THE 50 SHADES OF REVENUE MANAGEMENT…
Last Saturday, we, as Hotel Linkage, held an incredible event.
Our guest was Hakan Uluer, the Tourism Investment Coordinator from the Polimeks Company. Our subject was Revenue Management.
Mr. Uluer is someone I know from our sector and an expert in subjects such as Revenue Management, Budgeting, Cost Calculation, and Profit and Loss Reports, and he is one of the exceptional people that knows these subjects to international standards.
One of Mr. Hakan’s very interesting findings is this:
Managing your hotel to 80–85% occupancy is more profitable than occasionally having 99% occupancy.
Mr. Hakan’s continues in this manner.
“There is a very fine line when it comes to your hotel’s cost calculations and achieving profitability. Sometimes managing your hotel to 99% occupancy will come along with your personnel having difficulty managing the hectic operation and thus not being able to please the customer because of the increase of personnel and material cost. In the long run, this will negatively affect the hotel’s profitability. In order to not be influenced by these negative factors, the hotel needs to accurately calculate this profitability and customer satisfaction line, and it needs to strive within this line.
Other than this, we can organize the other points Mr. Hakan touched on in this manner:
*The Revenue Management Strategies that hotels use should operate according to international standards.
* Every hotel’s budget should certainly be ready at the beginning of the year.
* Reporting and Market Segmentation is very important. In these reports, you should have these columns; Actual Today, Actual MTD, Budget to Date, Actual v.s Budget so you can compare it. (Sample Report Below)
Other than these, it is very important for Revenue Manager to analyse these KPI’s everyday, Hotel’s ARR, RevPar, ARR Growth, RevPar Growth, and On the Books. So S/he can develop hotels selling strategy accordingly.
The hotel needs to know what Market Share is and follow its own situation on the market. It is very important to compare its own occupancy and ADR performance with its competitors’ occupancy and ADR performance.
These comparisons will tell us about the following notions.
MPI — Market Penetration Index –Your occupancy results versus the average occupancy of your competitors
ARI — Average Rate Index — Your ARR versus the average ARR of your competitors
RGI — Revenue Generator Index — Your revenue share of the market, the market being your hotel and the hotel competitors.
Keeping the previously mentioned reports is very important for the hotel. Whatever a pulse is for the life of an individual, these reports are the same for hotels. As a result of these reports, hotels will be able to accurately analyze demand, accurately predict demand, accurately give rates and increase profitability.
There are such moments that we sell a room that we could normally sell for 120 EUR for 80 EUR because of our inability to analyze and predict demand.
Every hotelier and investor needs to understand the 50 shades of Revenue Management and strictly apply these systems in order to earn more revenue from their hotels.
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