Why SMEs struggle to start on their business journey?

SMEs are often privately owned business that are managed by their owner / entrepreneur. In larger organization, the "power base" tends to be more evenly distributed amongst the managers of various departments, whereas in SMEs the owner generally controls all strategic decisions.

The background, character, values, beliefs, and education of an SME's owner will thus have a significant impact on the strategic direction of the firm.

Another point for SMEs that makes them different from larger companies is their organizational structure. In SMEs, job description are often not well defined. There can be a significant overlap in responsibilities, with staff members taking on a number of different roles. The accountability of individuals is therefore often less clearly set out than in larger firms, and initiatives sometimes tend to "fizzle out".

SMEs often have less structured procedures in place for strategic development. In addition, their communication and information flows are usually less formalized. This mean that staff members sometimes fail to follow up on details regarding strategic initiatives (collecting clients data, controlling expenses, communicate with their peers, vow out their feeling).

Day to day orientation
An important characteristics of SMEs is their general focus on day-to-day activities. Because their financial and staff resources tend to be restricted, SMEs often concentrate on short term problem solving and "making ends meet" as opposed to taking a long term strategic approach.

Day to day Internal Operation
A valuable characteristic is that SMEs owner have a clear idea on what products and services they would like to cater to their clients. They challenge innovation on daily basis.

This vision is often not align with the outcomes since they have difficulty explaining their employees what level of customer service and business excellence they are expecting. Absence of operating guidelines are often strong reasons of customer satisfaction results since  every employee tends to be corrected by the owner on spot.

The majority of SMEs do not attach importance to trainings and skills development. Training opportunities are not equally distributed amongst staff, being mainly offered to high medium skilled employees.

Most of the time, SMEs owners think that investment in training equals a waste of money but at the same time they never consider the cost of continuing to employ staff without proper skills. There is a fear that trained personnel would leave the company when their skill levels increase.

Lack of access to financing is consistently cited by SMEs as one of the main barrier to growth. Often consider by commercial banks and financial institutions as risky and costly to serve, SMEs are largely underserved when it comes to basic financial services. With such a limited access to financing, owners need to have a fundamental understanding on their financing and not only their cash collection at the end of the day. Because the key to successful finance, is planning.

Internal controls need to happen to streamline your finance and operational structure. It is your responsibility to reduce frauds and operational risks, reduce leakage of revenue and standardized systems and processes.

Day to day External Operation
Clients could come to SME to expect friendlier service at small establishments, but this does not guarantee qualified service. Small to medium size firms tend to have a smaller percentage of managers and more executive staffs.

To make matter, those establishments depend on informal, on job trainings of staff rather than formal training. This training approach implies that the Operation staffs may not have adequate training to deal with customer inquiries or complaints although there focus on clients satisfaction is a priority.

In summary, SME are a primary driver for job creation and GDP growth. They greatly contribute to economic diversification and social stability and they play an important role in private sector development. SME development also represents a major and difficult challenge.

Patronizing SMEs exposes the consumer to many challenges and potential market failures in such areas as choices, complaints and handle, information. More specifically, consumers can expect to confront the:
1) Inability to be a repeat customer at, or complaint to an establishment that disappear within 18 months,
2) Potential for dealing with insufficient and under train staff
3) Probability that SME staff will not have knowledge of consumer demand, needs and expectations.

RSVP Hospitality Team - We never stop thinking

The Secret Weapon for S.M.E businesses: 10 techniques for your business POS?

It's amazing how few retailers take full advantage of the POS system they have at their desk. This is absolutely crazy. Tracking down the latest news on point of sale software and hardware can be a headache in terms of information overload.

You invested LOTS of time and money in your spa / beauty salon / hair salon construction, design, lighting and Operating Equipments while your POS software has just been an item on the checklist. Why not get the most of it?

To help the user of spa / beauty salon / hair salon / veterinary business owners, here are 10 techniques to improve the use of your P.O.S system:



Technique 1: Understand your business
The first step to success with point of sale is a thorough understanding of your own business and where a POS system can help you cut the costs, improve efficiency and increase your overall profitability. How? you must use it not only to collect cash at the end of the day, but invest your personal time on it.

Technique 2: IT Software a must
I see many business owners in leisure industry complaining about the POS costs for them. Hang on a second: there are able to invest AED 2,800 in the latest Iphone or Android on the market, that main function is to phone, browse internet and download applications. The POS is a serious software tools that can tell you about all your clients, your accounting, your inventory and much more with a few clicks....

Just for your information a Property Management Software for Hotels cost vary between AED 30,000 to AED 150,000, so don't be afraid by a POS that cost less than AED 10,000.

Technique 3: The missing link in POS Beauty Salon / Nail Spa /  marketing
What do you know about the 5 clients that are coming today to your business? Right now, all you probably know is that they are coming for a treatment. To increase sales, you need to engage with people, and this does not stop with the receptionist job description. It is a common team objective that need to be raised to collect clients data information.

Technique 4: Stop throwing money in Magazine / Newspaper, understand your data
How many of you invest or barter AED 5,000 for a full page ads in a prominent magazine, a newspaper or a web banner? All those media support have a media kit. Does the media kit information match with your POS data? If the magazine is distributed in Jumeirah, and your Business Unit is in JLT, the question you should ask yourself is "do we have clients from Jumeirah area"?

The next step is to look in your POS how many clients come from Jumeirah area? What are the social demographics aspects of your media partner? This can only be answered by you if you collect more than a "firstname" and a "phone number" in your POS. Otherwise don't be surprise if you get "zero" sales from your marketing actions.

Use your database to literally map out where your customers are coming from, establish target zones for your marketing efforts and see how much sales come in 5 kilometers area. Strive to get more information about your clients.

Technique 5: Everyone knows the value of a Good Ad campaigns...or do they?
Whether you focus on printed marketing material, radio commercials or email blasts to registered customers, it's a must to track accurately the results of all the advertising campaigns that you run.

By tracking sales back to the original marketing stream you can get a clear idea of those campaigns that are indeed bringing more customers into your establishment. A simple means to achieve this is to trained your staff on how to politely collect information from your clients. It could be as simple as a pleasant greeting and an enquiry regarding where the client heard about your latest services. The answers collected can be recorded in the POS system. The more information you are able to collect, the more useful the resulting reports will be focusing your marketing efforts and growing your business.

Technique 6: Loyalty program and POS
To develop a loyalty program, you must leverage your existing customer base. These are people who have, on their own accord, found your establishment and been so significantly impressed by the services and products. They had a positive experience with your brand.

This could come in the forms of collecting mailing address, mobile phone numbers, email address with the promise to notify them of upcoming sales and promotions. For bigger ticket items or tailored services, personalized phone calls (from the business phone number) from a team member may be a more appropriate form of contact.

One step further to this tactic is the offering of a loyalty or membership program that entitle those who sign up for discounts not available to members of the general public. This is an offer that not only enforces brand loyalty through the perception of "exclusivity", but also guaranteed to increase the instance of customers willing to supply their details. These programs are fully compatible with POS capabilities. You might then make contact with customers in your database on a weekly, monthly or seasonal basis.

Technique 7 : End of the day reporting
Treatments have been perfectly executed, customers have been happily pampered and the time has finally come for you to wind down your operation and bask in a job well-done. However, before you close the day, you need to follow through the closing steps of your POS and that does not stop with only counting the money.

Print the sales report, settle the credit card batch and run the POS report as per your closing checklist, that will provide useful insights on your operations that may include:
- Paid Out Report: shows all cash paid out for a specified time period and include a subtotal and a reason field to document the pay out was made,
- Today's Sales Report: shows sales broken by sub departments,
- Voided Items Report: shows a listing of all items that have been voided with a specified time frame as well as the reason,

Technique 8: Retail Sales scanner design for efficiency operation?

The extra items that was installed at your salon, with a scanner function has the ability to assist you tracking the movement of your retail sales. Let's face it, small enterprises are not staffed to manage a proper monthly inventory on their own. The function of the scanner can not only help them increase the speed of operations, but also assist them in getting an accurate control of their inventory.

Technique 9: Champion the process of Inventory management

For operators, Inventory Management plays a significant role in the process of controlling the costs and reducing waste. However without a proper tracking, it can be quite a challenge. 

Technique 10: Is your business unit making money?
The POS are equipped with accounting systems, that can allow you to manage not only the sales transactions, but all your accounting operations (payable, receivable, cost efficiency, inventory), providing you invest some time and resource to program it.

SO, how do you become the Master of POS? 
POS today are getting more and more precise for independent retailer. You should opt for a POS that can hold large amounts of information about your customers, because this is literally your gold mine. In marketing, it's easy to understand someone who has already bought a service from you, know where to get the latest products, this customer will buy again. You just need to stay in touch with them and offer things you know they will buy.

For the inventory and sales analysis, you can contact us to assess your needs and re-organize your structure. Contact at: info@rsvp-hospitality.com

The Profit Therapy Team by RSVP Hospitality

New 4-star & 5-star hotels opening in Dubai in next 12 months

There are several Hotels (2,800 NEW rooms) that are scheduled to open from now to next November 2013, because Dubai is an amazing business and tourism spot. The Dubai Hotel market is the region's success story when it comes to developing a destination, with the city attracting demand from a wide range of segments, inclusive of leisure, corporate and MICE Travelers. Business demand is also increasing due to the improvement in better sentiment in the region.

Furthermore, the Arab Spring has been a great factor in the top hotel performance in 2011-2012 as traditional leisure destination in the Levant (Lebanon, Syria) and Egypt faced political and and social unrest during this period, forcing tourists to opt for safe destination like Dubai. Demand for GCC clients especially Saudi Arabia and Kuwait market is supporting this increase in the demand. These factors have contributed to a large RevPAR performance observed in most hotels.

The outlook for hotels in 2013 seems to be good, and despite new properties coming on board, I am convinced the market will still deliver double digits growth in RevPAR. Every year, in November, there are some hesitations about the future of the hotel market in Dubai, but 12 months later the market has outperformed. Be confident in your team and pricing structure, and deliver excellent service, and you will navigate through 2013 with ease.

Brand: Sofitel Hotel

Company: Accor

Date: Q3 2013
Status: Opened (July 2013)

Location: Palm Jumeirah

Inventory: 543 Rooms

Facilities: Beach, Restaurants, Bar, Spa, Health Club

Brand: Novotel Hotel
Company: Accor
Date: Q3 2013
Status: Pending (October 2013)
Location: Al Barsha - Mall of Emirates
Inventory: 465 Rooms
Facilities: Banqueting, Restaurants (2), Bars (3), Wellness, Health Club,

Brand: Sofitel Hotel
Company: Accor
Date: Q2 2014
Status: Delayed to 2014
Location: Sheikh Zayed Road - Downtown Burj Dubai
Inventory: 350 Rooms
Facilities: Banqueting, Dining, Bars, Spa, Health Club

Brand: Oberoi Hotel
Company: Oberoi Hotels & Resort
Date: Q2, 2013 
Status: Opened in July 2013 
Location: Burj Khalifa - Business Bay
Inventory: 250 Rooms
Facilities: Banqueting, Restaurants and Bar, Spa, Health Club

Brand: Anantara Dubai Palm

Company: Anantara Hotels & Resorts

Date: Q3, 2013 (June)
Status: Opening on September 15th 2013

Location: Palm Jumeirah

Inventory: 293 Rooms + 450 Condominiums

Facilities: Restaurants, Bars, Beach,

Spa, Health Club

Brand: Conrad Hotel

Company: Hilton Internation

Date: Q3, 2013
Status: Opening on October 2013

Location: Sheikh Zayed Road

Inventory: 552 Rooms and Suites

Facilities: Banqueting, 

Restaurants and Bars, 

 Spa, Health Club.

Brand: InterContinental Hotel
Company: InterContinental Hotel Group
Date: Q4, 2013
Location: Dubai Marina
Rooms: 132
Apartments: 196 (Residential Suites)
Facilities: Spa, Health Club, Restaurants






- Marriott Dubai Healthcare City (353 Rooms, 128 Apartments, 2013/2014)
- Renaissance Motor City (354 Rooms, Q4 2013)
- Pullman Dubai Jumeirah Lake (354 Rooms, Q42013)



2014, 2015, 2016 and 2017 Hotels:

- Dubai Marriott Hotel Zabeel (352 Rooms, January 2014)
- Double Tree Hilton Al Barsha (344 Rooms, February 2014)

- Sheraton Grand Dubai Sheikh Zayed Road (660 Rooms, Q2 2014), next to the Monarch Hotel...
- Crowne Plaza IMPZ (407 Rooms, Mid 2014)
- Park Inn Dubai Airport (312 Rooms, 2014)
- Rosewood Hotel DIFC (250 Rooms, Q3 2014),
- Palazzo Versace Dubai (217 Rooms, Q3 2014)
- Four Seasons Hotel Dubai (237 Rooms, Q4 2014),
- Waldorf Astoria Palm Jumeirah (330 Rooms, 2014)

- The Address, The BLVD (200 Rooms, 542 Apartments, Mid 2015)
- Crowne Plaza Dubai Business Bay (416 Rooms, 2015),
- Park Inn Al Jadaf (300 Rooms, 2015)
- Madinat Jumeirah Extension (2015)
- Be Spoke Hospitality (6 five star hotels, totalizing 1,400 Rooms, 2015)

- Swissotel Al Jadaf (280 Rooms, 2016)
- W Hotel Palm Jumeirah (2016),
- Baccarat Hotels & Resort, Dubai Pearl (98 Rooms, 2016)

- St Regis Dubai Sheikh Zayed Road - Business Bay (241 Rooms, 2017),
- W Dubai Sheikh Zayed Road - Business Bay (384 Rooms, 2017),
- Westin Dubai Sheikh Zayed Road - Business Bay (1,179 Rooms, 2017),

This list has been researched extensively, and may be subject to change. For more details, contact us at info@rsvp-hospitality.com or visit our website at: http://www.rsvp-hospitality.com

Romain Saada
Founder
RSVP Hospitality

A typical work week in Hotel Revenue Management - Day by Day

A revenue manager is responsible for the revenue maximization of the hotel room he managed. In order to do that requires a disciplined and systematic approach to the tasks on a daily and weekly basis. As some people mention to me, that Revenue Management is a wild and vast area to understand, then I created this post to clear their minds.

I have documented a typical week below to highlight the task, analysis and evaluation required. In addition, there is a number of team players and communication is key to keeping all the components in synchronization and strategies aligned.

It is especially critical to be action oriented and to follow up on those actions with ongoing performance evaluation and adjustment.

Sunday

Sunday is the data preparation day. I look at historical data for the last 06 weeks, organized on daily basis with my room nights and revenues by market segmentation. This gives me my market mix, days of the week performance. I also look at my cancellations and no show factor. It's important to understand the pattern of high, medium and low demand. This information help me to setup my future inventory restrictions. I ensure that this process is full documented and communicated to my executive team.

I also look forward with reports on on the books and business intelligence data, room types booked, overbooking levels, so that I can make up my mind on how i will drive my yield. Our forward looking analysis is a validation to ensure we reach our monthly forecast.

One of the biggest challenges is to bring historical data and future demand together in order to identify patterns and trends going forward in key performance indicator like: RevPAR.

Monday

I am preparing my revenue meeting, looking at my group materialization reports as I aim to see group moving from Tentative to Definite status. With that information, I evaluate on how many rooms will be release and potentially I can sell them through other distribution channels.

I also ask my executive to get me the company production reports in order to ensure my 20/80 rule remain working. It's important to determine the key market segments that are in use for your hotel. A market segment is a group of guests who have similar characteristics like booking patterns, price sensitivity. It's important to track their performance and make meaningful distinctions between them

I pay attention to my calendar of events, if new ones are being added, or if existing ones remain with the same dates, to ensure that booking are coming as per seasonality.

Tuesday

I observe my competitors rates for next months, as I ensure that on daily basis I am checking my competitor rates variation for next 14 days. I print those reports and ensure that my team will modify my pricing rate change. I ensured this is documented so I can critic my strategy. With my reservation manager and e-commerce executive, we make sure adjustment to our BAR pricing structure and inventory management as required. This analysis and evaluation  can be increased to daily if there is a dynamic competitive environment and large portion at last minute booking. I also give some calls to my competitors to understand their price positioning.

Wednesday

On Wednesday, our entire team (General Manager, Director of Sales....) meet for Strategic Revenue Meeting. We review current and future booking levels, the best available rate calendar, and any changes in terms of demand (pickup /drop). We also talk about group materialization, competitive pricing and market share data. I am keen to know what are my current trends in terms of market mix as well as distribution channels (GDS, Direct, Allocation Tour Operation, OTAs...). Changes in pricing and inventory management are documented as required for the minutes of meeting.

Thursday

A close look at my overbooking levels for the next thirty days in comparison with my no-show levels and last minute cancellation is performed to ensure that I maximize. Alternatively, I can look at my travel agent materialization to ensure that I know how to re-sell my rooms.

In Summary
This review of a typical work week is definitely not exhaustive, but only an overview of some of the tasks that are required by a revenue manager. It is important that you base your decisions on data, as your hotel company invest at least AED 20-25,000 (USD 7,000) per year on reports or more. I would be very happy to hear your comments to ensure all opportunities are captured. You need to ensure that any money left on the table is captured.

Shall you need assistance for your hotel to organize your weekly revenue management, please contact us at info@rsvp-hospitality.com or visit us at www.rsvp-hospitality.com

Large Hotel in Dubai: JW Marriott Marquis Hotel opens its doors!

When a Marriott property open on any market worldwide, the competitions start to shake, because this hotel brand is highly driven by [REVENUE MANAGEMENT INITIATIVES]. There were many projects in Dubai, to add a large hotel property (back in 2006 with the Bavaria Concept and its 2,000 rooms, then some major 700 rooms standalone), and finally JW Marriott Marquis comes in, in the most RevPAR area of Dubai City Hotel.

Officially recognized as the world's tallest hotel at a height of 355 meters, only 26 meters short of the Empire State Building, New York, the JW Marriott Marquis is Dubai first world class convention and business destination hotel.

The hotel will open in several phases, with its first tower of 804 rooms and suites, and in its soft opening phase, and with three of the final nine restaurants opening on November 12th. By January 2013, the hotel will have all nine restaurants and five bars and lounges open, with the Grand Opening scheduled to take place in February 2013.

With an opening Best Available Rate of AED 1,200.00 for their Standard Room, and an advance purchase setup at 25% discount, JW Marriott is definitely sending sign to the market, that it is a brand new product and will position its brand above the AED 1,000.00 structure.

A great advantage of JW Marriott Marquis is its distribution network with Marriott systems, giving a great amount of business through direct distribution channels of the Marriott group. JW Marriott has also a perfect regional location with majestic properties in Istanbul and Mumbai to feed their property in Dubai.

JW Marriott Marquis Dubai - Fact Sheet:

- 72th Floor

- Phase 1: 684 Rooms, 120 Suites

- 24 Meeting Rooms

To book the hotel, visit this link:

http://www.marriott.com/hotels/travel/dxbjw-jw-marriott-marquis-dubai/

Phone: +971 (0)4  414 00 00

RSVP Hospitality wishes a great success to JW Marriott Marquis Executive Team.

THANKS GUYS

A quick message to say thanks for reading my blogs. More of you are doing so and the numbers are growing (20,000 pageviews). I appreciate it greatly and will do my best to interest/entertain you in the future. Cheers ROMAIN

Tips for General Managers: Online Distribution vs. Online Marketing

A vast majority of General Managers don't make the difference between Online Distribution and Online Marketing. Reasons being in their hotels, they have a 24-28 years old e-distribution executive, that represents a minimum of 45% of their hotel business mix revenues (Online Market Segment). At first glance, it might be the best return on invest the hotel did in the last five years.




However here are my explanations for the e-distribution executive:
- This shift of market segmentation comes from the behaviors of new booking technology (internet, review site, smartphone booking, social media bookings, branded website). Historically clients used to go to travel agents, sit for 10-15 minutes, and choose a hotel, through a brochure (leisure clients), or send their dates, and the travel agents used to book as per client's choice (business clients),

- The Online Travel agencies are displaying one single rate structure, whereby hoteliers used to display a rate for GCC clients, a rate for UK clients, and a different rate for Asia clients, depending on their booking window, their length of stay, their room types....On an extranet you simply upload one rate per room type, then it goes to all worldwide clients, regardless of their booking type, origin of booking...etc. Therefore in the past, Hotel may have been organized with GCC Sales Manager, Rest of the World sales manager....

- Flexible allocation versus contracted allocation: in a traditional model, you attribute a fix allocation with the cut off date (2-5 days) and some blackout dates. On an online models, the e-distribution executive is given, an almost full access rights to manage the extranet. He can increase his rates, add rooms, or remove rooms allocation. In the Travel Agencies, they used to be the one controlling the margin when price and demand goes up.

E-Distribution Advise for GM:
Challenge your e-distribution to understand where your current bookings come from and how much they are costing you is vital to the success of your hotel business. Focus on 3 years strategies to leverage your brand website, and makes it best in class in your market.

With those 03 points, there are no surprises that the online market segment mix will still grow. It's natural and a bit of relationships with key accounts. The focus should be given on your own booking branded website (as www.rsvpdubaihotels.com), because with transaction costs averaging 1.5-3%, your profits will go very high, in comparison to the 20-25% cut given to Booking.com / Expedia and Co.

Alternatively, if your hotels is engaged into business intelligence data (Market Vision, Travelclick), the e-distribution may take the lead to review those pricing reports, and distribute monthly reports analysis to the team.

However  the link between distribution and marketing need to happen with an online marketing strategy. Marketing focus on the development of your website, your online communications to find, attract and retain future clients. It has to do with the quality of your contents, photo gallery, your blog, your social media activities for your F&B and Spa facilities, your public relation skills, your search engine optimization development (keywords, results, analysis) and your overall analysis of your customer segments.

E-Marketing Advise for GM:

Technology continues to push the travel, tourism and hospitality industry forward and make it more dynamic than ever before. The KPI for the online marketing, should be metrics links to traffic statistics, guest engagements, guest comments, monitoring site reviews, and popularity in blogs and forums.


RSVP Hospitality Overall Notes:
Recommend for two different persons to handle those jobs, as the marketing functions is more creative and strategic focus, than the e-distribution one. The e-distribution could be linked to an entry level of Revenue Management executive, because he/she is only focus on one segment of the hotel, and understand the dynamic of the booking window.

If you need more information, contact us at info@rsvp-hospitality.com and we can assist you in your structure organization.

Romain - RSVP Hospitality

Hotel General Managers should become more business minded

Does this type of revenue management conversation sound familiar?

GM: Thank you for showing us the revenue and market competition last night, but I believe we need to fill up the last rooms. Bring down the Best Available Rate, Send Sales 1 to Airport, send Sales 2 to corporate area, ask Sales 3 to call travel agents with our special offers and e-commerce executive, upload rooms on Expedia, Booking.com.

RM (*Revenue Manager): but the trends shows that there are not much business at our rates, we will dilute our existing base of clients.

GM: Trust me, I have experience, I know the city.

RM: We may end up with low piece of business that will not move our RevPAR.

GM: We will fill the hotels with whatever rates, that bring revenues.

RM: But....

GM: That is my final decision. Let's move on.

Results: Sales managers are begging for hotel rooms last minute to travel agents (those smart one understand that next time they have to place cheap business they will call you, and you will only say YES), and online travel agents will sense that you are not hands on your strategy, therefore next time they required for 50% advance purchase, you will be in the 10 pre-selected hotels. Your Corporate clients will loose the trust, because they can find better rates than their contracted rates on the last minute booking window. There are no secret, people are observing our behaviors, because travel agents have goals too to maximize their business.

In the end it turns out that the hotel fill up but does not move in RevPAR, because it has accepted rooms with a much lower rates that the existing on the books. And the market picked up at higher rates. Unfortunately too many General Managers still influence the strategic decision making process of hotels based on feelings, market knowledge and experience. They drive their decisions based on influence instead of hard factual data.

Where does this comes from?

Traditionally in the hotel industry, many people are promoted from Director of Sales or F&B Director to General Manager. Nothing wrong with that essence, internal promotion is great and moving up the ladder is a personal development. However different skills set are required to be a F&B Director, General Manager, Director of Sales, Director of Revenue Management. In Independent Hotels, the Revenue Management function is combined with Front Office and Reservation. In other words, analytical and operation function form one sole person responsibilities. Front Office is already a very tense position to handle between Check-In Operations and Housekeeping coordination. I strongly disagree!

Unfortunately we see far too little training given to the key position. The big hotel chains invest massively in the development of those key people to support their brand standards and guidelines.

We highly encourage hotels to invest more in business management and analytical development training of their staff. Because a large portion of tomorrow profitability will be enhance on how people are effectively understanding their data. Technology is no longer the impediment to driving improvement. It is proven. The obstacle is now people and behavioral change management. Increasing skills with analytics. Overcoming resistance to change.

In Revenue Management, for many independent hotels in the Gulf, the operation and strategic functions is grouped under a single responsibility, where it DOES NOT MAKE SENSE!

Strategies can't just be done in 05 minutes. It is a process that requires constant study, data extraction and preparation. If you are in an environment, where the phone rings every 30 seconds, it is hard fact to find your mind highly focus on your numbers. Just step a second, in a trader's life at New York Stock Exchange, and imagine how in one day, they could take up to 1,000 strategic transaction decisions for their investors.

Before taking any price decision or driving demand, history and trends need to be analyzed. Last week, I met a hotel sales manager employee, he was very happy his RevPAR grew by 20% (from previous year) during Eid Weekends, and he range a RevPAR of AED 700.00 (Full occupancy first two days over 4). My next question was how did your market share grew? He was still last in class on the market share competitive report. Do people really fill their hotels without strategies? When I went through specific market mix questions, he filled up his hotel with travel agencies and Booking.com. I let him smile, but do people really understand what they are doing??

There are nearly 32 days in Gulf markets (Conference cycle, religious holidays, week days, group business seasons...), where you can really make the difference to boost your RevPAR and profitability, the rest is all depend on your strategies, pricing structure and ability to drive the team. But during 32 days, the strategies you make can increase your RevPAR performance by 15-20% on a year basis. Worth it, isn't it?

It surprised me that in the independent hotel industry (non large international chains), strategies and tactical are just decided on a short lapse of time. It seems that many senior managers in the hotel industry still have problems with saying NO to unprofitable business. Hotels should not be the first one to fill up.

Independent hotel need to take a big jump if they want to be able to keep up the fight against the competition.

Romain
Founder
RSVP Hospitality

Eid Holidays: October 26-28th, 2012 the great Yield Factor

Expect bumper to bumper traffic and shoulder rubbings crowds around Dubai as tourists from the Gulf countries descend on the United Arab Emirates for the Eid Holidays, which falls this weekend.

There is something unique with the shopping malls for the Dubai stops, as Dubai is implementing 24-Hour Shopping initiative that should draw more crowds from the Gulf this year, until early hours in the morning. What a treat for Dubai shopaholics!!!

Hotels are anticipating 90 to 100 per cent occupancy during that period. Once again as per the Article of local news paper in Dubai, Gulf News.......just a second, no one talks about Rev PAR performance, like if it was a habit to fill up the rooms, during high occupancy demand, without getting a mix clientele. I see in this article, that travel agents registered an increase of 20% in demand. So it means hotels are selling negotiated room rates 30-40% from their current rate to travel agents. Is that logic?

Most of the hotels are selling their last room with price for a Suite in 5-star hotel being above USD 1,000.00 (AED 3,670.00 per room per night).

Ok it's great to see that hotels will make some money, after a so-so month in September 2012. But what would be even more interested is to know if revenue management leaders have been able to drive the bookings at the lowest distribution cost possible. 

In fact during a high demand period, you should look at your distribution channels mix between:

- Online Travel Agences: 20-30% Commission,

- Travel Agencies - Tour Operation: 15-50% Commission,

- Corporate Bookings: No commission but yearly contracted rate,

- Best Available Rates: 10% Commission

Easier to say, difficult to implement?

Every Eid Holidays in the UAE are a great performance, because there are great activities organized by DTCM and Shopping Malls as well. The regional troubles in the Levant part (Lebanon / Egypt) will not favor the clients to consider those destination. So for all nationals and expats, UAE will be THE great destination for the weekends.

The majority of the hotels are on very high occupancy; therefore if you analyze your nett bookings you will realized that there might be a 40% gap between your daily reports average rate and revpar and your daily reports without your commission.

Currently the vast majority of hotels are selling with daily quadruple rates, but when we will see the market performance, to the exception of the 5-star hotel, the 3 and 4-star segments will not be above AED 1,000.00

Profit Recommendations:

- Do not overbook your first category base, because you will end up upgrading for free,

- Turn off your up selling program for the period,

- Control your room allocation / block with travel agents, and maintain your cut off dates,

- Maintain a minimum length of stay: 3 Nights,

- Sell per room type on the phone with Travel Agents, Clients and business partners,

- Restrict your availability with OTA to the minimum and sell directly on the phone or through your brand website,

- Honor your cut off dates as per contract,

- Ensure all your reservation are guaranteed by company or valid credit card,

- Maintain descent services, as some hotels are charging their rack rate or even more than their rack rate,

The following should allow you to gain significantly in RevPAR for few days left.

Cheers,

Romain 

RSVP Hospitality wishes you Eid Mubarak for you and your family.

03 things that should clear your mind about Yield Management !!!!

Yield management has become a solid term in hotelier's jargon. Yet if you ask 10 hoteliers to define what it is, 5 may have a clear idea of what it is, and you may end up with 10 different answers.

The reason for such a different panel of answers is that the underlying concepts of yield management have not been well communicated to them. Yield management in the airline industry, is different to car rental that it is different to hotels.

The root concepts are the same, but the application and the techniques used to implement the concepts differ widely.

Yield or Revenue Management is the practice of maximizing profits from the sale of perishable assets, such as hotel rooms, by controlling price and inventory and improving service. What Yield management bring is a systematic approach to reach that objective. Through that systemization, hotels discover that they can deliver their product differently, and more profitability.

Revenue Management business practices could be:
- Setting the most effective pricing structure,
- Setting last room available for top corporate or leisure clients  based on a contract commitment,
- Limiting the number of reservations accepted for any given night or room type, based on the expected incremental profitability of a reservation (price, length of stay, cost of distribution...),
- Negotiating volume discount with wholesale or destination management company,
- Identifying peak periods and write them down in the PMS,
- Develop an upselling program instead of massive "free upgrade",

Revenue Management uses information about customer purchasing behavior and product sales to develop pricing and inventory controls that produce greater revenues and deliver products that are better match to their needs.

It is a mix activities between PMS technology information, statistics, probability, business experience and knowledge.

1) Yield / Revenue Management is NOT a sole computer system:
Discussions over yield management appears to be difficult at the first meeting as it is linked to computer systems, inventory, capabilities of forecasting demand, optimizing reservations and limiting discount availability.

Please get it right, Revenue Management is not a computer system neither a mathematical science. It is an approach to increase revenues and improving service by responding to current demand. It is a process, a way of conducting business.

Certainly computer based tools can be a key component of such a program to assist with forecast demand, cancellation and no show expectations to push your overbooking levels.

2) Yield / Revenue Management does NOT work in low demand season
Since demand forecasting is the basic of Yield Management, to evaluate also potential low days in advance, it can allow the hotel to take specific actions. There is no point sending your entire sales team on the same day of arrival, as you may want to reach from 70-100% Occupancy points, as this could have been identified much earlier.

Demand may be low for a study pattern of days (weekends, second week of the month, week after corporate season and New Year Eve, Sunday and Thursday...), rather than sporadic dates.

When such  conditions happen, revenue management can help marketing and sales departments identify opportunities for hotels to increase. The information can be crucial when sales people are on calls with clients.

3) Yield / Revenue is NOT easy
If a yield management program is not implemented with the right tools, then it might appear complex.
Obviously staffs deserve many hours of training and develop hotel procedures and policies that support the system. Don't think of hiring someone from Starwood, Accor, Hilton or other chains, to manage your Independent Hotel, because those revenue managers will not be able to implement policies learn at big groups. Reason: big chains have top tools and invest enormously in Revenue Management trainings and best practices.

BOTTOM LINE:
To summarize Revenue Management is an evolving process that can increase a hotel's revenue. Not working the right way with it, may have a low impact on your profitability. How well revenue management works for a hotel depends on how well the program is designed and implemented.

For more information, please contact us for free consultation call: www.rsvp-hospitality.com