Wes Anderson
Regional Director
Revenue Management, North America
InterContinental Hotels
Caribbean Hotel & Tourism Association
Agenda
• The New Revenue Management
• Linkages to Marketing/Sales
• Questions
Revenue Management Fundamentals
• Price Optimization
• Optimize Channels of Distribution
• Optimal Business Mix & Yielding
• Product Class Opportunity
Revenue Management Methodology
• Data Consolidation and Analysis
• Strategy Development and Buy-in
• Tactical Application
• Measure Success
(via Data Consolidation and Analysis)
Revenue Management Fundamentals
Price Optimization
• Consumer Based Pricing Model
• Competitive Based Pricing Model
• Niche Pricing Model
• Margin Based Pricing Model
Consumer Based Pricing Model
• Pricing Elasticity of Demand
– When markets are elastic, lower rates
– When markets are inelastic, raise rates
Competitor Based Pricing Model
• Peg rates off of competitor’s rates
• Assumes you are not the market leader
• Risk of “Greater Fool” effect
– Use a rate shopping service to ensure no
anti-trust infringement
Niche Pricing Model
You’ve got to pay my rates to keep the company
I’m offering at my hotels…
-Isadore Sharp, Founder of Four Seasons Hotels
• Risk of occupancy depletion in Elastic Markets
• Requires clear marketing message or
positioning
Margin Based Pricing Model
• Fluctuates by Supply and Demand
• Assumes minimum acceptable profit level
• Works for mid market and luxury hotels
Optimizing Channels of Distribution
Its about Discovery and Persuasion
Optimizing Channels of Distribution
Demand is inherent in channels
Optimizing Channels of Distribution
• GDS
• Retail Internet (Expedia/Travelocity)
• Opaque (Priceline/Hotwire)
• Hotel Web Site
• Hotel Direct (Voice Reservation Services)
Optimizing Channels, GDS
• Discovery
– Marketing in the GDS
– Biasing shelf space placement
• Persuasion
– Content and Pricing
Optimizing Channels, Retail Internet
• Discovery
– Conversion Percentage
– Social Media Presence
– Parity Compliance / discount online forwarding
– Market Manager Involvement
– TravelAds
• Persuasion
– Content and Pricing
Optimizing Channels, Opaque
• Discovery
– Pricing
• Persuasion
– Pricing and Content
Optimizing Channels, Hotel Web Site
• Discovery
– Search Engine Optimization
• Organic vs. Pay Per Click
– Measuring Effectiveness
• Google Analytics
• Persuasion
– Content & Pricing
Optimizing Channels, Hotel Direct
• Discovery
–
–
–
–
Marketing
Public Relations
Sales Efforts
Affiliation with Associations
• Persuasion
– Well Trained Staff
– Staff Incentives
– Promotions
Optimizing Business Mix
• Yielding, the root of Revenue
Management
• Segmenting your business
• Business Mix / Channels of Distribution /
Lead Time
Product Class Optimization
• Product Class - rooms priced at different levels
• Goal against ADR capture of Price Differential
• Balanced Inventory vs. Fractured Inventory
Linkages Between
Revenue Management and Marketing
• Marketing/PR generates Demand
• Revenue Management manipulates
Demand
Linkages Between
Revenue Management and Marketing
• Social Media Responsibilities
– Incoming (Trip Advisor)
vs.
– Outgoing (Facebook)
Marketing owns Facebook/Twitter
Outgoing Social Media
• Marketing owns Facebook / Twitter, etc
• Revenue Management prices offers
Incoming Social Media
• PR or Departments owns review response
• Revenue Management owns increasing
review volume (Optimizing Channels)