HIT THE SUITE SPOT

Presented By :Mayank MaindolaRadha Shekhar

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CONTENTS• The Taj Group of Hotels- Brief Profile• How Taj Group integrated IS in its

operations.• Reason for introduction of Revenue

Optimzation• Revenue Optimzation• In the lap of Optimization• Slight Flaws in the RO System• Conclusion

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Taj Group of Hotels- Brief Profile

• Taj Hotels Resorts and Palaces is Tata Group's wholly owned subsidiary and includes 57 hotels within 40 locations across India. And 18 hotels internationally.

• The first flagship property of the Taj Group of Hotels was established by Jamshetji Nusserwanji Tata on 16th December, 1903 in Colaba, Mumbai.

• Currently Taj Group of Hotels also operates three private jets – Taj Air and two luxury yachts

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1902: Incorporation of Indian Hotels Company Ltd. (IHCL) by Jamshedji Tata

1903: The Taj Mahal Palace, Mumbai - First Hotel established

1970: Completion of Initial Public Offering

1974: First five star beach resort, Fort Aguada Beach Resort, Goa

1980: First international step. Taj Sheba Hotel at Yemen

1989: Taj Bengal in Kolkata. First chain to have presence in all five metros.

2000: Partnership with GVK Reddy group to form Taj GVK Hotels

2004: Opened Wellington Mews in Mumbai, first luxury serviced apartment and

launched Ginger, its value for money chain

2008: Taj Mahal Palace, Mumbai, was under terrorist seige on 26 November, 2008

2010: Taj Mahal Palace, Mumbai reopened completely

Important Milestones

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Use of IT by Taj Group

Till 2003-04 the company was already using:• WAN- TajNet• ERP (for purchase and finance functions)• Call Centres received 2300 calls on an average

per day• Centralised Reservation System and Property

Management System• Data Warehousing System

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Even after employing the best available technology, the company

was unable to maximize its revenue.

The problem faced by the company was:

According to conventional wisdom if a

hotel has nearly 100% of its rooms

occupied, the company should be able

to maximize its revenue.

However, this is not always true.

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I always called Revenue Optimization.

A roundtrip by airplane sometimes costs less than a one-way ticket at times. Saturday night stayovers cost less. The same flight can cost $900 or $90 (and those two guys might end up sitting on adjacent seats).

HAVE YOU EVER THOUGHT WHY?

The reason we see such bizarre behavior is because of a fascinating field of economics called Revenue Optimization

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What is Revenue Optimization?

Revenue optimization, as the name suggests, uses optimization techniques to enable CIOs to turn their IT prowess to do what every CFO wants them to do— make more money and have an impact on the bottom line.

Put in simpler words, Revenue Optimization is having an impact on the bottom line of a business.

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Suppose you are on a vacation with your family and you have paid Rs. 5000 for 24 hours. In the same hotel may be your neighbor has paid Rs. 7000 for the same room because he is on a business tour and the other neighbor has paid Rs. 3900 for the same room because he had booked the room several weeks before checking-in. This kind of price-differentiation happens due to the need for optimizing the revenue.

RO combines Operational Research, Statistics and CRM and categorizes customers into price bands, based on various services. Statistical analysis of past data and helps in forecasting demand and establishing appropriate price spectrums. Applied correctly RO helps hotels expand market size and increase revenues.

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What Taj did?

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WORKING OF THE RO SYSTEM

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In the lap of Optimization

• A comparison of occupancy between April to December in 2004-2005 and 2005-2006 reveals that Delhi, with 77 percent occupancy in both cases, could get an average room rate of Rs 7,065 in 2005-2006 as opposed to Rs 5,429 in the previous year.

• A look at Bangalore yields even more interesting figures-though the percentage of room occupancy actually fell by two percent, the average room rate shot up from Rs 7,905 to Rs 10,639.

• Room income in 2004-2005 was higher than the previous year by 34 percent and the average room rate (ARR) also increased by 24 percent over the previous year, contributing 75 percent of the total increase in room income. Clearly, the revenue optimization mechanism was working well and was enabling the Taj to work out increasingly sweeter rates.

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SLIGHT FLAWS IN RO SYSTEM

These systems however are very useful for industries like Airlines, Hotels etc. but there are certain flaws that come along. These are:

• Computers cannot predict a sudden inflow of customers due to a festival in that particular year.

• They do not take into account the problem of ‘No SHOW’ forecasting.

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Some industry practitioners also refer to RO as the art of selling the right room to the right customer at the right time and for the right price.

CONCLUSION

Like a coin has 2 sides, the RO System too has its positives and negatives. But it is important to note here that the advantages of having an RO system far outnumber its limitations.

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ANY CLARIFICATIONS?

THANK YOU!