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Revenue Optimization Conference Deck (ROC 2014), describing new and better approaches towards determining the total value of potential group stays
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Your Group Sales & Forecasting Methodologies are BrokenMichael Hudson, Group-onomics
Group Hotel Revenue Model•Multi-million dollar assets that sign long-term contracts for short-term leasing of rooms & space !•Remove assets from available inventory to be sold (forgoing future sales & potential higher rates) !•Estimating amount of rooms/space to hold aside is critical for yielding assets and maximizing revenue !•Verifying group event performance IS problematic for the industry due to lack of transparency
Sharing Knowledge is Part of our DNA
Our Economy is based on Consumption
Whole Industries Were Created For This
Giving Others Use of Your Assets
Requires Diligence
Hotel Intelligence is a wide field
Think About Your Own Actions…
What is the First Thing You Do?
Buying a Car…
Think About Your Own Actions…
Think About Your Own Actions…
What is the First Thing You Do?
Purchasing a House…
Think About Your Own Actions…
Think About Your Own Actions…
What is the First Thing You Do?
Buying an App…
Think About Your Own Actions…
If you agonize over ratings for a $0.99 app, why wouldn’t you do this for a piece of business for
your hotel that can make or break your yearly Sales goals/forecasts?
Meetings & Conventions are the Most Complex Business for Hotels to Predict & Manage
Locations Brands ADR Variations
0%
14%
28%
42%
56%
70%
2008 2009 2010 2011 2012 2013 2014 2015
32% 35%45% 48% 52% 54%37%
48%56% 59% 62% 64%
Leads Actualized Rooms Leads ProjectedActualized Projected
Sales Channel Costs
Rooms
F&B
Space Rental
Convention Services
Outlet Spend
Revenue Potential Industries & Booking Windows
Why Manage this Complex Business
with History Collection that is State of the Art…
for 1988
The History Process is BROKEN
• Data provided by Meeting Planners are selectively positive
• Data shared covers room nights not full revenue picture
• When all else fails…Blind Cut
What if You Knew, with Certainty, Which Groups Meet Their Agreed Rooms
0% - 59% 60% - 90% 91% - 100% 101% - 109% 110% - 149% 150% & Up
AttritionOverbook
Sweet Spot (+/- 10% of Agreed)
Nearly 75% of Groups do not
meet Contractual Rooms obligations
75%
13% - 18%Average Attrition Range
Challenges for Hotels• 1 of 40 Hotels Getting the Same Lead • RFP Turnaround is measured in hours to be competitive
• Negotiating begins prior to clear picture of Groups’ value
• Contract performance trend data is limited or inaccessible
• Internal Hotel data covers only single brand
Vox Populi: Sir Francis Galton
Internal Steps Can Help
• Persistent & Electronic format of history data
• Champion an IT initiative that creates a data warehouse
• Embrace user-friendly graphical interface software packages like Tableau or Business Objects
• Lead/History Coordinator as a position within Sales/Revenue Management
But an Industry Approach is Best• Share more than just Room Night Performance • Transmittal via electronic distribution • Industry Standard Post-Con History Rating Form • Configurable for different business units:
• Sales • Revenue Management • Group Housing
To Make Better Decisions…• Agreed to Pick-up Rooms Detail • Events by Year and Market • Complete performance metrics, including category
spend, ADR & Total RevPOR • Arrival Pacing & Daily Pickup by Group • Detailed Space Usage by Type • Concessions and Commissions • Peak & Shoulder Night Performance
…Start with Better Data• Booking window • Peak Nights • Length of Stay • ADR paid • Space Usage
• Group or Event Location • Arrival Day • Events by Market & State • Industry Vertical & Market Segment
The POWER of 1%Hotel Rooms 500 total number of rooms at your hotel(s)
Percentage of Group Occupancy
55% Of total annual occupancy, what percentage is GroupPoten9al Sellout Days % 45% Annually, what percentage of the ;me is your hotel(s) at 90% or greater occupancy
Group ADR $220.00 Group Average Daily Rate or Target Rate
F&B per Group Room Night $100.00 Per Group Room night, average F&B/Catering Spend; typically charges hit the master bill
Group Hotel Counts by Size
Small Movements = Incremental $$$
1%
$0$200,000$400,000$600,000$800,000
0 1,200 2,400
452
1%
$0$200,000$400,000$600,000$800,000
Incremental Revenue$144,540
Hotel Rooms 500Percentage of Group Occupancy 55%
Poten9al Sellout Days % 45%Group ADR $220.00
F&B per Group Room Night $100.00
Simple Answer to a Complex Problem