Hotel Revenue Management & Hotel Operations – Working Together

You hear a lot about the importance of Hotel Revenue Management and Sales teams working together, but you rarely hear the importance of Revenue Management and Operations working together. Besides the obvious notion that a dirty hotel with poor service will make any revenue management strategy inconsequential, impactful Revenue Management depends greatly on the front desk’s ability to quote and track rate codes properly.

 

I cannot stress enough the importance of quoting the proper rates to the walk-in or the call-in guest. So please Operations, help me help you by following these easy guidelines:

 

  1. The New School Approach: Maybe it’s because I’m of the generation that would rather thumb through TripAdvisor on my iPhone than put the phone to my ear and talk to real person, but I believe that customers are more easily and greatly informed than ever before so please give them the benefit of the doubt and quote the Best Available Rate. I cringe when I picture a Front Desk Agent quoting the “walk-in rate” $20 higher than the BAR, while the guest standing in front of them points to their mobile phone and says, “Well, I can book $20 less on Expedia.” This causes an unnecessary service recovery and, over time, drives business to more costly channels. If Operations thinks they can sell their hotel at a higher rate, please provide me your insight, and I will happily increase rates!
  2. Qualify the guest: Do not simply quote the rack rate, but quote the best available rate the guest qualifies for. If the guest is calling 8 days prior to arrival, quote them the Advance Purchase rate. There’s a reason why we are willing to provide that discount – it builds guaranteed base business outside of our typical booking window. Ask the guest if they are traveling for business and with which company. If they have a negotiated rate with us, book it. If they don’t have a negotiated rate, enter their company into the PMS. When RFP season arrives, your Revenue Manager and your Sales Manager will thank you.
  3. Do not fade rates! Revenue Managers understand very well that rooms are perishable inventory and letting a potential guest walk out the door due to rate resistance hurts, but maintaining rate integrity is essential to increasing ADR and Revenue in the long-term. Operations should train their Front Desk to sell the hotel’s benefits, amenities, and value, not the rate, but that Blog I’ll leave for our Kriya Sales team.

 

When the Front Desk consistently fades unqualified rates, I lose confidence in the rate strategy. I am unsure if there really is a lot of rate resistance or if the Front Desk has just trained their guests to ask for a better rate because they know they’ll get it. This makes the impact of changing rates meaningless and makes measuring the rate strategy’s success impossible.

 

If you MUST fade rates, make sure you are tracking your production on each discount tier rate code. Do not override BAR as this diminishes the quality of your data and will cloud your Revenue Manager’s decisions. Remember, garbage in, garbage out. Train your front desk and implement a sound strategy. If your RMS or PMS allows for it, restrict the deeper discounts on high demand dates. Track the fade production by front desk agent to find valuable training opportunities. In most cases, the front desk agent is fading the rate because he or she is not comfortable selling the properties amenities and benefits.

 

The only instance when I find it acceptable to “fade rates” is when the property is trying to shift guests booking in costly channels to book property direct or through the hotel’s website. For example, Kriya RevGEN stores and analyzes all reservations and can often uncover guests who stay at the property frequently and book through an OTA. In this case, the Kriya RevGEN Manager can alert the property sales team and front desk to offer the frequent guest a 10% “Loyalty” rate for future bookings. The property will pocket the extra 10% margin that was previously going to a third party, and the guest will be thrilled with their new special rate.

 

It’s not easy building synergies between Operations, Sales, and Revenue Management, but it’s essential for a hotel’s success. Strong communication is necessary. Meet as a team at least once a week to review and align strategies, and make sure that the entire staff is on board, not just the management team. When the whole team understands the goals, they are much more willing and able to reach them.

 

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