PwC Downgrades Hotel Revenue Expectations

Although there are signs of economic recovery as well as indicators that the demand for lodging is going up, PricewaterhouseCoopers placed its expectations downwards. The firm expects that demand for US lodging won’t increase for next year. This spells trouble for hotel revenue managers who are already struggling to breakeven at this stage.

For 2009, PwC projects that revenue per available room (RevPAR) to drop as much as 16.4 percent. Meanwhile, the average daily rate is expected to drop 8.8 percent against the period of 2008. Many already expected a downtrend. However, PwC’s current forecast is bigger than the 16.1 percent and 8.7 percent it projected on September 10.

Both the above-mentioned metrics will move downward until 2010. On the other hand, occupancy rate is expected to recover next year. The increase will not be high though because from an occupancy rate of 55.2 percent for 2009, it might go up to 55.8 percent next year. For hotels to survive or even thrive, many hotel revenue management teams are stepping up their online initiatives.

In addition, many are trying to eat up the market share of their competitors. Getting hospitality revenue management software that can predict demand can also boost profitability within the travel industry. Software programs such as RevPAR Guru can help greatly in this regard because it has a variety of functions.
According to Scott Berman from PwC, “To what degree the industry experience recovery is predicted on an improving economy, which facilitates lodging demand growth and operator’s abilities to achieve higher pricing.”

Digital Media: How It Affects the Hotel Industry

If there is a time when the impact of digital media is felt the most, it is now. With the decline in the economy, the popularity of online travel bookings, and the rise of social media, 2010 is bound to shape customer behavior and how they utilize new technologies. Hotel revenue management teams need to be aware of these changes in order to survive and compete in today’s dynamic environment. Among the digital trends to be expected include:

Cloud Computing

Literally all techies would have heard about cloud computing right now. If they didn’t, they would still have an idea about what it is. Open source software are generating revenue because of the cloud computing. And as technology giant such as Google, Microsoft, and Yahoo focus more of their efforts into making cloud computing more sophisticated, people will be more inclined to take advantage of services through the internet. Hotels that are ahead of the game can increase RevPAR and improve hotel revenue.

Social Media Replaces Email

Social networking websites such as MySpace and Facebook are replacing personal email as the preferred medium of communication. Messages are transmitted through the “personal message” feature of these sites. This feature is gaining popularity right now because of its ease and convenience. As of right now, there is not yet that much deluge of spam compared to personal email. Plus, people like it because their friends are there with no address book needed.

Mobile Commerce

Mobile commerce has been tantalizing everyone for a long time. Yet, it actually hasn’t reached its full potential yet. Aside from the fact that a lot of people around the world still don’t have access to mobile internet, there is also the issue of ease of use. The latter is being resolved through the development of various mobile applications. Hotels can benefit from this trend and boost profitability if they act early.

Measuring Social Media Effectively for Hotels

Hotel revenue managers seldom measure the effects of social media, if at all. Most are too focused on updating themselves about the current economic situation and analyzing how this will affect demand. While these tasks are important, it is also critical to realize that social media is playing an increasing role in determining the demand for travel, and most importantly the brand image of individual hotels.

Utilizing social media metrics might be a good idea. Right now, all social media platforms have a set of measurements processes or techniques. The number of options available may be confusing for hotel revenue managers. There should be clarity in what should be tracked and measures.

Look Back to The Hotel’s Marketing Purpose – every establishment want to increase hotel sales and improve profitability. But wanting to increase RevPAR is different from actually doing something about it. Know your goals first and then other factors will follow.

Determine What Metrics can Measure Success – customer behavior and preferences should be understood and met. Once you have determined the goal of the hotel, whether it is energizing clients or supporting advertising objectives, social media can strengthen a firm’s relationship with the clients. It is important to determine what metrics should be used to track consumers.

Choose the Metric Category – after finding out which metrics should be used to boost profitability for the hotel, specifics need to be known. Within the social platform, yield managers should look at reports that are most important. Facebook and Jive can provide certain information, but it is up to revenue management teams to know which reports are relevant to their needs.

There is no denying that social media is affecting a significant number of travelers therefore the hospitality revenue management is affected as a whole. However, it is also essential to recognize that not all information out there is relevant. Yield managers need to pick and choose which ones are appropriate.

Travel Trends Hotel Revenue Managers Should Watch Out For Part 1

Similar to any other industry, the travel industry is continually evolving. And with the advent of the internet, it is becoming more critical to monitor upcoming trends in order to keep up with the competition and the demands of the global market trends. For hotel revenue managers, the task starts with analyzing the reasons behind demand, government policies that are under review and customer attitude in general.

For 2010, the following trends are expected to emerge:

Mobile Integration
The popularity of sophisticated mobile phones and other devices makes it possible for travelers to receive travel alerts, track flights, and plan their itinerary easily and conveniently. This capability is increasingly becoming used today. In addition, the frenzy seen in the development of new applications is feeding the trend. Hotel revenue managers need to look deeply into this emerging trend to determine what the best yield management strategy would be for the year.

Traveler Focused Buying
Managed travel programs are based on the concept that the entire process of traveling should be focused on the needs of the traveler. Because of the internet, it becomes easier than ever to offer this service. Everything within the process can be enhanced to serve the customers and cater to their preferences, profile, and historical patterns.

Video Conferencing
One reason why business travel is not as prevalent as before is the availability of video conferencing. Instead of going to the destination, a lot of corporations are deciding to communicate through videos. It is a significant development that will have a big impact on the hotel revenue management industry as a whole. Yield managers need to come up with ways to make business travel, and their hotels, more attractive.

A Closer Look at Hospitality Revenue Management and Internet Marketing

There is no double that hotel revenue management and internet marketing is fast coming together. At the Hospitality Sales and Marketing Association International (HSMAI) convention in Anaheim, California, the two topics were extensively discussed. People from both sides of the industry thought of ways to make the two disciplines complement each other to create demand in today’s turbulent economic times and beyond.

According to Eric Pearson, the senior VP of Brand Performance, Americas, Intercontinental Hotels Group, “revenue management and internet marketing professionals are the new rock stars of the hotel industry”. And indeed, it is easily apparent that the potential contribution they can give is significant.

The presentation he presented showed the types of benefits the hospitality industry can experience (ie. increase hotel sales, increase RevPAR, revenue optimization) if the two are used together. The strategy should be backed by concrete analysis and real time data to drive hotel profit growth even further.

Main Points of the Conference

In essence, the conference has several main points, one of which is the increased interdependence between hotel revenue management and internet marketing strategies. E-commerce, hotel pricing strategies, and revenue optimization techniques are all looked into. Right now, it was noted that forecasting the demand and knowing the buying behavior of the customer is the key to maximize hotel profits.

Meanwhile, on the breakout session “Social Media Strategies”, tips about what hoteliers can do to boost profitability were also discussed. Things like the best practices to measure ROI, identifying time and resource allocations, as well as employee policies were looked into. Attendants were advised to take advantage of the various measures available to them including marketing, sales, and other consumer information that’s readily available on social networks.

The lessons that were gleaned from the conference were very beneficial. If used wisely, it can contribute greatly to increase RevPAR and boost hotel profit.

Avoid Hotel Price Cuts With These 5 Tips

At first, many hoteliers might have tried to focus on providing value to their loyal clients by giving excellent service, great amenities, and following-up with them. For many though, these efforts are not nearly enough.

Before giving hotel rate discounting a try though, it might be a good idea to look into relevant historical facts. Economic downturns and recessions are not a new phenomenon. Sure, many younger hotel revenue managers today might have focused more on keeping up with demand instead of stimulating it because their experience mainly occurred during the good times.

A look at the hotel price cuts from 2001-2002 reveal that this yield management strategy had short-term and long-term consequences. Instead of boosting profitability, it did just the opposite because it had damaged the entire hotel sector. When one hotel tries to increase occupancy by cutting their price, this is quickly copied by their competition. Once it happens, the trend is hard to stop and it might affect the organization for many years to come.

Fortunately, there are effective hotel revenue management alternatives that can increase RevPAR and increase hotel sales even during the bad times. Among these include:

1. Concentrate on Increasing Ancillary Hotel Profits – follow the example of airlines. A significant part of their revenue comes from fees and various charges. For example, United Airlines expects to derive $1.2 billion from ancillary revenue alone.
2. Consider Opaque Channels – these types of hotel distribution channels become more useful during an economic downturn. It will help sell excess hotel rooms without the lure of a discount.
3. Use Smart Discounting – drastic price cuts are not on the same league as smart discounting. Innovative and profitable packages can be created by the yield management team.
4. Study Customer Segments More Deeply – divide your customer base according to price sensitively. Afterwards, gauge how discounting will affect your hotel operations over the short and long term.
5. Think of Ways to Add Value – value-added factors are important to the customer. They need to feel that they are getting their money’s worth from your hotel. Provide value effectively and see achieve profit optimization.

Should hotel revenue management team go for hotel rate discounting to rev-up demand? While it goes against the better judgment of many yield managers, this option is becoming increasingly hard to resist. But with the tips above, there is no reason for you to resort to price cuts.

3 Tips to Increase Hotel Sales This 2009

Even though the market is tough and almost every hotel is struggling to survive, it is still possible to increase hotel sales in 2009. It is just important to think of innovative ways to grow hotel revenue and provide value to the consumer. Jumpstarting hotel revenue starts by looking at the opportunities in the market with increasing hotel bookings, RevPAR, and average rate in mind.

Boosting profitability starts with knowing what your customers want and need. Determine how the inventory can be best utilized. In addition, providing a complete hospitality experience by setting up meeting space, restaurants, and fitness facilities can provide a good experience for the guests. Here are other 5 tips to increase RevPAR and increase your hotel revenue this year.

Cater to Families – hotel revenue managers can guarantee adjoining rooms to meet the needs of people traveling in groups. Charging a minimal surcharge will ensure that your hotel will be the preferred option compared to your competitors. And when you’re offering complimentary breakfast, make sure that there is a package for the whole family too. Just charge $5-$10 for the third or fourth child to get their loyalty. Adding a menu for children is likewise a good idea.

Last-Minute Getaways will Continue – most people have unpredictable schedules. That’s why last-minute bookings will still be prevalent even if majority of customers prefer to schedule everything in advance. With this in mind, make sure you take advantage of this opportunity by creating a suit package. Make sure you promote your last-minute deals online by utilizing email marketing, search engine optimization, pay per click, or adding your site to travel portals.

Closer-to-Home-Vacations – another apparent trend nowadays is that both leisure and business travelers are deciding to meet or take a vacation somewhere closer to their home. Though this may sound like bad news for hotels that rely on foreign travelers, it actually presents an opportunity for many. Consider advertising locally more than you used to. You might be surprised by the resulting increase in RevPAR and profit optimization.

Using Hotel Revenue Management Software to Increase RevPAR

A Cornell University Study, published in the Analysis if Revenue Management Vol. 5, No. 6, in the April of 2005, revealed that hotels that price above their competitors have the most aggressive hotel revenue managers. They are the best when it comes to increasing RevPAR, improving yield management, and boosting profitability. Many hotels want to raise their room rates in order to increase RevPAR but this strategy may not always work. Its success depends on brand image, amount of available facilities, location, demand, the number of competition, and general economic condition.

It should be noted though that the most successful hotels when it comes to revenue per available room implements hotel revenue management strategies. However, it you should note that the requirements of revenue management systems for individual hotels are different. For example, the needs of a 50-room boutique establishment are far different form a 600-room chain hotel. Before buying inventory software, booking software, or a yield management software, establishing the exact requirements of the hotel in terms of RMS systems and functionality is important.

If you’re anticipating the implementation or the upgrade of a system, evaluating the potential return of investment of the revenue management systems including their sustainability needs to be done. Below are some guidelines that will help you find the best hotel revenue management software:

Departmental Needs – each department has its own requirement when it comes to documentations needs, report, and other data gathering and retrieval technique for effective decision making. Hotel revenue managers need to know the minimum and the optimal requirement of each department.

Existing Hotel Revenue Management System – if you already have a revenue management system in place, consider if it would be more cost effective to replace it or to add certain functionalities. In addition, be sure to find out what the exact requirements are. The last thing you want is to have the same problems in the new system.

Hotel Channel Management – most hotel applications have this feature. Finding the right one is only a matter of how complex your business structure and the promotional mix. A system that allows you to evaluate the different revenue streams is a particularly effective one.

Customer Behavior Analysis – a good revenue management system should be able to forecast customer behavior based on historical data and customer information. The information helps the hotel revenue managers make better decisions based on actual data, not on guess work.

Social Media for the Hotel Industry

With the large number of Web 2.0 websites these days, it is not surprising that a lot of people are spending a lot of time online. Social media and sites that focus on consumer-generated content get a lot of buzz because it goes beyond traditional business to consumer interaction. Nowadays, people can interact among their peers and other users to get the best information possible. In addition, the social media creates networked connections and one-on-one relationships among people. Significant events, current developments, and interesting trivia are shared “virally”.

To cope up with these changes, the hospitality industry needs to know where and how to concentrate their efforts. Market research is required. For example, it is critical for hotel revenue managers to identify where their target consumers usually spend their time only and then focus on these websites. According to hospitality experts, hotels face a challenge of reaching out to consumers that use these media. If they are successful, not only will they retain their current market share, they develop new markets as well.

Essentially, it is important for hotel revenue managers to realize that utilizing social media is almost free. But it requires a lot of effort, promotions, and marketing. Building connections and being with the community is two of the most important factors to increase hotel sales. Profit optimization can only occur when hotels understand how leveraging works online. Web 2.0 technologies enables them to build brand awareness and consumer loyalty through proactive endeavors that boosts profitability.

It has been said that careful targeting and the consistent delivery of relevant messages is the key to successfully using these tools. Together with market research and marketing though, it is also critical for hotels to implement the most effective hotel rate distribution strategy to increase hotel electronic sales. Some tools that will help include forecasting software, price distribution software, and inventory software.

In addition, utilizing search engine optimization and search engine marketing techniques are also essential in these endeavors. Nowadays, there are a lot of web marketing applications that has been designed to improve traffic and brand recognition. The software can also be used for other industries aside from the hospitality industry. This is because the necessity of adapting to new technologies is not only apparent in hotels but in the overall business environment as well.