Revenue Management Webinar Series Recruiting, Developing...

9/9/2014

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Revenue Management Webinar Series

Recruiting, Developing and Retaining the Revenue Management Talent You Need

September 10, 2014

This webinar series is brought to you by HSMAI University, HotelNewsNow, and STR

Overview of Format and Topic

Fran BrasseuxExecutive Vice President, HSMAI

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Thank you to our sponsor!

POLL QUESTION #1How many people are participating

in this webinar at your location today?

� 1� 2� 3� 4� 5� 6� 7� 8 or more

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Panel Moderator:

Patrick MayockEditor-in-Chief

HotelNewsNow

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Today’s Presenters: Panel Moderator: Patrick Mayock, Editor-in-Chief, HotelNewsNow

Panelists:

Glenn Hollister

Principal,Practice Leader, Travel & TransportationZS Associates

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Neal Fegan, CRMEExecutive Director of Revenue Management

FRHI Hotels & Resorts

Sloan F Dean III, CRMEVP of Revenue OptimizationAshford

Vail Brown

Vice President, Global

Business Development

& Marketing

STR

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Hotel Industry Update

Vail R. Brown, CHMS

Vice President, Global Business Development & Marketing

vail_str [email protected]

HSMAI Webinar

September 10, 2014

U.S. Records Set in 2013!

�Most Rooms Available

�Most Rooms Sold

�Highest Rooms Revenue

�Highest ADR ($110)

�Highest RevPAR ($70)

Full Year 2013

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May 2014 RevPAR Growth

10%Highest May of any on

record…ever!

June 2014 Occupancy

71.7%Highest June occupancy

this century!

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FINA Supply1

Supply Growth Creeps Up

-1

0

1

2

3

4

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

20 Year CAGR: 1.7%

Total U.S.: Supply % Change

12 Month Moving Average: 2005-July 2014

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Total U.S. Closed Hotels

Annual 2004 through July 2014

49.6

64.9

53.0

35.6

27.931.6

27.5 27.0

17.6 18.2

9.9

0

20

40

60

80

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jul-14

Number of Rooms Closed (in thousands)

Only 18,178 rooms in 2013

Total U.S.: Acquisition Price vs. Development Cost

Source: 2013 Hotel Development Index

$0

$100

$200

$300

$400

$500

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

In T

ho

usa

nd

Acquisition Cost Development Cost

$17K per Project Less to Develop for Upscale

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3.6

10.6

42.0

31.0

5.0

1.1

15.3

Luxury Upper

Upscale

Upscale Upper

Midscale

Midscale Economy Unaffiliated

67%

Total U.S. Pipeline, Rooms Under Construction

‘000s Rooms, by Scale, July 2014

Most In Upscale & Upper Midscale

2 Demand

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July 2014:

113 Million Most Rooms Sold In A Single

Month Ever!

Total U.S.: Demand Percent Change

Twelve Month Moving Average – 2007 to July 2014

-10

-5

0

5

10

2007 2008 2009 2010 2011 2012 2013 2014

Aug 09’

-7.1%

20 Year CAGR: 1.6%

Feb ’11’

7.7%

July 14’

3.4%

Demand Growth Steady

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Top U.S. Markets

Demand Growth %, July 2014 YTD

Markets With Demand Growth > 4%

The Chinese Guest Still to Come…

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Group Demand3

Group Transient Contract

Segmentation

July 2014

1.8 million more group rooms sold

than in the prior 12 month

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-2%

-1%

1%

2%

3%

4%

5%

2012 2013 2014

Group Demand Is (Finally!) Recovering

*2013

Easter

Comp

Group Demand % Change

12 Month Moving Average Jan. 2012 – July 2014

New Hotels w/ 50,000+ Sqft Meeting Space

12

9

5

2

0

2

1

2008 2009 2010 2011 2012 2013 YTD 2014

Total U.S. Count of New Hotels with 50k+ Sqft of meeting space

By year, 2008 – YTD 2014

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4 Revenue

$30

$50

$70

$90

$110

$130

2007 2009 2011 2013

Bil

lio

ns

Total U.S.: Rooms Revenue

12 Month Moving Average: January 2005 – July 2014

Room Revenue > $128bn

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Total U.S.: 2013 Revenue Variance from 2012

Source: 2014 STR Analytics HOST Almanac

Where are we headed?5

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Positive RevPAR Growth For The Foreseeable Future

-20

-15

-10

-5

0

5

10

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

-16.8%

-2.6%

-10.1%

9%8.6%

65 Months 47 Mo.112 Months

Total U.S., RevPAR % Change

12 Month Moving Average 1990 thru July 2014

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Total United States

Key Performance Indicator Outlook (% Change vs. Prior Year)

2014 - 2015

U.S. Outlook

2014

Forecast

2015

Forecast

Supply 1.0% 1.3%

Demand 3.6% 2.1%

Occupancy 2.6% 0.7%

ADR 4.2% 4.4%

RevPAR 6.9% 5.2%

Slides: www.HotelNewsNow.com

Questions: [email protected]

Thank you!

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Glenn Hollister


A competency model is the foundation for talent development

Hiring

Training

Performance Management

Coaching

Career Progression

Competency Model

Role Expectations

Compensation

Non-Cash Rewards

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Competencies are a continuum across which people develop

Beginner Skilled Advanced Expert

Dimension 1

Dimension n

Revenue AnalystRevenue Manager

Director of RMRegional Director of RM…

Levels provide a proficiency continuum

Each cell captures the specific behavior, required to demonstrate success in that competency for each respective level

Dimensions are specific to a company’s strategy and culture and are the most critical drivers of success in the role

The model ties expectations to role

Beginner Skilled Advanced Expert

• Speaking:Comfortable speaking to small groups about familiar topics.

• Speaking: Engages audience and asks questions to gauge understanding.

• Speaking: Speaks and responds to questions confidently andbelievably even on unfamiliar topics.

• Speaking: Synthesizes complex new information on the spot and tailors message appropriately.

• Listening: Understands the speaker’s point even if not clearly articulated.

• Listening: Quickly reads audience reaction and mood and adapts style.

• Listening: Structures conversations to elicit key information.

• Listening: Gains access to unspoken information even when others do not plan to share it.

• Persuasion : Able to convince others of their idea’s superioritywhen the idea is clearly superior

• Persuasion: Able to convince others of their idea’s superioritywhen the idea is unproven

• Persuasion: Able to gain alignment on an idea even from those for whom the idea will require effort to change

• Persuasion: Able to gain alignment on an idea even from those for whom the idea will create difficulties

Example of one competency dimension: Influencing Others

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The hiring process should evaluate a candidate’s level of competency

Competency-based Hiring ProcessCompetency Model

The competency model clearly communicates and reinforces capability expectations that serve as the basis for hiring

decisions

Account Planning

Targeting, Territory & Funnel Management

Account Planning


Account Planning


Account Planning


Assessments help prioritize individual needs

Importance Performance Trainability

Competency From management, ZS analysis

From competency assessment

From interviews, ZS experience

Demand Forecasting � � �

Targeting and Offer Design � � �

Channel Management � � �

Analysis � � �

Optimization � � �

Interpersonal Interaction � � �

Sales Process � � �

Marketing Cycle � � �

Legend

� - High � - Medium� - Low

Training Priorities

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Assessments also help prioritize organization-wide needs

Weed OutImprove

(or leave)

Improve(or leave)

Support & Promote

“Doing it Right”Competency Assessment

“Get

ting

it D

one”

Res

ults

Higher

Lower Higher

RM competencies are distinct from typical hospitality competencies

Typical Hospitality Competencies 1 …for RM

Ethics and integrity Same

Awareness of customer needs More important

Directing others Less important

Analysis and decision making More important

Interpersonal communication Similar, but different focus

Leading others Less important

Teamwork Less important

Leading change Less important

1. Adapted from Chung-Herrera, Enz, and Lankau, “Grooming Future Hospitality Leaders, A Competencies Model” in Hotel Management and Operations, edited by O’Fallon and Rutherford.

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Forecasting & Planning Influencing Others

Market Insight and Offer Design Sales Process

Channel Management Marketing Cycle

Analysis Commercial Knowledge

Optimization RM Software & Tools

Key competencies for property level RM

RM competencies are in demand and compensation should reflect that

https://www.hotelschool.cornell.edu/industry/employers/documents/2013BSPreliminary-September.pdf

Industry Segment Median Starting Salary

Banking/Financial Services $65,000

Real Estate/Consulting $57,000

Technology/Software Development $55,000

Hotel/Resort- Corporate $53,000

Restaurant/Managed Services $52,500

E-Commerce $52,500

Other Consulting $50,000

Retail/Fashion $50,000

Hotel/Resort/Club- Property $40,000

Grads with strong RM competencies are mostly here

So do not expect to pay this

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Please take the RM incentive practices survey!

If you did not get a survey, go to: tinyurl.com/n8npszd

Or contact me at [email protected]

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Developing Talent

• By the end of my session today, you will be able to…– Identify hidden talent in your organization– Build your own talent development program– See how a development program can build

your revenue management pipeline

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Identify Hidden Talent!

• Survey the field• Educate HR on RM• Have RM subject

matter expert interview candidates– Qualify APTITUDE,

not EXPERIENCE

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Aptitude question example

• Do you think all customers should pay the same price for a particular product?– Candidates should be able to talk about the relationship of

supply and demand. Response should talk about if demand exceeds supply then the price should go up and inversely should supply exceed demand then price will go down. Additionally, discussion of different customer groups, or segments that may exhibit different buying behavior relative to volume, lead time, loyalty, etc. which may influence what price they receive.

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Build a development program

1. Pick a third party program that fits your organization

2. Tailor your content to teach the practical application of concepts taught with partner using the TWISTER method

3. Advocate for graduates on proper first job placements

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Build a development program…

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By starting with someone else’s!

Course timeline example

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Week

1 2 3 4 5 6

Student to complete eCornell Course 1

Student to review pre-work for FRHI Exercises

CorRevMan to book 3 WebEx & 1 RDRM Conference Call

Student to confirm completion of eCornell Course 1

1.1 WebEx Meeting (Student to ensure pre-work is complete)

Homework assigned for Exercise 1

Student to complete homework

Prework assigned for Exercise 2

1.2 WebEx Meeting (Student to ensure pre-work is complete)



1.3 WebEx Meeting



Student to meet with RDRM to discuss homework

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Tailor content using TWISTER6-step process of training & retaining (TWISTER):

1. Tell them what you are going to train– By the end of this session you will be able to…

2. WIIFM - What’s in it for me (the participant)?3. Show them: review material, demonstrate where

possible4. Try what they just learned

– This should be done with an audience

5. Evaluate how participants performed– Start with positive critique, then offer constructive

criticism, another positive critique

– Manage peer evaluations

6. Remind them what they just learned

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Advocate

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FRHI’s successes

Current FRHI DRM's

RMAGraduatesOthers

•About 10% of our hotels are run by a RMA graduate•Graduates are consistently reviewed as top performers in company•Currently have another 15 students in process


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FIRE… Ready, Aim

• Profile & Competencies• Recruiting• Development• Structure & Cost(s)• Best Practices

Speed of Change…

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Revenue Optimization Evolution

Reservation Manager

Revenue Manager

Revenue & Profit Optimization

Revenue & ECommStrategy

Tenants of ROP 2.0Behavioral Economics Mind

• Case Studies• Mensa Test

Distribution & Technology Savvy• Broad E-Commerce Knowledge• Customer Centric Thinking• Mobile & Tech Savvy

Change & Communication

• Thrives in Constant Learning Environment

• Precise, Persuasive & Practical Written & Verbal Communication

• 20% of time on creative / projects

• Customer Acquisition Costs

• Brand Contribution Benchmarking

• Comp Set Audit 2.0

• REIT Peer Set Benchmarking

• Rate360

• Demand360 EE 2.0

• Mobile Marketing

• ROI Analysis of eCommerce

• POV on Yelp.com & Google+

• Sales Deployment & Cost Benchmarking

• ETC…

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ROP Goals MUST Include Profit

Cost of Customer AcquisitionTRAVELVENDOR

COST AS % REVENUE

AIRLINES 3-8%

CAR RENTAL 4-8%

HOTELS 15-25%

Even with Parity, All Channels are NOT Equal(!)

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Hotel Distribution

Today

Source: Kalibri Labs – Cindy Estis Green

Rate Profitability

Concept of “net RevPAR”

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Revenue Optimization Training …Expanded Breadth

1. October 2013 – Cornell 2 Days on RM & Distribution2. January 2014 – STR Analysis; RPI Goals; Demand360; Group

Pace vs. Group Shops vs. Closure; RM & eCommerce Deployment Models

3. February 2014 – Pricing Semantics; Segmentation & Pace Reports; Sell Out Efficiency

4. March 2014 – 1-on-1 training on Revenue Call Prep & Process5. April 2014 (Sam) – Dat1; Seg10; Overall MRDW Training6. May 2014 (Jay H.) – eCommerce 1017. June 2014 (Laura M.) – Sales Transformation Overview + MI

Sales Scorecards8. July 2014 – SOP for Rev Call prep (Steve); Business Transient

& RFPs explained; MI Global Pricing Strategy & Reference Guide + RO NEEDS ASSESSMENT

9. August 2014 – Demand360 Updates, GDS Advertising & Booking.com

10. …September 2014 – Revenue Optimization Assessment & Training Review

Industry Projections

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%

2015 Industry Projections: STR | PKF | PWC

STRPKFPWC

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…Dynamic, DOW BAR Pricing NOT Mere Yielding

Actions / Steps / Measure

1. Determine usage of Brand Retail Price Optimization Solutions (Price Optimization for Marriott, Starwood & IHG; GRO that is rolling out for Hilton). Ensure 100% Retail Price Optimization adoption. Recommend Competitor Weighting changes, if necessary.

2. Determine how often & when BAR pricing decisions are made. Also, how far from arrival? When competitors are changing rates? Etc.

– e.g.: Markets such as DC should optimize pricing multiple times Daily.

3. Increase BAR contribution across the portfolio to 20%+.

4. Work to identify Retail pricing spreads for Premium Room Types.

Total RM: F&B, Function Space & Other Revenues…Dynamic Catering, Competitor Benchmarking, F&B minimums, Revenue / Sq Ft Tracking, ProPAST

1. Increase Profit per Available Space/Time (ProPast) for Full Service1. Decrease Turn Times & Comps

2. Prevent Unsold Function Space

2. All hotels to review catering menus of Top 5 competitors. Redesign 2014 Catering Menus where necessary.

3. Review & Recommend on Catering Sales Deployment in Full Service & Urban Select Service hotels.

4. Review & analyze any & all F&B minimums.

5. Analyze Revenue / Sq Ft (utilization) for Meeting Spaces for all Full Service Hotels for past 3 years & for 2014 budget.

6. Recommend Meeting Room Rental & AV charge increases for 2014.

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…As the Role as Changed, so Too Does Comp1. Revenue Management should be renamed to Revenue Optimization

2. DOROs should be compensated as much as DOS, possibly more (E.g. Some Big Box NYC properties are paying Key DORM positions ~$250k base)

3. Sales & RO should report to Chief Revenue Officer. RM reporting to Sales is a Big Mistake.

4. Re-allocate Sales Resources to Fund Increases in RO Deployment & Resources

5. DORO to Hotel Ratio should be 1:1 with any & all properties above $20MM in Annual Revenue.

6. DORO to Hotel Ratio should be between 3:1 and 6:1 for Select Service (higher for Economy Segment but not more than 15:1 assuming $1MM annual Rev.)

� In Market Cluster works best for Full Service / Complicated Revenue. Above Property, yet still Cluster, works best for Select Service. (DO NOT FALL PREY TO OVER-EMPHASIS OF SPECIFIC BRAND EXPERIENCE.)

…What the Best Do1. Revenue Management is part of EC

2. Group & Business Transient pricing is set by Revenue team

3. Revenue team members have immersion programs in Sales, Distribution, Marketing &/or Ops

4. Revenue Management has GOP accountability. (PIP participation)

5. Training in Behavioral Economics, especially around Pricing

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FEEDBACK on 1.0 to 2.0

Questions?Panel Moderator: Patrick Mayock, Editor-in-Chief, HotelNewsNow

Panelists:

Glenn Hollister


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Vail Brown

Vice President, Global

Business Development

& Marketing

STR

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Next Revenue Management Webinar: #7: What Your Mother Never Told You About Becoming a Revenue Analytics VisionaryOctober 8, 2014 ♦ 2:00 - 3:30 pm Eastern

Next Government Insider Sales Webinar: #7: More Than Per Diem Is Changing in 2014September 25, 2014 ♦ 2:00 - 3:00 pm Eastern

Next Digital Marketing Webinar:#3: New Year, New Budget: How to Allocate for Digit al Marketing in 2015September 15, 2014

Evaluation

� Please take a moment now to click on the Evaluation link in the LINKS box and complete the evaluation.

� Be sure to click on “Submit” when you have completed the evaluation to send us your responses.

� Your comments & suggestions are very important to us, and they help us to provide you with quality programming.

Today’s webinar is copyright 2014 by the Hospitality Sales & Marketing Association International with All Rights Reserved.

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