Reflective Journal
ghanhateu
HOS301ATopic4PowerPoint.pptxHOS301A Hotel Management Simulation
REVENUE & PRICING
1
REVENUE & PRICING
2
REVENUE & PRICING OVERVIEW
GROUP ACTIVITY
HOTS
REVENUE MANAGEMENT
https://youtu.be/wbQbRqcS8YY
What is Revenue Management
REVENUE
MANAGEMENT
Industry Definition
Revenue management refers to the strategic distribution and pricing tactics you use to sell your property’s perishable inventory to the right guests at the right time, to boost revenue growth.
Within the hotel industry, the widely accepted definition is: “Selling the right room, to the right client, at the right moment, for the right price, through the right distribution channel, with the best cost efficiency”.
Modern RM has transitioned from a short-term, myopic tactical focus to developing long-term, big picture strategies for both transient and group business.8 Taking a long-term approach that balances occupancy and rate strategies for these two segments, leads you down a pathway of intelligent pricing decisions and greater profitability for your hotel.
Kevin Duncan, Senior Director
Strategic Commercial Initiatives
Rainmaker Group
4
REVENUE MANAGEMENT
This is the dropdown box to toggle between general and weekly screens.
TEAM DECISION
Advise students – the system allows for weekly decisions.
Describe all the decision options available.
5
OCCUPANCY
Occupancy refers to the number of rooms occupied at any give of time.
Occupancy Formula
Rooms sold
Rooms available
Occupancy =
6
ADR
Average Daily Rate (ADR) is a metric that measure the average revenue earned per occupied room. This does not include F&B or other departmental revenue. It is rooms revenue only.
ADR Formula
Total rooms revenue
Total rooms sold
Average Daily Rate =
7
RevPar
Revenue per available room (RevPAR) is a metric that measure the revenue earned per available room
RevPAR Formula
Total rooms revenue
Total available rooms
RevPAR =
8
GOPPAR
Gross operating profit per available room (GOPPAR) is a metric that measure the profitability per available room
GOPPAR Formula
Gross operating profit
Total available rooms
GOPPAR =
9
YEILD MANAGEMENT
Yield management is a strategy based on selling to the right customer, at the right time for the right price.
Revenue Management
Long Term Strategy
Data Analysis
Cost of sales
Short term focus
Optimise pricing strategy
Element of revenue management
Yield Management
What is the difference – advise that revenue management is an evolution of yield management.
Refer to readings in Moodle
10
EBITDA
This metric is used to determine how profitable a hotel is. It is an indicator of a hotels financial performance and can be used to compare profitability.
EBITDA = Total Revenue – Expenses (excluding interest, taxes, depreciation, amortization)
Advise that whilst EDITDA is a financial metric it is now a fundamental KPI of revenue manages as this relates to profitability.
As revenue management as a discipline evolves the metrics become sophisticated.
11
HOTS
Trial
Trail Run:
30 minutes
2 DECISION CYCLES
In their hotel management teams, students are to enter their decision for March and April year one (1).
Allow 20 mins per decision before cycling.
12
PRICING
CNBC: Inside the hotel pricing game
https://youtu.be/b2zg81CSZ64
PRICING
Pricing takes into account the segment (target audience), ability to pay, market conditions, input cost, trade margins and competitor actions.
Cost
Competition
Demand
Length of stay
Segment / Guest Type
Forecast
Hotel occupancy
Market conditions
Seasons
Unexpected circumstances
FACTORS TO CONSIDER
ACCOMMODATION
14
Direct Expense
Food Cost – ingredients
Indirect Expense
Labour
Equipment
Consumables
Licenses
Utilities
Profit Margin
Competition
Seasonal Menus
FACTORS TO CONSIDER
FOOD & BEVERAGE
PRICING
15
PRICING
TEAM DECISION
If the box is ticked, decisions are made for all the weeks.
Submit offers for corporate contracts
Advise students – the system allows for weekly decisions.
Describe all the pricing decision options available.
Weekday v Weekend
Conference pricing
Corporate contracts
16
PRICING
TEAM DECISION
If the box is unticked, it will display the week you will be making the decision for, you may select any week.
17
F&B
PRICING
TEAM DECISION
Select Menu Type
Select Supplier
Enter your price
Enter Price for Food and Beverage
Advise students – the system allows for weekly decisions.
Describe all the pricing decision options teams need to consider.
What menu will they select and what ingredients
Enter the pricing for both food and beverage
18
WORKSHOP
Each hotel group is to answer the following question:
What are factors to consider when pricing a product/service?
2. Submit answer via link to answer garden. The link can be found in Moodle.
Group Activity: 15 minutes
Fun activity to determine if hotel groups understand pricing and the factors they need to consider.
Share answer garden screen, all students will see the answer.
19
HOTS
Trial
Trial Run:
30 minutes
2 DECISION CYCLES
In their hotel management teams, students are to enter their decision for January and February year one (1).
Allow 20 mins per decision before cycling.
20
Distribution
Triptease: How can Asian hotels drive direct bookings in a time of crisis?
https://youtu.be/lLgmWdbrMjU
DISTRIBUTION CHANNELS
Describes the different methods in which bookings for a hotel are made. A channel may be direct such as the hotels reservation department or indirect via a third party website (OTA).
DISTRIBUTION
Talk about the complex nature of distribution and how pricing is impacted by distribution partners.
22
Direct Channels
Hotel Website
Reservations
Walk In
Online Travel Agents
Third Party Website
Wholesalers / Travel Agents
Indirect Channels
DISTRIBUTION CHANNELS
A diversified distribution strategy will allow hotels to reach a larger number of clients. This should be aligned with overall hotel and marketing strategy, know where your audience is.
Talk to students about a balanced approach, not just relying one one channel over the other.
23
DISTRIBUTION
EHL: Hospitality Insights – Winning Distribution Strategy
https://youtu.be/wqZ4vAyHOkE
TEAM DECISION
Direct bookings only.
Revenue Management screen for a specific week.
DISTRIBUTION CHANNELS
25
TEAM DECISION
Indirect bookings
Revenue Management screen for a specific week including indirect booking channels:
Expedia
Booking.com
DISTRIBUTION CHANNELS
26
ASSESSMENT
DISCUSSION
In their hotel management teams, students are to enter their decision for March and April year one (1).
Allow 20 mins per decision before cycling.
27
Next Week
Teams to work on the plans/decisions
Complete pre class Activity
Participate – post your thoughts on the discussion forum
Remind students that this subject requires out of class work.
28
