Revenue Management 2006 – the Risks & Rewards
Revenue Management 2006 – the Risks & Rewards
I know that you are out there – the ones who will address that nagging worry in the back of their mind after the holiday hoopla is over – can we really achieve that budget in 2006?
??The answer is yes and no – there is no reward without risk. If ever there ever was a year with a little wiggle room for taking risks in your revenue management strategy, this is it. Your staff will be looking at you for your risk tolerance and they will follow your lead – what will it be?
??I know a GM who took a big risk with a citywide convention and refused to accede to their demand for a huge rate reduction accompanied by assorted comps and, oh yes, then there were those sponsorships they were requesting. All of the other major players in his market had knuckled under and taken large blocks at greatly reduced rates. He chose not to.
??His rationale was that he could maximize his rate and occupancy in displaced business by not acceding to demands that would have compromised his budget for that month. A month prior to the citywide groups arrival, he didnt have a lot of reservations, two weeks out he was still dead in the water. Panic began to set in but he knew his transient reservation window was very short lead.
??Reservations began trickling in and then came the deluge after the displaced reservations realized that his hotel was about the only option during that time period. At the end of the day, he filled his hotel for that period at a rate $12 higher than the comp set – need we tell you what it did for his REVPAR. His boss called him to congratulate him for making such a good call – but it could have gone the other way!
??There is a saying in the theatre if you want to be noticed move when everyone else is standing still, stand still if everyone else is moving. Being a contrarian is risky but has its rewards. Try the following with your staff –
??Stop Filing Your Revenue Glass From the Bottom Up! Quote your higher rates first – you can always come down. There is a sentiment, outdated but still there, that we should reward our early reservations with a low rate – why? How many discounted reservations do you take well in advance of the arrival date that would have been willing to pay a higher rate? Take the risk – let your revenue manager know that it is all right to take a risk and adjust if demand patterns warrant