Smells like summer ;-) at Revmanager, we take the opportunity of this early December to wish everyone a Merry Christmas and a Happy New Year. With this end of the year so close and with Christmas knocking at the door, it is time to implement all the plans that were made in mid-September, at the next year’s budgeting season. This planning will condition all next year’s management activity as well as revenue optimization. We have already renegotiated contracts with the operators and we are ready for the new year. At least, this is how it is expected on a demanding activity like ours.
But is it really like this?
On many occasions hotel professionals, local accommodation spaces, travel agencies or other tourism businesses are so overwhelmed with day-to-day activity and solving the daily problems that are looming, that they completely forget about the new year that is coming around the Christmas corner. As we all know, this is an entire activity that takes place between at least three to six months in advance.
All of the activity planning proves to be vital for revenue creation and optimization.
In this way, we take the chance to suggest a task check list to go through before starting the new year. Before we begin we know in advance that the next seasons of great booking flows will be Carnival, Easter and then Summer. A good preparation of the first two seasons (Carnival and Easter) almost dictate a good start of the year, however, do not be neglect the months before the carnival.
Actions to be taken immediately (if not ready yet):
- Promotions to stimulate bookings after new year’s eve (promotional campaigns and special packages for low season).
- Distribution of packages and special offers for Carnival and Easter by traditional agencies, tour operators and OTAs (availability management for these seasons).
- Send new catalogues to the foreign agencies and carry out with them a charm operation for the whole year (this should have already been done, but we know that this is not always the case in the sales reality).
- Be present in nearest fairs in order to develop and capture new businesses (beginning of the year in BTL and FITUR). Plan participation in international fairs, check here all fairs with the participation of Turismo de Portugal, IP for 2019. | See here
Santa’s Check List for Revenue Managers, for the upcoming year...
This Santa’s Check List takes into account all steps of the revenue optimizing process, with regards to the virtuous cycle of THRM (Miguel Costa, 2017). This list tries to frame all points always taking into account the continuous revenue optimization. Here are presented several analytical models considered essential for a good execution of the management model of the revenue creation system. Make sure you already apply or adapt the template to your specific business model for increasing value creation throughout the year.
1. Diagnosis in the THRM system and evaluate the points to improve in the upcoming year
- Model of Porter's Five Forces
Here we must proceed with the planning of the different existing pressures in our business, including the entry of new competitors in the market and the anticipation of conflict management within the owners and operators (stakeholders).
Strategic Competitive Analysis
- Positioning strategic redefinition towards the competition (generic price strategies)
- Competitive SET definition
- Services matrix
- Tariff matrix
Reputation Analysis (Online Vs Offline)
- Reputational matrix and guests feedback analysis
In this analysis it is essential to note if there is a correct management of the future guests expectations and the service that is delivered, if not, this can lead to complaints. It is essential to check if there are any gaps (gaps of the quality management model SERVQUAL) between what is the perception of those responsible for the management and the guests perception.
Proposals for the future and Goals
- Value chain analysis
- Model of Porte’s 7 P's
- Canvas Model (Business Models)
It is through these models that we often notice a technological gap towards our direct competitors and we make the corrective proposals or acquisition of new tools or Software, leading to the Upgrade of IT Systems. When confirming new solutions, we should take into account the following systems: ERP, Cloud PMS, CMS, Web Booking Engines, CRS, GDS, Channel Managers (CM), Rate Shoppers, RMS and CRM. Apart from these there are other systems, however it is imperative to have, nowadays, a distribution system and distribution management fully two-way integrated (2 ways Interface - XML connections).
It is here that we must detect strategic direction failures suggesting the implementation of corrective actions leading to strategic changes that will be passed on to the whole team in the future. There is also the definition of the correct Marketing Mix and all its corrections compared to the previous year.
2. Demand and its stimulation
- Demand map, with dates and special events. Review the annual map of special dates and busiest dates (bank holidays, holidays and events)
- Map of strategic means planning, where are defined concrete actions for the special and busiest dates (together with marketing and sales departments - improving communication between these 3 departments).
- Ensure that all content in the operators , OTA's and GDS's has been properly reviewed (Photographs, Room Descriptions, Room Types, Packages, etc) or corrected if necessary.
- Ensure that all actions are properly synchronized with the marketing and sales departments, improve communication with each other.
- Analysis of patterns of demand behaviour based on historical data and identification of new patterns and opportunities.
3. Demand Forecasting
Whatever the mathematical method you use for carrying out the bookings forecast map, in a generalized way, we must always take into account the generic elements that are included in the following formula:
Forecast = Historical data +/- [(Bookings in the System +/- Expected Bookings)]
- Analysis of On The Books (OTB)
- Rate Shopper Reports
-Assure daily analysis of Managers Report and Daily Report
- Analysis of general news and announcements of events (clipping report)
- Take into account the annual map of the special dates (possibility of greater flow of reservations)
- Assure that forecasts for next year are properly calculated according to the mathematic method that suits your business type.
- Ensure data extraction from the database directly into a Self-Service Business Intelligence tool.
- Use the historical data for the forecast.
- Ensure forecast charts updating at least once a month or at least analysis of pickups 90 days in advance.
- All forecast maps should be made as detailed as possible, when we have the resources to do so (sales forecast by market segment, by channel and different rates).
Most commonly used forecasting methods (in order of simplicity of calculation / choose the one that best fits your business model):
1. Forecast for historical data
2. Forecast for historical data (with previous years average)
3. Forecast by advanced method
4. Forecast by combined method
5. Forecast by “Puly” method
4. Overbookings, no-shows and cancellations
- Calculation of the Cancellation rates for the different seasons of the year in our propriety
- Calculation of no-shows average rate throughout the year
- Calculation of the Optimum Overbooking (nº of rooms in overbooking)
- Identify and understand the reasons for rejections, cancellations and no-shows, in order to prepare the entire revenue strategy.
- Ensure that all staff members know the procedures to be followed, when there is overbooking, no-show or cancellations.
- Ensure one or more contracts with partner hotels for busy seasons.
5. Pricing and targeting management
- Alignment of pricing strategy with the general strategic guidelines
- Elaboration or confirmation of the segmentation (reports by segments)
- Review of price discrimination
- Calculation of demand elasticity
- Ensure the implementation of dynamic prices
- Confirm the Lowest Price Guaranteed (on your own website)
6. Groups management (displacement analysis)
- Preparation of the “displacement analysis” , strategic decisions to be included for comparison in the analysis (what services or sources of revenue to take into account when comparing the revenue generated by the individual tourists segment, when compared to the advantage of group bookings).
7. Inventory Management
The Revenue Manager must ensure the correct functioning of the following points, even if it is in a zealous or delegative way, this should prevent any difficulties that may occur in these essential actions.
- Increase or decrease of capacity (number of rooms)
- Management of the optimum occupancy rate, taking into account the deterioration of the provided service.
- Ability to respond to demand by closing or opening areas / floors to guests (control by fixed costs).
Tactics (daily management)
- Employee schedule management
- Arrival or departure of guests
- Service period
- Maintenance of housing units
- Rooms out of service or house use (unavailability)
- Process planning
- Services processes and guests engagement
Revenue management actions (directly related or dependent on RM)
- Ensure the preparation, completion and updating of the Pickup.
- Adjust the forecasts taking into account the competition, company goals, the projection of results and some subjective considerations (personal/market sensitivity).
- Determination and adjustment of forecasts margin of error (MAD and MAPE).
8. Distribution and Channel Management
- Knowing well the portfolio of markets distribution channels (advantages and disadvantages of each distribution channel)
- Revaluation and choice of the distribution channels or identification of new distribution channels (due to market changes), with the aid of a report with channel distribution costs and total.
- Strengthen the commercial relationship with distribution channels and have well-identified contacts or account managers.
- Determinations of booking conditions and rates per distribution channel
- Definition of the main markets we intend to achieve
- Identification of rate disparities (corrective measures to minimize disparities) - Rate Parity Report
- Confirmation of all the contractual conditions with each distributor (content adjustments – media and information)
- Allotments allocation (when existing or allotments elimination)
- Commissions and payment conditions (renegotiation)
- Technological aspect for the distribution (definition, adjustment and contracting of new platforms that help management of the defined strategy).
9 . Guest feedback and reputation management
The work of reputation management is a continuous work throughout the year and it is dependent on all employees, however there are five essential pillars in reputation management and that the Revenue Managers should be especially aware of.
Creation of original content
- Creation of original content about the hotel, using the words of the guests
- Special treatment for loyal customers.
- Personalization of all customers communications
- Service personalization (welcome guest on the room)
Emphasize organization values
- Hotel Facilities
- Details of the quality of service
- hotel details (story telling)
Assertive management of negative feedback (resolution)
- Use of means for direct complaint to the hotel (to avoid online), i.e. virtual chats or surveys on the hotel page.
- Encourage contact with hotel through own means (feedback survey, live chat, etc.)
Distribution and Rates
- Assertive, transparent and parity distribution policies in all channels.
- Consistency when the customer comes in direct contact with the front-office.
- Clear advantages on own website’s bookings.
For example: Use of Rate Match tools in real time, while ensuring the lowest price on the website.
10. Evaluation of THRM efforts
Nowadays the evaluation of all the implemented changes, in a generic way, is verified as an essential element of the whole system of revenue optimization. Thus, the implementation and definition of a Balanced Score Card (BSC) and a Web Metrics Score Card (WMSC) in hotels is an essential step in performance monitoring.
In its implementation we should always think "Where We Are, where we go, and where we want to be in the future."
The calculations of indicators such as the ones below are essential in modern hotels that focus on future performance (in addition to other complementary indicators). These are: Occupancy Rate, ADR, RevPAR, TrevPAR, RevPAG, RGI, EBITDA and GopPAR.
With the help of this check list, we managed in a simple, organized and clear way, to guide ourselves towards a conscious and efficient planning. The constant answer to the questions of who we are, where we are and where we want to go will be mirrored in our strategy, point to point, assuring us of our correct positioning and anticipating possible deviations. This is the path, which has gone through historical data, crossed the present and is projected into a new year, with new and undoubtedly better results.