Bring back the Revenue Manager

Have you noticed the revenue manager are short in supply these days? these are the executives who run analytical reviews, control the leverage of demand vs. pricing, drive the strategy and perform forecast accuracy within their business units.

But in many independent companies in the Gulf, the only true revenue driver is the General Manager. Everyone else, whether the 65 hours a week executive, the credit manager with his 25 calls a day for cash recovery, the night auditor processing 60 reports or the sales team with its 8 sales calls each, runs a piece of business to support their functions.

As a result, a limited number of people have full, end-to-end accountability for business success and there are few opportunities for revenue managers to learn all aspects of a business. This may be one of the reasons why many organization struggle to perform.

In large hotel chains organization, the revenue manager is at the center of action. He is regularly trained by his regional managers, he can create best practices to be shared with his peers or he attends business management courses (Time management, effective leadership, communication skills, project management). In small independent group of hotels, or independent structure (100-250 rooms), the revenue manager seems to be just noted as a "title position" to remain trendy with the hotel market development; however many of them are an extension from the reservation manager position... so the title does not really reflect the functional role. There are no added value when it comes to developing a new BAR pricing vs. competitors analysis, evaluating a piece of business, displacing calculation, seeing their market within a 90 booking window, changing his benchmark competitive set, analysis of historical data, day-to-day forecast, confronting a director of sales on the strategy, constructive feedback to General Managers...

Starting in 2005-2007, many GCC hotel base companies evolved to "functional" structures to cut costs and reduce duplication. Revenue management being the favorite buzz in the General Managers round tables, the main question remain at who will perform the RevPAR growth. Is it a G.M responsibility? Is it a team responsibility? In my mind, the hotel better have the right structure in place to perform. And this comes from a thorough review of the organization functional aspect.

When will the hotel understand that reservation department is an extension to sales department (clients relationships, selling what is on the Property Management Screen,  entering rooming list, managing extranets distribution channels and many more functions...) and therefore cannot be performing at Reservation and Revenue Management. It can be a short term solution to evolve a reservation / revenue manager, but the organization needs to go deeper in defining the roles and responsibilities of each. The reservation executive answers the phone and sell, while the revenue executive review hundreds of data every day, perform reports, and follow the guidelines of the hotel revenue management policies to extract data that will support the strategy.

I meet dozens of revenue managers in the market, who are great in their roles, however unable to perform great numbers, because their position is a result of a mix functional roles between a reservation role, a extranet/e-commerce role, a yield manager role even in some cases a sales manager role....This become very complex for their understanding and development, they feel there are doing a bit of everything, but not to the expert level; so when an opportunity comes for another position within the market, they switch for it....

As a result of this shift, career paths today are less geared towards filling the few revenue manager position, and instead focus on functional specification.

Obviously we cannot reverse the structural trends of the past 5 years in the region. However, companies can take steps to give their people more management, business skills and accounting/finance experience, which may help them avoid the narrowness of functional specialization.

Given the difficult nature of business today, having people with broader perspective may be critical to developing successful independent hotel establishments. So it just might be time to bring back the Revenue Manager.

To what extent does your independent hotel company have opportunities for true revenue managers?

Romain Saada @ RSVP Hospitality
Visit us at http://www.rsvp-hospitality.com 

Evaluate the Distribution Costs for your Hotel

When it comes to making channel mix decisions for your hotel, it requires much more than choosing between direct channels or third party channels, since each category carry costs.

Since we are in the budget season, it is highly important that this comparison need to be establish.

The cost to deliver a reservation to a hotel has grown dramatically in the last 10 years. Besides reservation transaction costs, it is also necessary to consider the cost to trigger the reservation.

Since many hotels maintain a budget for operational expenses (reservation delivery) separate from a budget for operational expenses (triggering the reservation), it can be problematic to determine actual distribution costs because these fees are often combined when charged to a hotel.

Are Search Engine costs treated as a marketing fee or as one to facilitate the booking of a direct reservations? Does the online travel agency (OTA) commission get charged as a reservation or a marketing expense on the P&L (Profit and Loss Statement)?

There are many factors to consider when evaluating costs and benefits by channel such as direct and indirect reservations and marketing costs. Each hotel would have to conduct those analyses using its own data to determine the best management action that applies to its own situation.

COMMISSION COSTS ON THE P&L (MERCHANT AND OPAQUE MODEL)
In order to conduct a cost comparison by channel, the reservation expense has to be clearly identified. Connectivity fees from reservation vendors (Travelclick - I-Hotelier, Synxis, Travel Tripper, Fast Booking...), switch fees, retail travel agency commissions or marketing fees, are all booked under an expense that apply against the revenue they deliver.

The cost of business delivered through 3rd parties, being merchant model or opaque model, through the OTAs may prove to be difficult to track because it does not appear on the P&L.

When a room is sold through this model, the hotel provides a Net Rate and never pays a commission after the guest checks out. It is a prepaid room with a rate that comes in only as a revenue.

In order to establish a comparison, the cost of all channels should be identified to enable a comparison.

Apply this to a RSVP Hotel:
- 100 Rooms
- 75% Occupancy
- ADR: AED 500.00
Monthly Revenue (31 Days): AED 1,162,500

Let's take an example that a mixture of OTA commission costs of 20% room only, 25% package and 40% opaque, this may give you a 25% blended commission.

The RSVP Hotel Market Share for OTA is 40%. In revenues, this represents AED 465,000.

Since the commission is deducted on the website for (Expedia, Lastminute....), the amount of deducted commission is equivalent to: AED 116,250. This amount is pre deducted so it does not appear on the P&L.

You need to compare the level of the above commission with your other OTA channels such as Booking.com, HRS, Venere...This task should be carry out by your E-Commerce Executive, Online Distribution Executive or Revenue Manager. This also need to be compared with your brand booking meaning www.rsvpxyzhotels.com, because you have to drive your direct booking strategies.

VARIABLE MARKETING AND RESERVATION FEES

A typical cost for a AED 500 rate at a one night length of stay may range from AED 30.00 to AED 130.00. Those fees comes from Voice-Direct, Voice-Third Party, Voice Travel agent, GDS Fees, Transaction fees, Hotel CRS Fees.

The results of your comparison will have a very large impact on your profitability for 2013 strategies. If you need assistance, contact us.

Romain @ RSVP Hospitality

Peak Season vs. Low Season: Two very different experiences in UAE during Ramadan

While meeting business professionals on this first week of Ramadan, in the United Arab Emirates, they all witness extreme low demand with either empty rooms, empty treatment rooms or empty seats (Restaurant, Hair Salon, etc...). Everyone is trying to get additional business even thinking using the magic "demand feeder" grouping sites (Cobone, Groupon, Mox Deals...), but they fail to understand that there are some times in the year where there are low period of business.

So when I see , a vast majority of established 4-star hotel in Deira / Bur Dubai / Al Barsha / WTC, precisely 162 hotels on Booking.com, battling to be below AED 200 (USD 55.00), I am wondering what is left for your hotel profitability when you remove your 20-25% commission per night, cleaning costs, amenities, linens, your reservation staffing and rest of the personnel.

Similarly, Beauty Salon are falling into this gap of low prices for attracting new clients. Groupon advertised this week also a Body Scrub 60mn Treatment for AED 49.00 (USD 13.50). Calculating the 25-30% commission of grouping side, plus usage of linens and beauty products, amenities, I am wondering if it's not better to give it free of charge, as an experience.

I have been 6 years in the UAE, and we know as fact, that the first week of Ramadan, is low in revenue generations. Discounting therefore does not work, it just diminish your Brand product values, and not even generating a good margin, because demand is not there.

WHAT TO DO
Effective Business Planning is happening throughout exercises that are called Budget and Forecast. If you know that every Ramadan period, your business are not flourishing, then you have to create some advance cash flows in the previous months or adjust your inventory to have a successful Eid Weekend.

I met many business clients, that filled up their 2011 Ramadan with low average rate transaction, and then when we look at their profit and loss statement, there were negative, because for whatever business they brought, they still have to pay fix and variable expenses linked to running the place.

If you look at your historical statistics (providing you have accurate data), you will always notice that you had excellent revenue generations during the 4 days post Ramadan, because it is a big celebration, and people comes with their families and friends to celebrate it.

WHAT TO EXPECT FOR EID WEEKENDS: BUSY AIRPORTS, ROAD TRAFFICS + RESIDENTS DEMAND!!!

Same scenarios, look into your past historical revenue generation, and everyone coming from GCC would be celebrating in the UAE (Beach properties first, then city hotels). It's not a surprise why a vast majority of hotels are already selling quadruple digits rates on Sheikh Zayed Road, JBR, Marina, while hotels in Deira / Bur Dubai are more conservative.

Same goes for the Beauty Salon and Spa, where it is actually very busy season.

We all know that on August 26th 2012, when reviewing your figures, everyone would have top up nearly full occupancy of their businesses, and the question would be: "We could have maximize more, we will do better next time", because beside the revenue generation, the market share competition is the clear view on your performance.

Therefore if you have not yet anticipate a surge in demand for Eid Weekend, it still the time to "choose the business" that you would like to get as:
- Establish the correct pricing, knowing that you will have a strong 96 hours booking window too,
- Elaborate and Publish some specific packages (Hotel Room + Breakfast + 1 Value), to sell it at a decent rate,
- For Beauty Salon and Spa, privilege for high turnover of your spaces rather than 90-120 minutes package, because every one will attend function in town; you may want to keep some spaces for your top 10 regular clients too.
- Inform your staff that no day offs will be accepted during that periods,

Eid weekend will be the period that can bring you healthy profits, if you know how to manage the demand and inventory.

Wishing you Ramadan Kareem!

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

Marketing Intelligence: Knowledge is Power!

Marketing intelligence and analytics, internet (or web) marketing analytics in particular, allow you to monitor campaign and their respective outcomes, enabling you to spend each Dirhams (AED) as effectively as possible.

The importance of marketing intelligence is obvious: if something costs more that it returns, it's not a good long term business strategy.






Question related to this Article:
How many of owners or general managers invest in offline / online media, without knowing the client profile of the readers / users?

Amongst the many clients I visit, I will resume their marketing intelligence as:
- First, managers don't want to know the answers marketing analytics provides,
- Second, marketing analysis does not offer sufficient insights for managers. It tends to confirm what they know,
- Third, they are not considering the impact marketing analytics can have on the companies, it can change the way manager think.

Beyond the obvious sales and lead generation, marketing analytics can offer profound insight into customer customer preferences and trends. Some SMB (Small and medium enterprises) invest up to 5% of their overall sales revenues, but do not get much out of it in terms of new clients generation.

Marketing Intelligence Exercise:
I invite you to do that exercise with your team, at your work place for nearly 1 hour. Turn off your cell phone, because what is needed is your brain.
- Organize a meeting with 3-4 of your staffs (Marketing / Sales, Operations...),
- Explain the purpose of the meeting is to review our marketing impact and decisions,
- Collect and Print all last 6 months advertising collaterals / actions that you have done,
- Extract from your online marketing sources (Google Analytics, Facebook Page Analytics...) some key reports,
- One set of reports needs to be print for each staff,
- Print a report of new clients generated through those actions,
- Ask your operational staffs about the clients, their behaviors, their loyalty, what do they care for,
- Evaluate the cost of your marketing spending, the results and ask yourself the questions:

WHO DID WE INTEND TO TARGET? 

AM I SATISFIED OR NOT?

WHAT DID I LEARN?

Last week, I met one of my clients, and we had a meeting with a new supplier for a mobile application for the Dubai market. Their application is to list businesses such as hotels, restaurants, beauty salon, health club, spa. Their target clients are tourists and Dubai residents.

With the new era of technology, it feels like converting the thousand Yellow Pages into a friendly savvy mobile application. Although this mobile application seemed to be user friendly, this company is only able to tell me that 50,000 downloads have been performed in Dubai. On the many questions, I raised about marketing intelligence, such as what is the gender, age, location, and trends of your application, none of my questions found valid answers.

How can Owners / General Managers / Marketing specialist invest in a technology that cannot provide valuable data insights? Are the market following what other competitors doing? This related cost of AED 3k, 5k, 10k, 15k, 30k, does it really bring you clients?

Analytics continue to be a big buzzword in the marketing space, so it is important that you involves your key personnel, because you need more than one person to bring the success in a marketing intelligence strategy.

If you would like to share your outputs, use the box below.

Romain @ RSVP Hospitality

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