategies that you can implement that will add value and revenue to your business.

RSVP Hospitality will make a Spa Revenue maximizing and profitability Presentation for Spa and Salon, on how to process simple analytical that give bottom line results.

To register, visit the link, Beauty World Middle East - Think your revenues differently.

Benchmarking Skills...1,...2,...3

One of the most important knowledge for a Revenue Analyst / Manager is recognizing competitor market.

Many Independent hotels in Gulf Countries are telling us "We are already number 1 in our market". When you dig-in their reports, you realize than their hotel is performing 75% above in RevPAR than the remaining hotels, resulting of them being benchmark with inferior hotel products, because it looks good for the owner.

The above might lead to dangerous strategies because you never push your limits from analytical and sales development process. The hotel team goes on "cruise control" when they feel the company is performing at Number One position.

Normally, everyone tends to benchmark against the best within their own industry. People are inherently fearful of change, and benchmarking opens the door for unexpected results to surface.

There are several factors to consider such as location, room categories, number of units (rooms, seats, parking bay, spa treatment room...), star ratings, restaurants, spa, health club, etc. because the hospitality unit best seller is not always our main competitor.

The objective of that post is to determinate the strategy of hotel within market.


Benchmarking is the process of comparing one's business practices from other competitors. There is not single benchmarking process that has been adopted and it is useful to create and maintain a daily database of best practices.

The cost of benchmarking can be reduced through the usage of several internet resources that appeared in the last decade such as MKG, The Bench, STR, TRI Hospitality, Hospitality SIG, Intelligent Spa making make the benchmarking process quicker and more efficient.

Basically, a benchmarking report must answer to the following questions:
- How many competitors are? current and potential competitors, identify them....
- How many rooms competitors have?
- What is their pricing strategy?
- Quality of products and services they offer?
- What are competitors distribution channels?
- Identify competitors facilities?
- What are their differences with us?

Don't be afraid to place a higher star rating hotel in your competitive set, or a brand hotel (Sheraton, Marriott, Radisson, Hilton, Novotel, Sofitel), because those hotels drive a mix segmentation (FIT, Corporate, Leisure Individuals, Web, Groups), and for that reasons there are successful.

Dear Hoteliers / Hotel's Owners,


You should really pay attention to your benchmarking reports because it has a vital aspect on your sales strategies and staff efficiency.


If you have been number one in RevPar (Total Room Revenue / Number of Room Available) for over 6 months, it may be the time to remove a low performing hotel figures, and modified your competitive set with a higher brand. 


This may result of you loosing your number one ranking, however you will place different strategies (price, market mix, yield, forecast...) to gain it back, resulting on an overall performance.

Sooner or later everyone realizes that benchmarking is a necessity for company survival. 


Revenue Regards,


The Profit Therapy Team

The difference between Revenue Reporting and Revenue Analysis

An Independent Hotelier asked me this very simple question last week. What's the difference between Revenue Reporting and Revenue Analysis?

My instinct was to use an observation from the Justice Court: "I know when I see it".

That applies to what is analysis. I know it when I see it.

That, of course, would have been an unhelpful answer.

So here I what I actually said:
If you see a data puke (lots of data, 12-15 morning reports, different graphs, pies, trends, different ratio or metrics) then you know you are looking for at the result of a revenue reporting, even if this is called a Hotel Finance / Sales template.

If you see words in English outlining actions that need to be taken, and below the fold you see the relevant supporting data, then you are looking at the result of the revenue data analysis.

Would you agree?

The job of data revenue reporting is to punt the part of interpreting the data, understanding the context and identifying actions to the recipient of the data puke.

If that is your role, then the best you can do is to make sure to summarize the data into Excel and add a color to the table header.

So what about revenue analysis?

The job of revenue analysis mandates a good understanding of the business priorities (Independent Hotel Strategies, RevPAR growth, Market share goals, Variance Week 4 vs. Week 2), creation of the right custom reports (i.e Ramadan Period analysis for last 3 years, Market Segmentation - Peak Periods), application of market segments to that data (FIT - Travel Agents - Group Series), and finally and most importantly, presentation on your insights and recommended action using the right language.

See the difference? it's a different job, requires different work and of course radically different skills.

Analysts constantly complain that no one follows any of their data-base recommendations. How do you expose your hard work?

Top 5 signs that you are looking at / doing revenue analysis

1- The thing you see instantly is not data, but rather actions for the business to take.

2 - I have never seen revenue analysis without effective data / market segmentation.

3 - If there is even a hint of the impact of actions being recommended then I know that is analysis. It is hard to say: I am recommending that we shift the Travel Agents business into the FIT. It is harder to say: I am recommending ...and that should increase revenue by AED 100,000 and profit by AED 60,000. Look for that.

4 - If you see fabulous metrics like Benchmarking Penetration, Month by Month RevPar , Top 10 Accounts year-to-date, then they are good signs that the Analyst is stepping outside Revenue Trends. I would still recommend looking below the surface to ensure that they are not just data pukes, but the good thing is these are smarter metrics.

5 - An application of algorithmic intelligence, data sort, expected range of metric values, or anything that even smells of ever so advanced statistics is a good sign.  Unknowns, unknowns are what it's all about.

I hope you have some fun learning how to distinguish between revenue reporting and revenue analysis. It is a fact of life that we need both. The bigger the hotel inventory, the more they want data puke, sorry, reporting.

But if you have "Analysts" in your job title then you perhaps now have a stronger idea of what is expected of you to earn that title. If you are hiring a " Revenue analyst consultant" and are paying them big AED then you know what to expect from them. Don't settle for data reporting, push them harder.

Apply the rules above. Send their "analysis" back. Ask for more. Raise your expectations!

I hope now "you will know it when you see it", and have more "datagasm"!

I strongly recommend Independent Hotels in the Middle East to search for a Revenue Analyst to develop, because this role has a direct double digits impact on your profitability. You cannot give this role to a Financial Controller or a Director of Sales, because they have their own duty. I am talking of someone who spend 80% of his time analysis (Excel mainly) and 20% remaining for presentation of the outcomes.

Okay, it's your turn now.

How would you answer the question about the difference between revenue reporting and revenue analysis? What signs do you look for when evaluating the work of your Analyst?

Please share your thoughts via comments below.

Thanks.

Romain @ RSVP Hospitality

AED 99.00 Hotel Room - Dubai, UAE: Real profitability?

What can you get for AED 99.00 in Dubai?
A one way airport transfer, a buffet breakfast, a 24-hour Internet access, a deal from Groupon  / Cobone for a 1-hour spa in a standalone business units, a 2-hour dhow cruise.....etc

Well, you can actually get a Hotel Room at the Jebel Ali Easy Hotel, that is located inside the JAFZA. With a mere of corporate international companies in that areas (Maersk, Dubai World Port, Unilever, Naffco), it is surprising to see a double digit hotel room rate, in that area and also in Dubai. And the good news, you can book up to 9 rooms.

Jebel Ali Easy Hotel: AED 99.00 Strategy
So for distressed corporate clients with low budget, the good news is that this AED 99.00 rate at Easy Hotel is not only available during Ramadan, but it seems to be the first Best Available Rate of their pricing structure, and it's also available during high and peak seasons (October and November). So is Easy Hotel Revenue management piloted by a system like their sister business units Easy Jets? Also

Talk: Crystal Bowl -  Tell me the right price for Dubai Summer Prices in 2012?
As industry professional, we are all expecting to see Dubai hoteliers entering the battlefield price arena, for releasing their public Summer prices as low as AED 99.00-199.00. Since the Tour Operator / DMC and Travel Agents, needs to be protected and markup their rate, we are looking easily at an addtionnal 20-25% discount on those rates. Does it really make sense, when looking at the historical data on the last 05 years, when Dubai hotels are still performing comfortably on RevPAR.

We know that some leading 5-star on Sheikh Zayed Road and Festival City/Airport areas can offer group rate deal as low as AED 300 Net with Taxes and Breakfast Included. If 5-star hotels price at that level, then what do you expect 3 and 4-star hotels to sell at?

Perform your mathematics and cost structure

With the constant increase of utilities cost for Dubai Hotels (DEWA, Gas...) along with structure cost (Maintenance / renovations), how can those hotels deliver profitable operations?

I would recommend that the Financial Director get involved in the Summer sales tactical and forecast, because I have seen many hotels in Dubai, running 100% on Summer and generate a loss on their Profit and Loss statement. So does this makes sense to provide full efforts, and not turning on profitability?

Running a business, it is crucial to gain a net income / profits from your operations. If there is no profits, clearly there is no salary to the owner.


Rahul @ RSVP - Hospitality

Maximizing or not the Internet Access Revenues...

I always try to share the best subjects on ancillary revenues where hoteliers can maximize their business units revenues, following analytical of their trends, and placing up the right strategies to grow their department profitability.

Having said that, when it comes to Internet access revenues, 10 years back hotels had to massively invest in broadband internet access (the one that came from the broadband cable plug in the wall), because  IT managers and hotel operators, had to cable the entire hotel, invest in routers, to ensure a decent internet access throughout the hotel. it's started first, with US hotel chains, then the rest followed up. Then came Wifi, with concepts such as @The Link by Sheraton in 2005, proposing a wifi access in the hotel lobby, then move to Hyatt....etc.....

Cost of technology is dropping

Six to eight years ago, a typical hotel wireless internet provider would place a few expensive access points at strategic points in the building, hoping to cover the entire hotel property. They installed expensive servers, switches and routers on site, and hired high cost IT workers to keep the whole thing running.

So what's changed in 3-4 years? unfortunately, most WIFI companies haven't changed a lot. They still install a few access points and expensive servers (that cost between AED 10,000 to AED 40,000 each) on site. Whether something breaks and become outdated, it gets replaced at the hotel's expenses.

Now with cloud computing, hotels can save lots of money by removing their servers, having a dial up off site consultant that can remotely access the location. 

In my last 6 years in UAE, i must have visited nearly 250 hotels across the Emirates, and stayed in nearly 40 hotels. All the hotels prove to be great in design, had a lovely big room with sectional sofa and huge flat-panel TV, quiet, upscale, and very well thought in amenities.

Except for the Internet Access

As has become all too common with Internet Access in hotels, Dubai hotels charges not by room for internet access, but by computer, so they can maximize their revenues: share a room and each of you pays for Internet Access. At AED 95.00 / Day that adds fast.

The issue is, we've move beyond a single Internet access device per traveller. I travel with three devices (laptop, i-phone and i-pad), that each want to get their personal ray of internet sunshine.

According to hotel policies, that would be 3 items x AED 95.00 AED 285.00 / day for Internet access.

Worst if you are sharing your rooms, with someone, that has also a smartphone and a laptop, so between you, hotels end up collecting AED 475.00. Staying for 3 days, it is AED 1,425.00 per stay.

Clearly this is an outdated way of charging for access, to say the least....

Having share that, I can admit that any hotels involved in Profit Therapy has to generate revenues every way they can. But there is an adjustment needed there, where Internet access need to be a flat fee for all devices.

One possibility, could be upon check in to ask how many laptops or smartphone access you need, or each access token could be great for two devices, let's say a laptop and a smartphone. Throughout their stay, travelers will experience that Internet Access is a real pain, and this may results in a share opinions through TripAdvisor or other communities.

When it comes to hotel Wifi, you should always lean towards simplicity:


Make it fast,


Make it easy,


Make it free,


Your guests will thank you for it and will keep coming back.


Romain @ RSVP - Hospitality

The Three Little Pigs help us analyze traditional pricing vs. revenue management pricing for hotels

Yep, story of the three little pigs provide the perfect analogy...

Comparing traditional pricing and Revenue management pricing performance related to the classic story of the three little pigs and really helps to define their fundamental differences in terms of the value each of these metrics mechanisms create.

For the purposes of the comparison, we can use the 2 pigs at the opposite ends of the house building spectrum to provide a relevant analogy to traditional vs. analytical. Many independent hotels focus on Occupancy and ADR metric, means no application of revenue management principles are being understood. The RevPAR is not being present neither in their discussion or reporting line.

So, let's recap the house building (measuring) practices of the "straw house pig" and the "brick house pig". A brief summary of our characters are as follows:

The Straw House Pig
The "Straw house pig" benefits from convenience. In the original story, the straw house was built quickly and easily without much trouble. The problem facing that pig was the lack of security but also the high cost of maintenance over time. When a storm came or the wind blew, this straw house would be damaged if not destroyed and the rebuilding process would begin again. of course, the good news was that it required very little heavy lifting, expertise, or time to build.

The Brick House
The little big that built the brick house camped out for a while, worked hard, planned a permanent structure, and laid down the bricks, one by one, until the structure was complete.
After completion, the brick house would require some light maintenance, but it remained solid and strong, able to provide the little pig a better return on her investment of time and the longer term than the straw house pig. Storms could come and go with little to no effect on the plight of the "brick house pig"and the house at times provided life saving protection and security.

Analysis:
The straw house pig's method compares well with a business owner whose choosing many different strategies, focusing on what the market or what the travel agencies/dmc dictates and adjust his pricing strategies according to its competitive set. When competitors are slashing their rates, the hotel will be damaged and will follow low prices structure of the market. Building market share in those conditions prove to be difficult. Your competitors can jump in the fray and undercut your positions in a matter of hours. Their focus is to practice same pricing than in the last 10 years.

Summary: Straw House Pig = Traditional pricing

In contrast, the "brick house pig" built on a revenue management culture designed for long term, low maintenance benefits. Building it required time, expertise, hard work, and revolutionize thinking process. This compares well to a planned and executed revenue management strategy. Those companies engaging with proper rational pricing, dynamic pricing, single image parity inventory, sell sequencing, demand patterns and deep market segmentation, there are in the best position to grow their revpar and increase their profitability. With pricing understanding being analyzed deeply, they understood how not to be dependent from a single market segment (Wholesale, Online Bookings, Corporate) but be able to define multi market segments.

Summary: Brick House Pig = Revenue Management pricing

Brick House Pigs will grown in a downturn economy. They will have the best chance at growth when they have engage in a process, of not only printing data analysis, but engage in analyzing and establish realistic risk strategies.

Romain @ Profit Therapy Thinking

Banquet, Conference and Group - Revenue Management

After last week release on ancillary Spa revenue management, the topic of the week is Banquet, Conference and Group Revenue Maximization. Are you already optimizing your revenues and profits of your function space? This topic concerns quoting the right price to the right customer at the right time for the right function space (Meetings, cocktail, receptions, weddings, MICE, product launch, gala diner...).

All Independent Hotels should look into their massive ballrooms, foyers and breakout rooms square foot to think out of the box, and drive additional profits. Don't leave money on the table.

What does Function Space yielding consist of?
Function space occupancy is not easy to calculate because a single room can be divided and the appropriate time unit must be determined. As opposed to spa who based in occupancy unit based on per hour basis, we will recommend function space to calculate by day part. The number of day part per day vary from hotel to hotel, but it is related to the number of times each day that a function space can be sold (Rotation).

- Define a revenue management strategy,
- Take ownership of the function space data behaviors,
- Which statistics is the most useful to analyze data?

How can I build interesting reports and statistics?
It is important to attribute market segments for each type of function activities, so you can ensure a minimal tracking for revenues. The revenues could be cross data with your day parts in a more sophisticated progress.


- Develop a banquet demand calendar (Weddings, Social Gatherings, Corporate Meeting, MICE Meeting....)
- Build meeting rooms turn-aways statistics,
- Align your room forecast with your a function space forecast

How can I possibly implement dynamic pricing on function space?
Your function space cannot be priced without considering the effects on room sales and food and beverage. A price that may be too low for the function space when considered alone may be more than compensated for when room and food and beverage are considered.

- Calculate a pricing per square meter,
- Introduce dynamic tiers/bar pricing to banquet and meeting space,
- Apply inventory restrictions and pricing conditions,

Shall profitability ratios evaluate during my decision process?
- Implement a RevPAS calculation (Revenue per available square meter)


This is the just the first release of our Banquet, Conference and Groups. More posts will follow on that subjects.

Romain @ RSVP - Hospitality

Rate Parity - Technology to support RevPar Growth...

Rate parity exists when the same rate structure for a hotel exists across all its distribution channels.

When a hotel effectively controls rate parity, rate integrity is assured and the consumer becomes confident in booking the hotel. Rate parity ensures an even playing field and is critical in protecting a hotel relationship with all its distribution partners, including hotel franchisors, meeting planners, travel agencies and online travel companies.

If your hotel decides to work with one OTA website and expect them to be effective in a competitive market, it makes sense to start working with as many websites as possible to gain maximum exposure.

If a consumer is visiting a dozen of OTA websites, and there is a different rate on every site, the hotel's integrity is put into question by the consumer. When a hotel's rate integrity is questioned it's very bad for business, for the hotel, the sales team and the website itself.

The key issue in rate parity today is ensuring the rules of certain websites markup structure are 100% understood and adhered so. Managing accurate and competitive rates is tough enough, but attempt to do so through 15-20 of different internet channels? Just imagine: logging into 15-20 of extranet everyday, each extranet having a different website address and login procedure to remember, with different markup methods, different standard room types, different ways to access and change rates, different contract terms, the tasks become boring, if not impossible for an e-commerce manager or revenue manager.

A question to ask to General Manager:
Where would you like to have your associate focus on?

i.e for hotels not using a channel manager:
3 Hours per day * 30 days = 90 Hours per month or 1,080 Hours per year, so nearly 6 months of work.

Today, hotels can obtain and manage increased internet exposure through hundred of websites, as well as maintain accurate and competitive Rate Parity through the use of a Channel Manager. There are over 10 great providers in the market.

3 hours of manual rate loading or 05-10 minutes with the system? Where would you like to be more efficient? loading rates manually or taking business sounds decision that create wealth of revenues for your hotel.

Some channel manager key functionalities:
- Modify prices,
- Modify availability,
- Modify minimum length of stay,
- Opening / closing of rooms,
- Compare prices with direct competitors,
- Overview of your availability and price positioning on various distribution channels,

RSVP Hospitality selections for effective Channel Manager Technology:
- Travelclick: EZ Yield
- Rate Gain: Channel Gain
- Lixto: Channel Manager
- Rate Tiger: Channel Manager


Romain @ RSVP-Hospitality