Once you start looking into it, revenue management gets pretty fascinating. It’s part exhaustive analysis and part gut-level guesswork, part well-laid plans and part crapshoot. Of course, that also makes it frustrating, both for the revenue managers trying to put their profit puzzles together and for meeting planners trying to allocate their budgets effectively.
Today, you’re the right customer booking the right hotel at the right price. Tomorrow, you’re not. So how can you know your leverage at the time and place you’re negotiating rates?
Matt Dolan, market revenue management leader, Washington, D.C., for Marriott International, offered some insight to planners attending the Financial & Insurance Conference Planners Education Forum this summer in New Orleans. When weighing the value of your meeting, he explained, revenue managers consider how it fits into a hotel’s overall revenue picture. Here are 11 contributing factors:
1. Hotel loyalty
Do you have a history of booking the hotel or the brand?
2. Preferred dates/alternate dates
How does your desired pattern fit in with business already booked and likely to book at the property? There is often a range of rates available to you, so it could pay to be flexible.
3. Preferred hotel/flexible location
Would you consider other properties within the brand or chain?
4. Number of rooms
“In markets with heavy transient demand,” Dolan explained, “a smaller, multi-night room block with higher catering contribution may be more attractive than a large block of group rooms.”
5. Rate budget
Are there commissions or rebates attached to the rate? What is the customer’s rate range? “This is really about understanding the past buying behavior of a customer, and helping to match that to a timeframe within the hotel requested,” he said.
6. Meeting space (rooms-to-space ratio)
“This is a big topic. It’s not an exact science, but if you can avoid having dark space”—a ballroom that’s not being used for some portion of the day, for example—“and if you can give that back to the hotel, there is value in that. We might be able to book a local catering lunch for $80,000.” Note that hotels may have a catering-per-square-foot revenue goal, and some employ a Manager of Function Space Optimization.
Yes, these are looked at as a cost of doing business, Dolan said, but revenue managers will still do the math and see how much value is being given away.
8. Program’s purpose
“Does the customer need to be at the specific hotel for a certain reason—i.e., do they lobby Congress on the Hill or do they have to be in Orlando for an event at the convention center? Understanding the purpose of the event allows for a better understanding of the program and how to cater a proposal to the customer.”
9. Frequency of your meeting
“Is it an annual meeting? Semi-annual? I put a lot of stake in this. It helps if you can lay some future programs on the table.”
10. Program audience (local or out of town)
This can have an impact on attendance at catered events or for room-night pickup.
11. Group history
What hotels have you booked previously? What was your room-night pickup? What was your actual F&B spending?