Ever wondered how a hotel evaluates your meeting 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 says. But how does it work in negotiations?
In a case study McLoughlin cited, the hotel salesperson 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, and contract terms.
For each component, the hotelier ranks the group, with a ranking of 1 being the most desirable situation (from the hotel's standpoint) and a ranking of 3 being the least attractive.
For example, a contract that includes both cancellation and attrition clauses would score a 1; a contract with one or the other would score a 2. A contract with neither clause would earn 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 of more than 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 F&B costs or bump room rates if other concessions are made. Changing the date to a shoulder season or adding an attrition clause might be enough in some cases to fill the bill, she adds.