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

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 )

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 )

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

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

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

TECHNOLOGY INFLUENCING COMMERCIAL TRANSACTIONS

AND STRATEGY Part 1

TECHNOLOGY

Magnetic badgeLabor cost

managementData collection

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)

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

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

BOOKING DATA’S TO LINK WITH THE CARD

Demographic

Preferences

Number of previous stays

Loyalty level (if there is any)

Booking channel

Room type

ON-GOING CHANGING CONSUMER BEHAVIOR Part 2

CUSTOMER BEHAVIOR

Process to use database Customer

behaviors and preferences

PROCESS

Define an accurate Forecatd

Data Analysis

Choose the right data

Collect Data

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

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))

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?

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?

SEGMENTATION : BEFORE Traditionally, hotels segment their guests based on the purpose of their stay:Business or corporateLeisureGovernmentContractTour and travel

TYPE OF CUSTOMERS: GENERATIONAL

Millennials (1977-2000)

Generation X (1965-1976)

Baby Boomers (1946-1964)

LIFESTYLE SEGMENTATION - VALS

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

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

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

ON-GOING ISSUES RELATED TO

ORGANIZATIONAL VARIABLES

Part 3

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

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

METRICSDefine common metrics to measure the impact of RM on profit & facilitate the communication between the different functions

RevenueCosts

Profits

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

BONUS

Total ProfitMarket ShareIncremental Revenue

Non-consumed ratio

Define common goals to stimulate the “working together”

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