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What is Revenue

Management?
The goal of this presentation is for
the learner to understand the
purpose of, and processes
involved with revenue
management.

Lesson Objectives
After completing this lesson the
learner will be able to:
Explain the role of the revenue
manager.
Define the 9 meeting basics.
Explain strategies to maximize
revenue.

What is Revenue
Management?
Simply stated, it is a technique used to
maximize revenues.
Other terms used are yield management.
It should take into consideration as many
factors as possible to determine the rate.
It also is useful as an evaluative tool to
determine standards for which actual results
can be compared.

Why do hotels need Revenue


Management?
To improve revenue beyond transient
rooms revenue
Improve communications among
revenue generating departments
Identify the most productive channels of
distribution (both room nights and rate)
Establish clear roles and responsibilities
among staf

The Role of Revenue


Manager
Focal point of the revenue
management function
Keep track of propertys competitive
position RevPar
Mange channel distribution process
Impartial manager guides revenue
generating process

Revenue Management Tools


Revenue Meeting
External Reports
Internal Reports (history, forecasts,
bookings, and budgets)
Competitive Surveys
Internet
GDS
Call arounds

Strategies and Tactics

The Revenue Meeting


Purpose
Identify revenue opportunities for the
property
Held at a frequency equal to the booking
pace of the hotel
Attendees
GM, Rev. Manager, DOS, Sales and Catering
managers, Res. Manager, Controller

The Meeting Basics


1.
2.
3.
4.
5.

Start with discussion of m-t-d occupancy,


ADR, RevPar against budget and forecast
Bring accurate 7- or 30 day forecast
Periodic review of rolling 12 month forecast
Invite any staf member who can block
revenue opportunities
Have history used to make of the forecasts
notes, PMS and CRS reports

The Meeting Basics


6. Discuss current sales leads
7. Discuss peaks and valleys of
business along with strategies to
improve outlook
8. Include booking pace report
9. Be sure everyone is prepared and
ready to participate

RevPar
Calculation
Total rooms
revenue/ total
rooms available
Or
ADR multiplies by
the Occupancy %

Rooms
Available
Occ. %

350

Total
Revenue
ADR

$87,000

RevPar

$248.57/
247.83

85

$291.95

External Reports
Star Reports
Provided by Smith Travel Research
Shows relative position of property
against competitive set
Shows RevPar penetration
Is historical data
Smith Travel Research

Internal Reports
History last 2 years
Forecasts 7 and 30 day
PMS
Booking Pace
Chain or Property Revenue
Management
Budget

Competive Surveys
Global Distribution Systems (GDS)
How are you positioned?
How are your competitors positioned?
What rates are available?
Starwood GDS information

Strategies to Maximize Revenue


What Channels to use
How will you position the property
Routinely review property
information in all channels (monthly)
Determine best mix of group and
transient
Determine mix of catering

Strategies (Continued)
Set a Hurdle Rate and communicate it to all
revenue producing departments
Discount management
Minimum length of stay
Sell-Thru
Length of stay rate sensitivity (tiers)
Closed to arrival
Determine total revenue potential of business