EFT Amsterdam Special <br><br>Performance measurement has gained importance in order to quantify the value of RM and the

EFT Amsterdam Special Performance measurement has gained importance in order to quantify the value of RM and the overall financial success of the lodging industry...

Published: 03 Dec 2006

EFT Amsterdam Special

Performance measurement has gained importance in order to quantify the value of RM and the overall financial success of the lodging industry...

Performance measurement has gained importance in order to quantify the value of RM and the overall financial success of the lodging industry, according to Markus Lewe, regional vice president - revenue strategy, Marriott International.

Lewe says, “Key PM such as RevPar and marketshare premium can be benchmarked internally and externally.”

“Can measuring historical performance help you gauge improvement or does `a rising tide float all boats’?,” asks Lewe. “Measuring historical performance enables trend and gap analysis and can be used to evaluate past strategies. Bridging historical performance with future demand indicators will give you the competitive advantage.”

In an interview with EyeforTravel.com’s Ritesh Gupta, Lewe spoke about how Marriott approaches RM, challenges in RM and other issues. Excerpts:

In your opinion what’s the biggest challenge when it comes to RM?

Revenue Management is facing the challenge of not (yet) being universally understood. In many cases senior management does see RM as technical experts rather than business enablers.

The biggest challenge is the navigation through change and presenting complex pricing and inventory strategies in a format that can be easily understood by non RM experts – and consequently increasing their support for the discipline.

What factors do you think are critical, for an organisation like yours, in today’s environment to optimise revenue management?

Most important, covering the basics! If your basic inventory management and pricing evaluation tasks are not being performed as they should, you will be loosing money.

Secondly, develop a mid- and long-term strategy in synch with marketing and sales strategies – which serves as a critical roadmap to success.

Last but not least – having the right people in the right job.

Kindly share major initiatives taken by Marriott International in the recent past when it comes RM?

We at Marriott put people first. This includes a sophisticated hiring and retaining process, training RM associates but also a strong training focus for non-RM associates such a General Managers, Sales & Marketing and Finance Leaders. Additionally, enhancing & upgrading our industry leading proprietary systems in order to support RM strategies.

The needs of a hotel can change by season, month, week and even by weekday vs weekend, this has to be reflected in pricing to impact customer behaviour. What do you think is the key in handling this?

Forecasting demand patterns, understanding customer’s willingness to spend, combined with competitive intelligence are key for developing a successful pricing strategy.

Why has Performance Measurement now moved into the main arena and do the fundamentals of PM need to change?

Performance measurement has gained importance in order to quantify the value of RM and the overall financial success of the lodging industry. Key PM such as RevPar and marketshare premium can be benchmarked internally and externally.

Can measuring historical performance help you gauge improvement or does `a rising tide float all boats’?

Measuring historical performance enables trend and gap analysis and can be used to evaluate past strategies. Bridging historical performance with future demand indicators will give you the competitive advantage.

How sensitive is RM systems forecast quality about frequent price adoptions in a dynamic pricing environment? How can forecast quality be ensured?

Price adoptions (if not significant) represent only a portion of a hotel’s forecasted demand for a particular market segment. Detailed customer and market segmentation combined with in depth knowledge of demand patterns by segment will enable a higher forecast accuracy, especially in a dynamic market.

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