Download - Total Revenue Management
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TOTAL REVENUE MANAGEMENT TOOLS
Quentin Abolo / Amandine Anaf -Grisard/ Jean - Noël Cannac/ Eugénie Colatrella / Anna Lalain / Romain Manus / Kim Mermoz/ Alexis Montcel / Louis Volot HR4RM
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OUR GOALS To develop a set of tools to assist these departments see the "big picture" as well as propose new KPI's and TRM appropriate bonus system. This is seen to be the foundation from which hotels will be able to start a process that will lead to a systematic optimisation of total revenue in the next 3-5 years.
Our considerations : •Creating shared values•Being innovative•Sustainability •Experience economy (4 E’s )
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CONTENT:BY CONSIDERING THE NEW CHALLENGE
OF REVENUE MANAGEMENT1) Technology influencing commercial transactions and strategy
2) On-going changing consumer behavior
3) On-going issues related to organizational variables (Knowledge management and metrics )
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INTRODUCTION TOTAL REVENUE MANAGEMENTo“The concept of total Revenue Management is simply about managing every revenue source at every guest touch point to it’s maximum profitability for the entire hotel or resort asset” (Bonnie Buckheister, 2013)oDynamic pricing will replace fixed pricing in outletsoEverything will be based on customer behavioroAll sell strategies will be based on accurate demand forecasting
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DIFFERENT TYPE OF REVENUE Define Core and Ancillary revenues & Partnerships :
Core revenue:
Room Revenue
?
Ancillaries
Revenue Catering Function
space Parking Water sport area
Restaurant & Bars
Golf Spa Welness center
Partnerships
Airport Bus
(transfer to the resort)
Excursions (outdoors) Boat
Retail shops in the city
Outdoor bar and
restaurantAirline
companies
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THE EXPERIENCE ECONOMY : THE 4E’S Pine and Gilmore (1998) Resort position : « posit that richest - experiences such as going to Disney World or gambling in a Las Vegas Casino - encompass aspects of all four realms, forming a “sweet spot”, around the area where the spectra meet. » May use this organizational scheme to evaluate the mix of activities in current offerings The analysis may provide information to reveal strengths and weaknesses in each of the realms
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TECHNOLOGY INFLUENCING COMMERCIAL TRANSACTIONS
AND STRATEGY Part 1
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TECHNOLOGY
Magnetic badgeLabor cost
managementData collection
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MAGNETIC BADGE AVAILABLE OPTIONSRoom keyEnergy consumption Purchases > points creditVisits Points handover
HOW DOES IT WORK?Booking online via direct channel: Room rate Optional extra points (at a lower rate than on-the-spot) Gold card for loyal customers (points credit at a lower price)
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TECHNOLOGY TO DRIVE COST MANAGEMENT
SET UP OF LABOR COST SOFTWARE Restaurants datas: Hotel occupancy (transient - goups) /Capture ratio / seats nb / average length of meal / weather
Staffing guide: Nb employees needed of X covers / Nb worked hour per days Standard Forecast According to the hotel datas & the staffing guide : theoritical plan Labour ForecastManual input from the manager
=> Check the labor costs in order to ensure high profit
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DATA TO COLLECT IN ORDER TO ANALYZE CUSTOMER’S BEHAVIOUR
THESE CARDS SHOULD PROVIDE DATA’S ABOUT ANCILLARY CONSUMPTIONS LIKE:
Which outlets/facilities are the most used by the guest
At which time of the day the guest uses these outlets.
How long these facilities are occupied by each customer
How many points the guest spent in each outlet
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BOOKING DATA’S TO LINK WITH THE CARD
Demographic
Preferences
Number of previous stays
Loyalty level (if there is any)
Booking channel
Room type
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ON-GOING CHANGING CONSUMER BEHAVIOR Part 2
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CUSTOMER BEHAVIOR
Process to use database Customer
behaviors and preferences
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PROCESS
Define an accurate Forecatd
Data Analysis
Choose the right data
Collect Data
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PROCESS STEP 1: COLLECT DATA
New technolog
ies, at every guest touch points
General software for al the resort• Instantane
ous• Reliable
Develop visuals tools
Easy to segment
and select
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PROCESS STEP 2: CHOOSE THE RIGHT DATA
Traditional data used for RM• Competitors
analysis• Historical data• Calendar • …
Data related to the consumers’ behavior inside the hotel• Golf data• Spa data• F&B data• ….
Number of customers who
use the golf/Number of total customers
RevPATM Spa Revenue per
Available Treatment Period (Spa Treatment
Revenue/ (N° of treatment
Periods per day x N° of
treatment Rooms))
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PROCESS STEP 3: DATA ANALYSIS
Revenue Managers will
be demand/profit managers
Differentiate every
segment of customers
(Transient vs. Group,…)
Identify, Core, Ancillary and Partnership revenue• For example, in
a resort, does the core revenue will really be the rooms?
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PROCESS STEP 4: DEFINE THE ACCURATE FORECAST
Link the data collecting system with the DPMS• Automatic
integration of data in the technological tool
• Interface available from each unit of the hotel, even from mobile phones
All sell strategies will be based on accurate demand forecasting• Monitoring the
results• Adjust the strategy
Identify ideal business mix• What is the actual
business mix?• How could we
adjust the business mix according to data analysis?
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SEGMENTATION : BEFORE Traditionally, hotels segment their guests based on the purpose of their stay:Business or corporateLeisureGovernmentContractTour and travel
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TYPE OF CUSTOMERS: GENERATIONAL
Millennials (1977-2000)
Generation X (1965-1976)
Baby Boomers (1946-1964)
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LIFESTYLE SEGMENTATION - VALS
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Innovation: lifestyle changer, information ready, future oriented
Thinkers: conservative, mature, reflective
Believers: economical, me too followers
Achievers: aspirational, hard working, moderate
Strivers: fun loving, up to date, overwhelmed
Experiencers: assertive, energetic, optimistic
Makers: hands-on, practical, self-reliant
Survivor: cautious, loyal, traditional
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Innovation: buy new things, activities to experiment them, are not influenced
Thinkers: take a lot of time before purchasing by looking deeper at the details, can be influenced
Believers: believe in the right & wrong (activities such as gambling), communities, team activities, verify
information, often woman
Achievers: me first I want to, team activities, money is what matters, high income, family
activities=married, rely on technology
Strivers: center, importance of fashion and money to them, like video games
Experiencers: exclusive and different activities, want everything, sociable, 50% live with their parents
Makers: make their own trips, activities, mechanical activities, may be perceive as anti-intellectual
Survivor: cautious, no risk activities, oldest, more time alone, routine activities, loyal to brands, less use
internet
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BEHAVIORWoman represents 60% of bookings and revenueMan are paying higher rate than womanLead times are greater in January & February 52 days, when in may and June it is 35 days20,7% are coming from mobile booking, 17,7% from tablets and 61,6% from desktop 59% of the bookings are made between 9am to 7pm and 22,6% from 8pm to 11pm
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ON-GOING ISSUES RELATED TO
ORGANIZATIONAL VARIABLES
Part 3
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ORGANISATIONAL STRUCTURE
Operations
Head of operational departments
Demand/profit managementRM
Sales & MarketingFinance
Front Office
Receptionnist
Concierge desk
F&B
Bar Restaurants C&E
Wellness & spa Activities
Golf Retail Stores
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TRAININGoCross-training inside the organization in different department in order to better understand how to optimize profit
oImplement the revenue management spirit
oBreak the boundaries between departments
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METRICSDefine common metrics to measure the impact of RM on profit & facilitate the communication between the different functions
RevenueCosts
Profits
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NEW METRICS TRevPAR = Total Revenue / Number of Rooms
According to the core revenue + the ancillary revenue
•F&B ROGR = Catering Revenue per Occupied Group Room RevPASH = Revenue Per Available Seat Hour
SPA SProPOR = Spa Profit Per Occupied Rooms Spa Utilization ratio (SUR) = Hours Treatment Sold / Hours Treatment Available Average Treatment profit = Profit / Number of Treatment ProPETH = Profit / Number Treatment Room Hours
Total Cost per Customer = Costs before guest arrival (total costs acquisition) + Costs during the guest stay (total fixed and variable costs) + costs after the guest stay (service recovery)
Non consumed points = (Number of points spent / number of points bought)*100
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BONUS
Total ProfitMarket ShareIncremental Revenue
Non-consumed ratio
Define common goals to stimulate the “working together”
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CONCLUSION Before room focus now « big picture » Ideal Consumer : he buys more than he
consumes – non refundable purchase Revenue Manager will become profit
strategist head of the organization New metrics based on profit A common goal No more sillos & individual
bonuses Total asset management