revenue management webinar series session 3: who are my...
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Revenue Management Webinar Series
Session 3: Who Are My True Competitors?
This webinar series is brought to you by This webinar series is brought to you by HSMAI University, HSMAI University, HotelNewsNowHotelNewsNow , and STR, and , and STR, and
sponsored by sponsored by IDeaSIDeaS Revenue SolutionsRevenue Solutions
Overview of Format and TopicOverview of Format and Topic
Webinar Moderator
Fran Brasseux
Executive Vice President, HSMAI
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We are very grateful to our sponsor for this
Revenue Management Webinar Series:
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Panel Moderator:
Jeff Higley, VP,
Digital Media &
Communications
HotelNewsNow/
STR STR/STR Global
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TodayToday’’s Presenters: s Presenters: Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global
Panelists:
Jan D. Freitag
Vice President,
Global
DevelopmentSTR
David Bland
Senior Director
Hospitality & Leisure
Group, Alvarez &
Marsal Real Estate
Advisory Services, LLC
Trevor Stuart-Hill
President & Founder,
Revenue Matters
Orly Ripmaster
Senior ManagerSTR Analytics
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Klaus Kohlmayr
Senior DirectorOf Consulting
IDeaS
US Lodging Industry Overview
Jan D. Freitag
Vice President
STR
Agenda
Total US OverviewChain ScalesForecast
www.hotelnewsnow.com
Click on “Industry Presentations”
2011 – So far, so … blah
Total US - Key StatisticsYTD April 2011
% Change• Hotels 52k• Room Supply 578 mm 0.9%• Room Demand 326 mm 6.4%• Occupancy 56.5% 5.4%• A.D.R. $100 3.1%• RevPAR $56 8.7%• Room Revenue $32.5 bn 9.7%
Slight Annual RevPAR Changes Prevail
Strongest Demand Rebound Ever. But ADR Growth…?
-8.6%
-0.1%
- 4.5%
*Total US, ADR & Demand % Change, 12 MMA 1/89 – 4/11
1.6%
Gas Price vs. Room Demand: This Means What?
* US Room Demand vs. US Average Gas Price $ / Gallon (Source: www.eia.gov)
Mill
ions
Gas Price vs. Room Demand: Geek Speak
“We note relatively low correlation coefficients and predictive values (R2) across the time period tested.
In fact, the correlation coefficient between total U.S. lodging demand and WTI and Brent prices is 0.37 (R2 0.14) and 0.38 (R2 0.14), respectively. “
Joe Greff, J.P. Morgan, 3/10/11
Chain Scales
Luxury Leads Recovery. Supply Growth in Up / UpMid.
*US Chain Scales, Supply & Demand % Change, YTD 4/11
ADR Will Follow. But When?
*US Chain Scales, OCC & ADR % Change, YTD 4/11
Strong High End Performance
*US Chain Scales, OCC % , YTD 4/11
Luxury Leads The Way
*US Chain Scales, ADR $, YTD 4/11
Forecast
2010 Profits Were $10 Billion Off Peak
*Total US Room Revenue and Profit , in $ billions, 2007 - 2010
2011 Total US Outlook
LowGrowth Forecast
HighGrowth
Supply 1.0 0.7 0.4
Demand 2.1 2.5 3.0
Occupancy 1.1 1.8 2.6
ADR 3.7 4.2 4.8
RevPAR 4.8 6.1 7.4
2011 Chain Scale Outlook
Chain Scale
Occupancy(% chg)
ADR (% chg)
RevPAR(%chg)
Luxury 0.8 7.4 8.2
Upper Upscale 1.8 6.1 7.9
Upscale 2.2 5.4 7.6
Upper Midscale 2.4 3.9 6.3
Midscale 1.8 2.5 4.3
Economy 2.5 1.9 4.4
Independent 1.5 4.1 5.6
Total US 1.8 4.2 6.1
2012 Total US Outlook
LowGrowth
ForecastHigh
Growth
Supply 0.8 0.5 0.2
Demand 1.8 2.2 2.7
Occupancy 1.0 1.7 2.5
ADR 6.2 6.8 7.4
RevPAR 7.2 8.5 9.9
2012 Chain Scale Outlook
Chain Scale
Occupancy(% chg)
ADR (% chg)
RevPAR(%chg)
Luxury -0.8 11.5 10.7
Upper Upscale 2.2 8.4 10.6
Upscale 1.9 7.3 9.2
Upper Midscale 2.5 6.9 9.4
Midscale 1.2 5.9 7.1
Economy 2.0 4.9 6.9
Independent 1.6 6.5 8.1
Total US 1.7 6.8 8.5
www.hotelnewsnow.com
Click on “Industry Presentations”
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Trevor Stuart-Hill
President &
Founder, Revenue Matters
Why is this an important question?• We’re all stakeholders
– Investment in an Asset
(Owner)
– Benchmarking
Operational
Performance (GM)
– Price Positioning /
Tactics (RM)
– Guest Perception (S&M
and PR)
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Owner’s Perspective
– Upside potential of market (ROI)
– Market gap being filled (competitive advantage)
– Threats (i.e. new supply)
– Legal / Performance component (Mgt. Co.)
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Management Co. / GM Perspective
• Bonuses & Incentives
– KPI Targets
– Promote based on ROI thresholds
• Validation of S&M / RM decision making
• Momentum / Brand Power
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Revenue Management Perspective
• Futures traders (no – not the price of pork
bellies)
• Need to know if a response to a given
competitors action is warranted or not
• Conversely – need to know who is watching
you
• Game scorecard
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S&M / PR Perspective
• Customers’ perception is everything
• They vote with their feet (and wallets)
• Sales professionals need to know which other
properties are in the consideration set – and
why
• Communicating a relevant message in a way
that your audience can relate to it
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Utopia?
• Stakeholders perspectives are understood
• Goals and motivations are in alignment
• Competitors are plentiful and predictable
• Everyone’s business mix is similar
• BUT…. Would we REALLY want this???
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Orly Ripmaster
Senior Manager
STR Analytics
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STR Analytics Agenda
•STR Comp Set Selection Parameters
•STR Analytics Comp Set Selection Guidelines
•STR Analytics Comp Set Selection Tools
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STR COMPETITIVE SET PARAMETERSProperty/Brand/Company Guidelines
•Percent Check
•Company Check
•Property Minimum
•Company Minimum
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STR COMPETITIVE SET PARAMETERSCompetitive Set Changes
•Minimum of Two
•New Construction Hotels
•Non-Participating Hotel Removal
A CHANGE MAY NOT BE MADE IF DATA OF A
SINGLE PROPERTY IS ISOLATED IN ANY WAY.
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STR COMPETITIVE SET PARAMETERS
• Multiple Competitive Sets
ALL competitive set guidelines must
be met in order to create a property
competitive set or ad-hoc grouping.
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STR ANALYTICS COMPETITIVE
SET GUIDELINES
What is a “reasonable” SET :
What are some potential selection
traps:
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STR ANALYTICS COMPETITIVE SET
GUIDELINES
Multiple sets by competition:
•Regional / national
• Segmentation
• “Aspirational”
How can I find help in selecting the right set?
•New Tools for STR Analytics
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STR ANALYTICS COMPETITIVE SET TOOLS•Bandwidth & RPM Reports
•Competitive Set Advisory
•mComp Report
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STR ANALYTICS COMPETITIVE SET TOOLS•Bandwidth Reports
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STR ANALYTICS COMPETITIVE SET TOOLS•RPM Reports
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STR ANALYTICS COMPETITIVE SET TOOLS•Comp Set Consulting &
mComp Report
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STR ANALYTICS COMPETITIVE SET TOOLS
Contact
Orly Ripmaster
Senior Manager
(303) [email protected]
www.STRanalytics.com
David Bland
Senior Director
Hospitality & Leisure Group,
Alvarez & Marsal Real Estate
Advisory Services, LLC
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Alvarez & Marsal Hospitality & Leisure Group• Our Hospitality and Leisure practice provides advisory services over a broad scope of
tourism and leisure products such as Hotels, Resorts, Casinos, Marinas, Spas, Convention
Centers, F&B Facilities, Vacation Ownership Golf Courses, Sports Facilities and Cruises.
• Our scope of hospitality advisory services include:
– Market and feasibility analysis
– Strategic planning
– Transaction advisory
– Operator selection
– Management and franchise agreement negotiations
• We have served a wide range of clients in the hospitality arena including multinational
development companies, government and financial institutions, international lodging
companies, law firms, private equity funds and investment banks. Recently, our
professionals have assisted:
– Operations diagnostics
– Asset valuation services
– Asset Management
– Litigation
– Restructuring and Creditor Advisory
– Lehman
Brothers
– Citigroup
– Bank of America
– Scotiabank
– JP Morgan Chase
– Starwood Hotels
& Resorts
– Loews Hotels
– Starwood Vacation
Ownership
– RLJ Development
– Lowe Enterprises
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Establishment of your Competitive Set performs
two distinct roles:
1) Positive/Upside: Goals for your hotel to reach
2) Negative/Downside: Measure of minimum
performance in Management Agreements
Aspiration and Motivation
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Revenue Management Strategy Mastery
Who controls your hotel’s inventory and pricing?
– Does that person have direct knowledge of the
competitive set hotels?
– When was the last time that person personally
experienced all of the competitors?
– How does the Revenue Manager work with the DOS
and Group Sales?
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“Matter of Perspective”
• Whose perspective counts?
• Who determines your competitors?
– Operator – tool to improve or protect contract
– Owner - focus on upside or downside?
– Guest perception of value
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Klaus Kohlmayr
Senior Director of
Consulting
IDeaS
1. How to determine your hotel’s true and
most relevant competitors
2. How to correctly evaluate your hotel’s
positioning – considering price, value,
and competitiveness
3. From information to strategies!
RGI/RevPar Index
ARI/MPI
Social Media scoring
Rev/m2
Please the Owner
Please the Boss
Do Better
Beat the Competition
Step 1 – Understand your Competitors
You Competitors
Product/Place/Price/PromotionProduct/Place/Price/Promotion
Strengths/WeaknessStrengths/Weakness
Objectives & StrategiesObjectives & Strategies
Reaction PatternsReaction Patterns
Dr. Philip Kotler, Marketing Management
Step 2 – Evaluate the level of danger
You Competitors
Segment OverlapSegment Overlap
Power of InfluencePower of Influence
Dr. Philip Kotler, Marketing Management
Relative CompetitivenessSegment Overlap: HighSegment Overlap: High Power of Influence: LowPower of Influence: Low
My Hotel CompetitorLocal Corp
Segment Overlap: HighSegment Overlap: High Power of Influence: HighPower of Influence: High
Step 3 – Evaluate Product & Services• What are the most important services to my
customers?– Breakfast, Speedy Check-in, Bed, Internet access, Hotel access etc
• How does my Hotel compare with my competitors
Breakfast Check-in Access Total
Comp A -3 +3 0 -3
Comp B +2 0 -3 +3
Importance
to Client3 2 1
Step 4 – Research your Price
Positioning
Step 5 – Bringing it together
V-5 V+5
$$$
$
• # of Days above/below 100
• Day of Week patterns
• Driven by Occupancy or Average Rate?
Beware of Averages!
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X X X X X X
X
XXXXXX
X X X X X X
XXXXXX
X X X X X X
X = competitors
Vertical line = average price
XXXXXX
Scenario #1 Prices
Scenario #2 Prices
And don’t forget your “wider”
competitors…
Questions? Questions? Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global
Panelists:
Jan D. Freitag
Vice President,
Global
DevelopmentSTR
David Bland
Senior Director
Hospitality & Leisure
Group, Alvarez &
Marsal Real Estate
Advisory Services, LLC
Trevor Stuart-Hill
President & Founder,
Revenue Matters
Orly Ripmaster
Senior ManagerSTR Analytics
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Klaus Kohlmayr
Senior DirectorOf Consulting
IDeaS
Upcoming Webinars:The HSMAI University 10-part 2011 Revenue Management Series – Next:
Session 4 on July 26 - How Will You Measure Your Success?Special rates for registering for entire series
Portrait of American Travelers - June 2, 2011 - With Peter Yesawich, President & CEO
of the Ypartnership
The Impact of Social Media on Revenue Management – June 30, 2011 – With Bonnie
Buckhiester
To register, please go to www.hsmaiuniversity.org.
And don’t miss …HSMAI Revenue Optimization Conference, June 20, 2011, Austin, TX
The 2011 HSMAI Revenue Optimization Conference, prior to HITEC, is a unique one-day interactive program featuring thought leaders and subject-matter experts in various aspects of revenue management.
For more information and registration go to www.hsmai.org and click on HSMAI Revenue Optimization Conference.
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