"RM tends to work harder in down markets"
Published: 04 Dec 2008
Revenue Management Special
Revenue management executives are increasingly propagating that the RM discipline should concentrate on three main points: management skills, total hotel revenue management approach and GOP contribution projects.
According to Greg Albertini, Regional VP, Revenue Strategy, Asia Pacific, Marriott International, the decision on what areas RM should concentrate on is a property by property decision that is driven by profit potential.
"(To me) Business acumen skills and strong communication/persuasion skills are critical for revenue leaders," said Albertini, who is scheduled to speak during Revenue and Pricing conference, to be held as part of Travel Distribution Summit Asia 2009 (1-2 April 2009 in Singapore).
Citing an example, Albertini told EyeforTravel.com's Ritesh Gupta, "We would not deploy a full group or catering revenue management effort in a primarily transient hotel. If you think about your RM effort in terms of: Transient, Group, Catering, F&B, Spa and other; you can then evaluate a hotel's potential in each area."
"The decision to invest in deployment is a business case around the value RM activities in each area will bring to the hotel. It is crucial to define the activities and effort it will take to deliver results and get GM buy in on the investment; the most common mistake made is under deploying and then not seeing the results. In these cases, a GM will quickly start to question the investment in manpower."
On another note, in the face of an impending recession, it is critical to assiduously manage revenue in a challenging environment and avoid rate erosion over the long-term.
On how revenue managers can identify pockets of opportunity to maintain or improve revenues in the face of a recession, Albertini said it is counter intuitive to other disciplines, but RM tends to work harder in down markets.
"Many people think that because there is no excess demand to yield there is much less work to do in RM. In high demand markets we concentrate on yield, mix and pricing. In down markets, helping the team understand when demand will stop eroding and what the worse case scenario for revenue might be, are crucial for cost containment planning to ensure profit margins and flow through expectations are met."
"Pricing is the other main focus, as customers become more price sensitive in a down market we must watch our positioning for key segments in various channels carefully; this can be a lot of work," said Albertini.
"It is critical to be comfortable with the fact that leading a market rate decrease will only give a very short competitive advantage. The competition will quickly match the pricing and as a result we will end up accepting less profit on our stable room base. The profit loss of lowering rate on your stable base is seldom made up from additional capture, especially when your competition can quickly match your pricing. The only person who wins in a price war is the customer. Watching segment pace and re-forecasting frequently, as well as keeping a close eye on competition pricing can be a lot of work!"
Travel Distribution Summit Asia 2009
Greg Albertini, Regional VP, Revenue Strategy, Asia Pacific, Marriott International is scheduled to speak during Revenue and Pricing conference, to be held as part of Travel Distribution Summit Asia 2009 (1-2 April 2009 in Singapore).
For more information, click here: http://events.eyefortravel.com/tdsasia/revenue/agenda.asp
Or contact:
Reece Gladstone at reece@eyefortravel.com
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