Revenue Management – Three keys to being successful in today’s ever-changing environment:
In today’s highly competitive and ever-changing economic environment, we need to be especially diligent and sensitive to the types of demand out there today. Taking a more holistic approach to how you approach your revenue strategy is important. If you do a good job with the following three activities, you will pave a road to future success and will increase asset value at your property.
1. Business intelligence approach:
How you approach business intelligence and what you do with this information is fundamental in sound decision making. Decide early on what your key performance indicators should be. Typically your key performance indicators address the needs of your property and the areas where it is currently underperforming. Decide how you will measure this effectively and then begin to track your success. The key performance indicators should be more than just market share indices; they should also center on profitability. Recently I worked with a property that was doing well on market share by commanding a significant premium in occupancy in relation to their competitors.
After sitting down with the team and analyzing the type of business they were accepting and the amount of profit that this business was generating, we decided to change strategy significantly and shift our mix. The end result was they lost occupancy share, gained significantly on rate share, maintained RevPAR share and overall profitability, and flow-thru went up significantly. What do our customers say about price versus value? Do you really take enough time to understand the different types of demand, when that business will come in, and if you are capturing the right amount of that business? Are you taking too much from one particular channel? Have you shifted your mindset to the new reality, or are you still programmed on a strategy from a year ago? If you are finding this a bit overwhelming, make sure you reach out and get some expert advice on how but to approach your business intelligence needs.
2. Forecast proficiency:
Operators have done a decent job of predicting how the next 90 days will turn out, but how much of that is a self-fulfilling prophecy? I would encourage you to ask the following question. Are your previous trends in line with your strategy, and are your previous trends dictating your future forecasts? Does your forecast take into account your most recent strategy? These are important points. In the example given above where we shifted our mix of business, we also needed to shift our way of thinking for the future and be somewhat bold in how we forecasted the future. It would have been easy to look back at old trends, but the reality is that we changed our strategy and our forecast needed to reflect this as well. If we had let our forecast reflect old strategies, it would have the potential of becoming self fulfilling. As you forecast the future, you need to ask these questions and then begin asking yourself: what is your true potential?
3. Team approach:
If your organization is still operating in a vacuum, you will only be marginally successful. Ensuring your team objectives are agreed upon by the revenue team and communicated on a regular basis is absolutely crucial. The team should know at any given time how effective the strategies are by looking at how they measure up against their key performing indicators. The team should also feel they can challenge one another from time to time. This sharpens the team and keeps everyone focused on their true potential.