Revenue Management
David Chitlik
  • Revenue Management
  • Can Any Hotel Sale Really be Used as a 'Comparable'?
  • A hotel is not the same as a house or a warehouse or an apartment or office building, and assessors often don’t understand why. The hospitality sector is frequently the most challenging part of a jurisdiction’s property tax base. The only way to derive a hotel’s real property value from a purchase price is for an assessor to spend time and energy understanding the adjustments needed to accurately determine what part of that purchase price relates to real property and whether or not it can be used as a sales comparable for other hotels in that jurisdiction. Read on...

Natasa Christodoulidou
  • Revenue Management
  • Pros and Cons of RevPAR vs GOPPAR
  • Revenue Management, also known as yield management, may be defined as the process of analyzing, anticipating, and impacting consumer behavior to maximize the profits from a fixed perishable resource, primarily hotel guest rooms and airline passenger seats (Christodoulidou, Berezina, Cobanoglu, 2012). Revenue management, including overbooking and dynamic pricing, has been an enormously important innovation in the service industry (Netessine & Shumsky, 2002). For example, a number of airlines overbook their reservations for a particular flight by 14% since on average they expect a 10% to 20% no shows on flights. The Marriott hotel chain credits its revenue management system for generating additional revenue of about $100 million per fiscal year. Read on...

Kristie Dickinson
  • Revenue Management
  • Top 5 Issues Impacting Revenue Management This Budget Season
  • Revenue management continues to be one of the most important aspects of profitably operating a hotel, though it also remains one of the most difficult to grasp fully. Last year, I wrote an article on the Top 5 Questions Hotel Owners Should Be Asking About Revenue Management, which focused on conversations that owners should be having with their operators about setting goals, analyzing data and how best to measure results, all good primer leading up to budget season. To further the discussion, I will highlight some specific issues below that bear relevance in today’s market Read on...

Steve  Van
  • Revenue Management
  • Paralysis From Over-Analysis
  • We have all heard the old cliché that “less is more”, and, while there is a grain of truth in the notion that simplicity and clarity are sometimes preferable to complexity, the reality is that, regardless of the circumstances, more information is almost always a better bet. Today we are seeing the tension between these two ideas play out in the hotel industry, where revenue management has exploded with new approaches in recent years–almost all of it facilitated by an avalanche of previously ignored or unavailable data. Consider just how sophisticated revenue management has become in the hotel industry. Read on...

EJ Schanfarber
  • Revenue Management
  • The Science and Art of Revenue Management Continue to Evolve
  • The revenue manager of an individual hotel or hospitality entity has become the “quarterback” of modern hospitality strategy and, in many ways, operations. He or she reviews past game data, surveys the competitive environment, consults with coaching staff (ownership and brand standards) and listens to teammates (especially the general manager and director of sales) before hitting the field on any given day and making a complex play call. As we know, with revenue management, a lot of things are in motion at once before we can determine and allocate “which rooms, when, at what rates.” Read on...

Ravneet Bhandari
  • Revenue Management
  • Big Data Demand Signals
  • Big data, more than a buzzword, has by now become a conundrum that we, consumers and providers of information, try to crack and make sense of it. Essentially, we know that data is becoming larger with wider access to complex algorithms and connections. The onion metaphor – the peeling back of many layers - can be used to reflect the multifaceted aspects of machine learning technology. These swaths of data or rather layered strings of data sets turn these complex entities into a more accurate view of customer demand for the hotelier. Read on...

Stefan Wolf
  • Revenue Management
  • From Revpar to Trevpar - A Guideline For Integrating Ancillaries Into a Revenue Optimization Strategy
  • Considering ancillary revenue streams can make up to 60% of hotel revenues of why would not any operator embark on the journey of total hotel revenue management? Apart from challenges related to the creation of a functioning revenue management culture the inclusion of F&B, spa and event revenue streams into that culture brings its own set of challenges. This article will explore these challenges and offer a guideline to successfully integrate additional revenue streams into a comprehensive revenue optimization strategy. Revenue per available room or RevPAR is a measurement of the success of a balanced occupancy versus average daily rate strategy. Read on...

Mario Candeias
  • Revenue Management
  • It Takes Two to Tango: Sales Management and Revenue Management
  • Revenue Management (RM) has taken a lead role in the generation of an optimized top line. As it is technologically based and technology has taken over the world, RM benefited from those tailwinds in its rise to supremacy. Such, that most literature, research and general writings have been almost exclusively focusing on it. That is not a problem per se. But RM is merely a fraction of the top line. Sales is the “big picture” and RM is a function of it, not the other way around. Sales must recover its leading role, as without it, RM is nothing but a one-legged body. Read on...

Mark Davis
  • Revenue Management
  • Revenue-Leaks, or the Holes in the Bucket
  • The true art of Revenue Maximization (RevMax) at the elementary foundation is segment mixology including all points of revenue generation. I label this the perfect RevMax Cocktail with the ingredients engineered for total consumption of market share by segment from top rate to the lowest, while also considering each element of contribution to NOI margin. In terms of maximum RevPAR, it is simply maximum achievable occupancy at the highest deliverable ADR. However, before the hotel can celebrate success the team must also have a discipline to avoid the typical erosion of RevMax thru Rev-Leak! Every hotel must have an effective team balance to deliver the sweet spot: the most profitable revenue possible per available room. Read on...

Bonnie Buckhiester
  • Revenue Management
  • Revenue Management: There are Two Sides to Every Story
  • The saying goes that there are always two sides to every story. In the hotel business this couldn’t be truer when examining the relationship between operator and owner, or in many cases between operator and asset manager. Both want to optimize performance, but often this requires a careful balancing act between guest satisfaction and profitability. If a hotel is exceeding expectations – i.e. beating budget, surpassing last year, stealing market share – one might ask “does that mean the revenue management effort is optimal”? If a hotel is falling short of expectations, does that mean that somehow the revenue management effort is lacking? Read on...

David Chitlik
  • Revenue Management
  • In-House Tax Help is Part of a Hospitality Company's Evolution
  • Your hospitality business is small, with a single hotel or locations in only a few tax jurisdictions. Your accountant is taking care of compliance quite well, with the help of a local, seasonal tax specialist. But as you grow, expanding to another state, another region, it's time to seek tax expertise. Hiring an in-house state and local tax professional is often part of the evolution of a hospitality business. Its decision criterion is generally the same as that of any other position, arrived at through a cost-benefit analysis, and there are any number of metrics that can be used. Read on...

S. Lakshmi Narasimhan
  • Revenue Management
  • Are You Pricing for Profits?
  • A consistent misconception among hoteliers is that pricing for profits means operating at the highest price level within your competitive set. This is as far from the truth as anything. Pricing for profits is an approach which takes into account how well your pricing strategy deals with one of the most common phenomenon in hotel or any form of business - price resistance. Price resistance is a price point where customers feel the need to look elsewhere. A superior indication of price leadership and pricing for profits is to see where you stand in terms of REVPAR against the Market Average. This is principally because if you are well above the market average REVPAR, you are exhibiting price leadership more than merely an average daily rate in the higher levels. Read on...

Nitin Shah
  • Revenue Management
  • How World Economic Issues Are Affecting the American Hotel Industry
  • The good news is that globalization, cable news, the internet, and social media come together to give us instant and constant worldwide connectivity. However, the bad news is that these same technologies make all of us interdependent like never before on economic, political, and social events around the world. For hotel owners, the result is an industry that is more competitive, challenging, complex, and volatile -- and less predictable -- than ever. To demonstrate this, let’s look at how current global economic developments are having an impact on four aspects of the lodging business in America. Read on...

Sheenal Patel
  • Revenue Management
  • Thinking Differently About Data, Technology and Revenue
  • The hotel business can be mired in the way things have always been done. Hotel managers input data into spreadsheets without analysis, information from different business areas isn’t centralized, and hotel owners only address problems once they become chronic. Decisions are made without rigorous data to back them up, and a stagnant mentality can prevail. It doesn’t have to be that way—and in our company it isn’t. When we founded NVN Hotels 10 years ago, our intent was to challenge the status quo. By coupling a data-driven approach with guiding principles that empower employees to have ownership and enact change, we’ve created a culture that expects and rewards excellence, which ultimately increases revenues and propels growth. Read on...

Breffni Noone
  • Revenue Management
  • Developing the Revenue Management Talent Pipeline: An Industry and Academia Partnership
  • It is no secret that revenue management is facing a talent shortage. Current revenue management practice requires a focus on managing the profitability of all of a hotel’s revenue streams, and hotel companies are looking for emerging revenue managers who have the skill set required to meet that challenge. Amidst growing concern that hotel schools do not make the cut in terms of graduating students who are prepared for the demands of this new era in revenue management, I suggest that a strategic industry-academia approach is needed to develop a viable, and strong, revenue management talent pipeline. Read on...

APRIL: Guest Service: The Personalized Experience

Scott Hale

Home sweet home. Your dog recognizes the sound of your car pulling in the drive and waits anxiously for you at the front door. Your thermostat knows the temperature that you expect the kitchen to be as you prepare dinner. Your stereo knows what playlist works best with tonight’s recipe. Your television has your preferred programming all cued up when you’re done with your meal. The list goes on. Home sweet home. What if you could make your guests’ next experience at your hotel just like home – but better? You can. Read on...

Tom O'Rourke

Mobile devices are not only important when planning trips, they are indispensable to guests when they are on the actual trip. According to the Expedia and Egencia Mobile Index published last year, travelers rank their smartphones as their top priority when on the go. Mobile devices are so important that survey respondents ranked them higher than a toothbrush or a driver’s license. The mobile experience extends beyond the point of booking the room—it’s now an integral part of the journey. Read on...

Adele Gutman

Before the first shovel was in the ground, we knew Aria Hotel Budapest would be an extraordinary hotel. For the Library Hotel Collection and our founder, Henry Kallan, creating a hotel that is beyond ordinary is everything. We think about each detail of the design and experience to create wow factors for our guests. These elements generate rave reviews, and rave reviews are the cornerstone of our marketing program. This is how we became the #1 Hotel in the World in the TripAdvisor Travelers’ Choice Awards. Read on...

Megan Wenzl

A personalized guest experience is important in today’s hospitality industry. Guests can voice their opinion about a hotel in seconds because of the Internet, and their feedback is contained in sources like social media sites and online reviews. Potential guests read this information when they are looking for where to stay on their next summer vacation. Guests will post online reviews about their experiences. According to research by ReviewTrackers, 45 percent of hotel guests are likely to leave to a review after a negative experience, while 37.6 percent of hotel guests are likely to leave a review after a positive experience Read on...

Coming Up In The May Online Hotel Business Review




Feature Focus
Eco-Friendly Practices: The Value of Sustainability
The hotel industry continues to make remarkable progress in implementing sustainability policies and procedures in their properties throughout the world. As a result, they continue to reap the benefits of increased profitability, enhanced guest experiences, and improved community relations. In addition, as industry standards are codified and adopted worldwide, hotels can now compare how their operations measure up against their competitors in terms of sustainable practices and accomplishments. This capacity to publicly compare and contrast is spurring competition and driving innovation as hotels do not wish to be left behind in this area. Water management and conservation is still a primary issue as population growth, urbanization, pollution and wasteful consumption patterns place increasing demands on freshwater supply. Water recycling; installing low-flow fixtures; using digital sensors to control water usage; and even harvesting rainwater are just a few things that some hotels are doing to preserve this precious resource. Waste management is another major concern. Through policies of reduce, reuse and recycle, some hotels are implementing “zero-waste” programs with the goal of substantially reducing their landfill waste which produces carbon dioxide and methane gases. Other hotels have established comprehensive training programs that reinforce the value of sustainability. There is employee engagement through posters and quizzes, and even contests are held to increase innovation, sensitivity and environmental awareness. Some hotels are also monitoring a guest’s energy usage and rewarding those who consumed less energy with gifts and incentives. The May issue of the Hotel Business Review will document how some hotels are integrating eco-friendly practices into their operations and how they and the environment are benefiting from them.