Ever wonder on what basis a hotel evaluates your meetings business? Here's a look at the approach many hotels take. It's called revenue management.
“Revenue management is an art, not a science,” explains Shelley McLoughlin, national sales manager, Conferon Global Services, Norwood, Mass. “It's selling the right product to the right customer at the right time for the right price,” she explains. But how does it work in negotiations?
In a case study McLoughlin cited, the hotel sales person evaluates your business according to several different criteria, most typically your desired room rate, food and beverage spend, total anticipated revenue, arrival/departure pattern, rooms-to-space ratio, seasonality, history, andterms. For each component, the hotelier ranks the group with 1 being the most desirable situation (from the hotel's standpoint) and 3 being the least attractive.
For example, a contract that includes a cancellation andclause would score a 1; a contract with one or the other would score a 2; whereas a contract with neither would tally a 3. With regard to seasonality, an off-season booking would garner a 1, a shoulder season meeting would score a 2, and a peak season request would score a 3.
Scores from all eight categories are tabulated to arrive at a total score. A total in the 8-to-11 range means a good piece of business for the hotel; a tally over 18 would be considered poor.
Planners, of course, aren't privy to how hotels evaluate their business. However, if they are turned down but still want to stay at that property, planners should ask the hotelier if there are negotiable points, says McLoughlin. Often, groups can negotiate themselves into “range” without having to increase food and beverage costs or bump room rates if other concessions are made. Changing the date to a shoulder season or adding an attrition clause just might be enough in some cases to fill the bill, she adds.