Wes Anderson Regional Director Revenue Management, North America InterContinental Hotels

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Wes AndersonRegional Director Revenue
Management, North AmericaInterContinental Hotels
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Caribbean Hotel Tourism Association Agenda

• The New Revenue Management
• Linkages to Marketing/Sales
• Questions

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Revenue Management Fundamentals

• Price Optimization
• Optimize Channels of Distribution
• Optimal Business Mix Yielding
• Product Class Opportunity

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Revenue Management Methodology

• Data Consolidation and Analysis
• Strategy Development and Buy-in
• Tactical Application
• Measure Success
• (via Data Consolidation and Analysis)

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Revenue Management FundamentalsPrice Optimization

• Consumer Based Pricing Model
• Competitive Based Pricing Model
• Niche Pricing Model
• Margin Based Pricing Model

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Consumer Based Pricing Model

• Pricing Elasticity of Demand
• When markets are elastic, lower rates
• When markets are inelastic, raise rates

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Competitor Based Pricing Model

• Peg rates off of competitors rates
• Assumes you are not the market leader
• Risk of Greater Fool effect
• Use a rate shopping service to ensure no
  anti-trust infringement

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Niche Pricing Model

• Youve got to pay my rates to keep the company
  Im offering at my hotels
• -Isadore Sharp, Founder of Four Seasons Hotels
• Risk of occupancy depletion in Elastic Markets
• Requires clear marketing message or positioning

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Margin Based Pricing Model

• Fluctuates by Supply and Demand
• Assumes minimum acceptable profit level
• Works for mid market and luxury hotels

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Optimizing Channels of Distribution

• Its about Discovery and Persuasion

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Optimizing Channels of Distribution

• Demand is inherent in channels

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Optimizing Channels of Distribution

• GDS
• Retail Internet (Expedia/Travelocity)
• Opaque (Priceline/Hotwire)
• Hotel Web Site
• Hotel Direct (Voice Reservation Services)

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Optimizing Channels, GDS

• Discovery
• Marketing in the GDS
• Biasing shelf space placement
• Persuasion
• Content and Pricing

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Optimizing Channels, Retail Internet

• Discovery
• Conversion Percentage
• Social Media Presence
• Parity Compliance / discount online forwarding
• Market Manager Involvement
• TravelAds
• Persuasion
• Content and Pricing

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Optimizing Channels, Opaque

• Discovery
• Pricing
• Persuasion
• Pricing and Content

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Optimizing Channels, Hotel Web Site

• Discovery
• Search Engine Optimization
• Organic vs. Pay Per Click
• Measuring Effectiveness
• Google Analytics
• Persuasion
• Content Pricing

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Optimizing Channels, Hotel Direct

• Discovery
• Marketing
• Public Relations
• Sales Efforts
• Affiliation with Associations
• Persuasion
• Well Trained Staff
• Staff Incentives
• Promotions

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Optimizing Business Mix

• Yielding, the root of Revenue Management
• Segmenting your business
• Business Mix / Channels of Distribution / Lead
  Time

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Product Class Optimization

• Product Class - rooms priced at different levels
• Goal against ADR capture of Price Differential
• Balanced Inventory vs. Fractured Inventory

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Linkages Between Revenue Management and Marketing

• Marketing/PR generates Demand
• Revenue Management manipulates Demand

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Linkages Between Revenue Management and Marketing

• Social Media Responsibilities
• Incoming (Trip Advisor)
• vs.
• Outgoing (Facebook)
• Marketing owns Facebook/Twitter

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Outgoing Social Media

• Marketing owns Facebook / Twitter, etc
• Revenue Management prices offers

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Incoming Social Media

• PR or Departments owns review response
• Revenue Management owns increasing review volume
  (Optimizing Channels)