Are your 2013 Hotels Target, Budget and Marketing Plan Ready?

The first semester of 2012 is almost gone, it's time to think ahead....generally most hotels in the Gulf areas, have performed quite well in 1st quarter, and should perform well for Q4, to keep their owners happy.

If you are thinking going for a vacation trip prior to Ramadan, well it may be just a short break trip with Fly Dubai or Air Arabia to a nearby destination.

Summer for hoteliers is always a sign for scratching numbers, looking at your segmentation, start collecting Business Intelligence information (trustworthy), read newspapers, select articles, spot the new company to re-locate in your city...

2012 Semester 1 - Evaluation

Where do you stand in terms of Year to Date 2012 Budget? are you ahead of the exercise, or are you running behind your numbers? you must analyze your figures, and understand your performance. 

a) Negative Impact:

If you are in negative growth, then you need to strategically re-think your Q4. Will this be reflecting in a better mix, focus on higher rate contribution? You need to write down what went wrong:

- a wrong strategy (lack of availability, price resistance, turnaways analysis...)

- a new competitor with lower rates (don't only focus on their low rates, try to understand why did they use this strategy, do they have solid market base?),

- an existing competitor with distress inventory, 

- a less performing sales team (=> go segment by segment to understand + and -),

- a sales manager that went to work for a competitor,

b) Positive Impact:

- Is that temporary due to regional situations (Egypte, Levant...?),

- Being ahead from budget is good (you may have build a low budget target), however did you gain position in RGI? (Revenue Generation Index: RGI)

- Was there any hotel inventory that go under renovation / closure? (i.e the impact of Metropolitan Hotel Dubai demolition, 255 rooms)

Budget Elaboration

The basis of the budget comes from a detailed demand calendar. It's very important to map the events, conferences (Trade Centre, Exhibition Centre), sports exhibition game, trade fairs, concerts, GCC holidays (UAE, Saudi, Kuwait...), International holidays (Russia, UK, India, China, Brazil) and local bank holidays. This can be carry out by the revenue manager or the marketing coordinator.

Looking at your first semester exercise, we are working with hoteliers for which we have implemented a detailed daily market segmentation so that they are able to perform analytical analysis instead of reporting. Results: they started gaining back control of their inventory in order to maximize revenues.

It is more precise to leverage your Monday trends by explaining that your market segmentation is composed of 25% local corporate, 15% best available rate, 40% local DMC, 15% OTA and 5% crew, rather than saying on Monday we have leisure clientele. Huhh? what does leisure means? If 55% of my hotel is booked towards leisure segment, am I consider a leisure hotel? well only a detailed market segmentation can answer to you.

A real budget exercise is an activity that need to be elaborated through 90-120 days work and not 10 days.

We recommend hoteliers to implement a day by day budget for their market segmentation mix and revenues, because they will feel more in control, than programming a xx% increase, and dividing by 12 months, dividing by 30 days. That's the old school, and will not support your strategic thinking.

The General Manager or the Revenue Manager or Director of Sales, should effectively perform displacement calculations on all segments and channels to uncover hidden revenue potential. Additionally, you should analyze the real cost of each distribution channels by paying attention to the travel agent commission, agency fees, sales blitz investment, GCC trips investment, sales payroll, marketing collaterals, reservation costs, extra commission level (end of the year, 3-5% based on volume of targeted room nights).

For budget, you should also compare your year on year growth per main segments and sub segments, to make sure this tally with your marketing plan.

Marketing plan is a must for any hotel that has a strategic approach from the management. When you start managing 15-100 Million AED business, you deserve a structural approach.

Marketing Plan: back to basics

The marketing plan can function from two points: strategy and tactics. As I see, most of approved marketing plans are locked up in a book shelf, in the Sales Office, and don't move until the next season. 

It should be on the Director of Sales desk at all times, to prevent that we don't follow the right strategy as outline 8-12 months back. Tactical decision to introduce new rates, or extend rates, should be record so that you could notice if your volume of bookings has made the difference...or not.

When looking at strategic information, RSVP Hospitality would recommend:

* Ministry of Finance information (GDP Growth, Inflation rate...),

* Ministry of Tourism Information (Arrivals, airport statistics, airline routes...),

* Overall Hotel + Hotel / Apartment Supply,

* Market Source by origin,

* Market demand by main and sub segments,

* Benchmark reliable online source for RevPAR,

* Geo-political opportunities and threats,

* Distribution channels analysis (local CRS provider...),

Taking in consideration, that most of hotels in GCC are growing their online sales, a part of your marketing plan should be focused on Internet marketing and Online Distribution. 

Another part of your marketing plan, will be on to protect your corporate clients (individuals and groups), from giving them the best prices and ensure there are producing as per rational level. How you will communicate on that? How the sales team would be organized?

Shall you need assistance from expert, contact us at info@rsvp-hospitality.com or call us @ +971 50 589 3011 (UAE) or visit our website at www.rsvp-hospitality.com 

RSVP Hospitality

Better Information, Better Decision for Better Results 

Beauty World M.E - Download Conference Presentations !

To the Beauty World M.E attendees, please find attached my presentation for the conferences.

1) Key Performance Indicator - Spa and Beauty Salon Industry

RSVP Worldwide Presentation: 

How to use KPI's to effectively identify revenue opportunities.

Visit the link 

2) Maximizing profitability - Spa and Beauty Salon Industry

RSVP Worldwide Presentation: 

Maximizing efficiency and profitability of your business

Visit the link 

Thank you and keep asking questions about your concerns.

Romain

Spa Benchmarking: from where to get reliable research

Following the Beauty World Middle East, held on May 29-31st in Dubai World Trade Centre, RSVP Hospitality introduced a "Key Performance Indicator" and "Revenue Maximization" presentations to the audience.

Spa benchmarking is one of the "hottest" topics in the spa and hospitality industries. There are too many studies, surveys, that lack the credibility, integrity and quality especially when the data are exchanged without a third party. Who could rely on an Average Treatment room check from a competitor, down the street?

Poor information, suggestions or recommendations can be very harmful to your business, especially when you rely on this information to make operational, personnel, marketing and financial decisions.

We, all know that every owner like to claim, being the best in town, getting the best revenues and profitability. It's time to be realistic. Those reports may cost you less than USD 1 or 2 per day, so I am sure no one will have an objection, to get realistic accurate data.

The fact is you cannot manage what you cannot measure. It is important that you start tracking at least 03-05 metrics to review accurate analysis of your spa. Spa and Beauty salons needs to track numbers internally, as well as compare them with the market level information.

To my mind, there are three companies that can provide reliable information about Spa benchmarking in the Middle East:

1) Intelligent Spas
Website: http://www.intelligentspas.com
Type of Spas: ALL
Reports cost: USD 300.00

It is one of the dedicated spa-specific research company that collect, analyze and display report findings. Founded in Singapore, in 2001, Intelligent Spa assists in research in over 90 countries. Intelligent Spa also publishes a range of Spa Operational Manuals design to assist spa business raise services standard, improve customer satisfaction.

2) Ernst and Young
Website: http://www.ey.com/EM/en/Industries/Real-Estate
Type of Spas: Selected hotel spas
Reports cost: USD 795.00

3) PwC
Website: http://www.pwc.com/m1/en/publications/
Type of Spas: Selected hotel spas
Reports cost: TBD

Soon, there will be a fourth one (Q4, 2012 in the GCC) with The Benchmarking Alliance, visit the link: http://www.benchmarkingalliance.com

Just to clarify, Revenue Management is a principle that is used to enhance a firm's revenues by selling the right product to the right customer at the right time at the right price. It is important to note that Revenue Management is not meant to trick the customer into paying more than she or he is willing to pay. 

Instead, it is a way to acknowledging customers' different needs and perceptions of value and catering to those needs. 

Best Regards,

Romain @ RSVP-Hospitality

ALERT - Hotel Distribution: >50% Revenues from OTA

What shares does the OTA (Online Travel Agency) segment represent of a hotel's transient leisure demand? removing the corporate and group business segments, and you may arrived at a total dependance towards OTA.

20%? 30%? 40%? 50%? 

60%? 70%? 80%?

Scary? well your Director of Sales may still tell you "it brings revenues", your Director of Finance may still alert the increase in commission level and payment delay.

What shall you think as a Revenue Manager, and how to decide on the right path to lead your hotel.

I would call it an hotelier lazy man's approach. It may work for you on a short term notice, but does it really make sense when a hotel hire 5 full sales managers who blitz the market, develop the so-called "business relationship" (Room Nights potential versus Rate), segment the market towards Corporate Individual, Corporate Government, Corporate Groups.

Very often, the e-commerce manager or online distribution manager, will settle rates that drive bookings but under-cut your long term business relationships being "Your corporate market". If you take a monthly report and look at the average rate (before and after commission deduction) for online bookings and compare it with your Corporate market average rate, you may find surprises.

What are the distribution cost for an Independent Hotels in the Gulf?
- Direct Online Channel (Hotel brand website): AED 25-30.00 per booking

- OTA Channels: AED 220-260.00 per booking based on average 20% merchant commission, length of stay of 2 nights and an average rate ranging of AED 500-650.00

On average it is 10 times cheaper to sell your room via the direct online channel compared to the OTA channel. On a year basis, can you imagine what the difference in distribution cost it would represent for a 140 room hotel (Average rate of AED 395.00):
* Direct Online Booking (40% of total room nights) = 20,440
Cost = 20,440 room nights x AED 25 = AED 511,000

* Online Travel Agencies OTA (60% of total room nights) = 30,660
Cost = 30,660 x AED 200 = AED 6,132,800

Name any Hospitality owners who would not like that!

Hoteliers, you need to invest in your direct online channel. Being dependent from OTAs, who required year on year, higher commission and commitment, will not allow you to leverage any types of strategies.

Top 3 Recommendation for General Managers:
1) Challenge your e-commerce managers to create Direct Online Channels strategies and not only fill up extranets. Because a large part of profit is left on the table.

2) Organize a meeting with your Online brand booking being I-hotelier, Synxis, Fastbooking, Res-Avenues, and ask them the following: "I would like to increase my market share of Direct Online Bookings to 50%, what would you suggest us".

3) Review your website redesign, optimization and SEO, online media with experts, take control of your database (email collection...) to turn your e-commerce person as a data analyst rather than an extranet order taker (that adds room when the allocation is set at zero).

Please share your thoughts below.

Romain @ http://www.RSVP-Hospitality.com

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).

, 

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