TDS Europe 2006 special: By EyeforTravel Correspondent<br><br>RM now plays a significant in the commercial organisations
Published: 23 Jul 2006
TDS Europe 2006 special: By EyeforTravel Correspondent
RM now plays a significant in the commercial organisations of hotel chains, even in the smaller chains, says Elisabeth Stevens, city revenue manager, NH Hoteles.
“Due to transparency, pricing has become one: one sell rate for all. Controlling the distribution costs nowadays is more important, hotels are getting more focused to bottom line results: profits,” she says. “RM has become much more professional. Most hotels in Europe have moved away from short term tactics towards more strategically thinking. However, there are still many differences in development per country, per region even.”
In an interview with EyeforTravel.com’s Ritesh Gupta, she spoke about changes in RM, dynamic pricing and much more. Excerpts:
What kind of changes have you witnessed from revenue management perspective in Europe? Accordingly, how has your organisation responded to such developments?
RM has become much more professional. Most hotels in Europe have moved away from short term tactics towards more strategically thinking. However, there are still many differences in development per country, per region even.
RM now plays a significant in the commercial organisations of hotel chains, even in the smaller chains. Due to transparency, pricing has become one: one sell rate for all. Controlling the distribution costs nowadays is more important, hotels are getting more focused to bottom line results: profits.
Last year you told me - The dynamic approach of a BAR (Best Available Rate), whether the BAR is positioned correctly in order to convert the demand is the name of the game these days. Have you witnessed any change in this?
The BAR principle is now not only applied for individual bookings, but also for groups. Determining your price points is still key to success, but once this is done controlling the distribution costs is the next step.
What factors do you think are critical, for an organisation like yours, in today’s environment to optimise revenue management?
· Have a flexible & dynamic pricing philosophy for all segments
· Dynamic central reservation systems that connects to any current and future distribution platform
· Training of staff to fully understand the impact of yield controls
· Integration of RM into Sales & Marketing strategies
· Define areas of responsibility within your organization (commercial & operational).
The explosion of electronic distribution channels has moved travel pricing practices more towards the approach of a commodity than a differentiated product. Do you agree with this?
Yes and no, some elements of travel in have become a commodity, such as airline fares. However, there is still a lot of emotion involved when choosing a hotel, location, brand and décor are influencing the decision, next to price. It very much depends on the market segment.
RM implementation requires a systematic approach of your markets will feel that variable and dynamic pricing are irrational and predatory. What’s your take on this?
It is just a matter of time: consumers now also understand the dynamics of prices with plane fares, even energy prices are dynamic! It will only take a while and everyone understands this approach.
Markets must accept variable and dynamic pricing for RM to truly flourish, Steve Pinchuk, corporate vice president - revenue management, Harrah’s Entertainment told me earlier this year. What’s your viewpoint on this?
Other industries have also adapted dynamic pricing. This does not mean that it is easy to implement dynamic pricing, systems have to be able to support this and traditional markets have to do major investments to make this change (e.g. traditional offline leisure sellers).
What are your future predictions for Europe as far as RM is concerned?
It will get more professional. More education in hospitality studies. Hoteliers have taken back control over rates & inventory and are taking back control over distribution costs.
What’s on your agenda?
· Optimise use of reservation systems & distribution platforms.
· Implement Revenue Management software.
· Further education of Revenue Management in all layers of the organisation.
· Focus on profit rather than revenues.
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