How many rooms did your sell for nothing? Believe it or not a lot more than you think. Let Heritage Consulting explain how you actually sold some rooms for less than nothing and how with Heritage Consulting help you a lot more rooms on a consistence basses. If you'd like to get star reports like the one in this video. Heritage Consulting can show you how.
1. How many rooms did you sell for $0.00 Believe it or not a lot more than you think when your property has unsold rooms. You might as well have sold those rooms for $0. You still have to pay for all the cost to go along with an unsold room: mortgage, labor, utilities etc.
2. If you been in the hotel business for a while you may have to unlearn some things you were taught in the 80s and 90s. Particularly , revenue management. When your hotel occupancy hits a predetermined level, do you Jack Up the rate as you were taught? If so, your hotel is likely not going to be yielding the best results in todays online market. What Rate? 3. The reasoning is that often owners and GMs gauge their success and failure by ADR. Instead, they should be focusing on RevPAR. Hotels will often increase their rate once the occupancy hits between 65 and 70%. 4. So you start increasing the rate beyond what the market will bear. As a result, you stop selling rooms and start pushing rooms to your Comp Set. Your competition is usually the winner in this scenario, without doing a thing! The thinking usually goes something along this line; You have occupancy, now lets work on increasing the ADR 5. However, we dont get to decide that; the market and the guests do. Its been said time and time again, but it bears repeating ADR does not put money in the bank; RevPAR does. Just in case youre not familiar with RevPAR this is the metric that measures how much money you have actually earned per room (Sold 0r Unsold). THIS is the metric that hoteliers should be paying attention to! It would be nice as owners and managers if we could actually determine what our ADR should be. Focus Market RATE RevPAR 6. The smart hotel owner or GM should be looking at the demand based on a variety of other factors such as: Market compression from various segments What groups they may have had last year, returning. Has your booking window lengthened or shorted. Most importantly, what are your current market rates. Instead of raising the rates when occupancy hits 65 or 70%. 7. This occurs when the guest perceives that the hotel is offering the best value compared to the rest of the hotels in the area. Closely monitoring and adjusting your rates with effective accounting for the above mentioned principles will ensure that you continue to meet demand levels without pricing yourself out of the market. It will also allow you to consistently reach higher occupancy levels. When a hotel is out selling its Comp Set, it means theyve created the best perceived value in the market. 8. Dont price yourself out of the market. OTAs and the internet give guest complete transparency into pricing. Are your rates higher than your competitors? Are your rates higher the hotels with higher star ratings or with more amenities? When this happens you wont sell your remaining inventory no matter how many rooms youve already sold. You simply decided that 70% is enough. Dont let technology get in the way. Revenue management should be a strategy, not data analysis. Revenue management systems help the revenue manager handle the collection and analysis of data but often leaves little room for strategy. Hotel owners and managers should ask themselves the following questions; If I do ___, will it put more money in the bank. Will I sell more rooms if I do this? Am I selling my rooms at a price that makes sense to the potential new guests? Sound too good to be true? Its not, as long as you dont make these common mistakes. 9. If your like to get Star Reports that look like this, let Heritage Consulting show you how Notice that the RevPAR index is at 100.1% 10. Questions? More Information? Heritage Consulting email@example.com (504) 939-3390 309 N. Starrett Metairie, LA 70003 www.heritage-consulting-llc.com What rate will sell rooms