Hotel revenue management: how to achieve a sales success
A series of educational seminars and workshops for travel companies and hotel representatives which took place in Novotel Moscow City on June 3-5th was organized by the Committee on Tourism and Hotel Business of Moscow and gathered representatives of many accommodation facilities and travel agencies of the city. Presentation topics were various: from investment into tourist industry to restaurant catering in hotels.
One of hot topics of the three days` educational program included sales, room rates, booking technologies and ways to increase hotel profitability; it was raised by Andrey Mikhalets, commercial director of Moscow hotel «Astrus». This hotel that once bore the name of «The Central House of Tourists» successfully passed attestation procedure of the Russian Association of Business Travel and was certified as a business hotel in March 2013.
Mr Mikhalets divided a standard financial scheme of hotel revenue management into accommodation revenue management and other services revenue management and specified that in the first case the main instruments included flexible pricing and rates, establishment of partner relations, service packages, promotional tariffs, loyalty programs, coupons etc.
«If we put aside hotel business and regard more developed markets, for example, car or insurance markets or commercial real estate, we will see that dealer policy, i.e. relationship with agents, is their cornerstone. If a dealer does not make his sales plan during a certain period, he will not get his quota and that means that he will not have an opportunity to sell anything» — the speaker explained.
If we speak about hotel industry, it would be reasonable for the hotel to stipulate some requirements regarding the number of business events, the speaker says: «The quantity of such events must be at least one per month».
What aspects can be discussed during talks like that? First of all, the previous period, current indices, assessment of future plans. But it is even more important to get to know your business partner and to define what markets he is targeted at.
Sales specialists should summarize conclusions of the meeting.
«If the report has not been completed within the first two days and not forwarded to clients within a week, you can realize three to four points out of ten, at best. That is why one of the most important practical moments is to write down agreement provisions and to make sure that every manager has necessary contacts and sales plans for his market», — Mr Mikhalets stressed.
You should pay close attention to the information about the hotel on your partners’ sites.
«Unfortunately, partners pay little attention to it, so we prefer to allocate one employee for this task. It used to be an advertising manager, but now it is a sales specialist», — the speaker shared his experience.
Another important aspect is flexible quota management. You should bear in mind that many regional agencies book rooms, take up a quota and think that the offer is limited.
«Not long ago we received a request from an agency to provide an official letter stating that there were no more rooms in our hotel, the agency planned to post a scanned copy of that letter on its site in order to stop room booking in our hotel by its clients. But the problem was that the agency’s quota had been used up, which they did not expect» — Mr Mikhalets said.
It is also very useful to provide the department with instructions regarding feedback after events: «There are lots of tools to automate this process. You need not write letters, you can configure our system in such a way that a tourist receives a questionnaire several days after he checks out».
Full hotel occupancy at the weekend — is this task impossible?
Then Mr Mikhalets offered seminar participants to discuss the question how to sell rooms in a business hotel at weekends. It’s no secret that accommodation facilities of this kind face a real problem of room sales during weekends, because business travellers prefer to spend this time at home.
Arthur Makaov, managing director of «Borodino» hotel, called this task impossible for a small hotel even with non-refundable room rates: «When we announce dumping room rates, clients’ loyalty decreases. Instead of visiting the hotel’s site, people start searching for discounts and sales online on such platforms as ostrovok.ru or booking.com, and it is our hotel that suffers losses in the end».
Mr Makaov is persuaded, that usual booking tools will not solve this problem.
«If these methods can help, they work only once. You can sell your rooms for one weekend, and what comes next? The guests will not come back unless you announce the same dumping rates every weekend. But our aim is to attract as many individual guests with a high level of loyalty as possible to our business hotel for a long period of time, — the expert said. — What is more likely, you need to improve quality: to find out every client’s needs, to complete a guest’s profile, to write down everyone’s preferences, which implies having very qualified specialists at the reception».
When using this principle, according to Mr Makaov, it will take the hotel some time from half a year to one year to obtain a critical mass of clients, and the problem of room sales for the weekend will be solved.
Some participants agreed that an effective solution consists in offering booking packages including weekends with a discounted room rate, or special offers including extra services.
«We used to include tickets for the express train to the airport into our room rates, — Natalya Obydennova, general director of „Okhotnik“ business hotel gave her example. — But I can not say that the pay-off was high. Bonuses like that are more for loyal frequent guests».
As for hotel occupancy during weekends, the problem needs a broader view, Ms Obydennova supposes.
«We often hear that incoming tourism in Moscow increases, but it is not true, in fact. The obstacles are the lack of guidelines and directions for foreign tourists and visa issues. We have nothing to offer except a bus that goes half empty for some unknown reason, although it is very popular in Europe».
In order to solve the problem, «Okhotnik» management resorts to non-refundable rates and wedding packages.
«We hold meetings every week and discuss all possible options, — Ms Obydennova said. — This brain storm sometimes yields results and sometimes not. Transfer is more effective from this point of view. Non-refundable tariffs are only a temporary measure».
Another problem that needs to be solved and that affects hotel occupancy during weekends is the lack of promotion through various channels, including tour operators and travel agencies.
«If a hotel is focused on event-based marketing, — Mr Makaov emphasizes, — it has to advertise Moscow City Racing at its own expense to sell packages including a room and a ticket to this event. But why a small average hotel should take on global projects like that? We lack information exchange with regions that could help them keep informed about pending events and about hotels that could accommodate tourists and offer them good room rates. No hotel can change the situation alone.
I wish our government could cooperate with regional authorities to organize informational support, and Moscow could attract business travellers as well as individuals».
Mr Mikhailets assured everyone that the post-event release of the seminar, including all participants’ comments and requests would be submitted to the Committee on Tourism and Hotel Business of Moscow for further examination.
Marina Osipova