WELCOME TO REVENUE MANAGEMENT Executive Orientation AGENDA

WELCOME TO REVENUE MANAGEMENT Executive Orientation

AGENDA Ø Revenue Management Overview Ø Total Hotel Pricing Philosophy/Sales Strategies Ø Additional Demand & Price Turndowns Ø Fidelio and LHW Reports Ø One Yield

Revenue Management. . . AN OVERVIEW Marriott International Lodging Revenue Management TOTAL HOTEL FOCUS!

Revenue Management is …. “Selling the right product to the right customer at the right time for the right price. ” Robert G. Cross Aeronomics

Revenue Management is also. . . A COMBINATION OF PEOPLE & SYSTEMS all working toward completion of the revenue cycle

Revenue Cycle CREATE DEMAND MAXIMIZE REVENUE SUPERIOR SERVICE EXPERIENCE

Revenue Cycle MAXIMIZING REVENUE PRICING SELLING STRATEGY How we price our How we sell product our product INVENTORY ALLOCATION What we put on the shelf

Revenue Cycle Maximizing Revenue through Pricing How do we price our product? Using: • Rational Pricing • Total Hotel Pricing Process

What is Rational Pricing? Ø A Logical Reason exists for every rate. Ø Customers can be segmented according to their needs, buying behavior and willingness to pay And based on this: – We define variable, market-based pricing designed to maximize revenue and profits

Rational Pricing BENEFITS w. Re-establish price integrity in the customer’s eyes. w. Logical, consistent reason for getting a discount. w. Reverse the trend of trade-down to lower rates (i. e. , get travelers back to paying the benchmark/corporate). w. Allow a larger segment of rate-sensitive customers to buy the product. w. Generation - Grow market share by appealing to new customers. w. Share shift - Steal from the competitors. w. Make it easier for reservation agents to sell.

Revenue Cycle MAXIMIZING REVENUE PRICING SELLING STRATEGY How we price our How we sell product our product INVENTORY ALLOCATION What we put on the shelf

Any other ways to maximize revenue ? Maximizing Revenue through SELLING STRATEGY How do we sell our product? • CIRCUMSTANCE • SEQUENCE

Sell Strategy Ø Selling based on Circumstance – Weekday and Weekend or 7 days per week (based on market conditions) – Holidays – Special Events which may determine…. Ø How to Sequence Rate presentations – Menu Quote • Offers a set of rates to a customer. – Assumed Sale • One rate only, used for promotions or Holidays.

Circumstances & Sequences CIRCUMSTANCE High Demand RATE STRUCTURE CIRCUMSTANCE Normal Demand Low Demand “New Year’s Eve” Concierge/ Club $150 Corporate Benchmark $135 Assumed Special Event $195 Sale Special Corp $120 Special Event Rate Holiday/ Other Discounts SEQUENCE $100 “Typical Tuesday Sellout” SEQUENCE Menu Quote Holiday/ Other Discounts Concierge/Club Corporate Also Available None “Thanksgiving Week” Also Available Special Corp Rates Concierge/Club & Corporate

Desire is to Focus on REVPAR = Rate x Occupancy Rate Occupancy

How Does a Property Increase REVPAR ? SAFEST • Increase restrictions on lower rates • Eliminate last room availability for Special Corporate accounts • Eliminate nonproducing Special Corporate accounts MODERATE RISKIEST • Close out lower rates on peak days • Raise the Corporate Rate • Raise rates for smaller Special Corporate accounts • Eliminate discount rates • Raise prices on discount rates

Revenue Cycle MAXIMIZING REVENUE PRICING SELLING STRATEGY How we price our How we sell product our product INVENTORY ALLOCATION What we put on the shelf

How Else Can Revenue Be Maximized ? Maximizing Revenue through INVENTORY ALLOCATION How much is available at each price point? YIELD MANAGEMENT PROCESS

Forecasting Demand IF WE KNEW. . Who is coming? When will they arrive? How long will they stay? How much will they pay? When will they book? How rate sensitive are they? WE COULD MAKE MUCH BETTER INVENTORY ALLOCATION DECISIONS

Inventory Allocation - Tools w Uses past reservations and Additional Demand to forecast demand w Arrivals Forecast - forecasts transient arrivals by room and rate category and by length-of stay. w Optimizes transient revenue by determining which combination of customers will maximize revenue. Filters out low value reservations. w Provides specific restriction and authorization recommendations for each room/rate category for the next 90 days. .

Inventory Allocation - Tools w Numerous reports and graphs provide detailed information for analysis purposes. w Audits future Fidelio Inventory nightly to report situations that potentially could result in lost revenue). (System Control) w Alerts allow the user to set thresholds to highlight days that may need immediate attention.

Key to a Successful Revenue Management Effort PEOPLE PROCESSES SYSTEMS

The People – In the Past & Today Transient Group DOS, Sales Team Revenue Manager GM Sales Team DOS/RM GM Catering Sales Team Dir. F&B DOS/RM Catering Sales Mgrs GM

The People – Today & In the Future TOTAL HOTEL REVENUE MANAGEMENT Revenue Management Sales Strategy Team Property Sales, Catering & Event Management General Manager

The People – The Difference? • Teamwork • Communication/feedback is continuous

Total Hotel – The Functions Revenue Analysis Inventory Management Business Evaluation Director of Market Strategy Property Sales & Event Management Strategy & Implementation

The Processes ANALYSIS STRATEGY CRITIQUE

The Processes FUNCTION SPACE GUEST ROOMS REVENUE MANAGEMENT SALES EVENT MANAGEMENT RESERVATION AGENTS CUSTOMER

Recap. . . Revenue Management is. . . • Completion of the Revenue Cycle • Proper pricing, inventory allocation , and selling strategy • Driving Rev. PAR • Risk Management • Forecasting Demands • Strategic Planning

Thank You