REPORT FROM THE U.S.—As the group demand recovery continues to lag the transient demand recovery across the global hotel industry, hoteliers are increasing their focus on optimizing what group demand is coming in and ensuring they’re not leaving revenue on the table.
A panel of experts during a recent Hospitality Sales and Marketing Association International webinar discussed new practices, such as function space and restaurant revenue management, that allow hoteliers to maximize revenue opportunities.
“Function space and restaurant revenue management are huge,” said Neal Fegan, who, as the executive director of revenue management, is currently rolling out a restaurant revenue management program at Fairmont Raffles Hotels International. “If you’re not currently at least researching these things and looking into developing them you’re going to be left behind.”
At Fairmont Raffles, Fegan started with the basics, which meant finding a statistical way to determine when function spaces and restaurants were busy and when they were not. Public spaces are not as easy as rooms—which are based on nightly occupancy—to determine busy times. Keeping it simple has worked well for Fairmont Raffles, and Fegan recommends other hoteliers do the same.
“Don’t worry if it’s really high level at first,” he said. “Keep going up levels and find something that helps determine when you’re busy and when you’re not.”
For Fairmont, restaurant tables are the equivalent to a hotel room. If there is a party seated at a table, it is considered occupied. Table occupancy, then, is equal to the number of tables occupied divided by the total number of tables available.
Fairmont’s system was set up to determine and report table occupancy by the hour.
“This is when the patterns were easily seen,” Fegan said.
He said having concrete data points to analyze allowed the Fairmont food-and-beverage team and revenue management team to begin forecasting future function space and restaurant demand by using historical data to determine trends.
“By evaluating past data, this was a good measurement of what future results would hold,” he said. “Just by looking at recent trends we can predict what will happen in the near future.
“You can’t revenue manage without a forecast.”
Begin determining value
Once there are recognizable supply and demand trends to analyze, revenue management teams can begin placing values on actual demand and unrealized demand.
For instance, in the function space arena, it is important to closely monitor meeting sizes, recoup reserved space that may go unused during a meeting, and then assign a value to that space, said Todd Baumgartel, VP of revenue management field support for Marriott International.
“Proactively looking to move space gives you a better picture of how your system is optimized and what kind of value you can receive,” he said.
To do so, Baumgartel suggested hoteliers look at function space and room demand simultaneously. If a group is booking fewer hotel rooms than anticipated, their meeting space needs may be adjusted as well. Conversely, if a group gives back some unused meeting space, maybe their unused blocks of rooms could be freed up and sold at a higher rate.
“Maybe you can get some space back and sell it to other groups,” Baumgartel said. “We’re constantly monitoring and tracking every meeting room that gets returned, and then when someone new rents it, we track that too. We use return-space tracking to put a dollar amount on those efforts.”
Marriott’s function space revenue management workflow is undergoing some changes after the parent company purchased the Gaylord Hotels and Resorts brand in May. Gaylord, which has four large properties dedicated to meeting and function-space events, will now run its event sales and management procedures through Marriott’s revenue management organization. The new process will help automate the determination of function-space availability.
“We’re looking at evaluating profitability of a total group opportunity,” including roomnight spend, F&B and other ancillary spend from groups, Baumgartel said. “Consolidated and total yield systems are helping us do that more efficiently.”
For example, Marriott is able to use technology to help determine whether to turn down low-rated groups or high-function-space groups.
When combining several departments or asking different departments to work more closely together, both Fegan and Baumgartel said it’s important everyone speak the same language.
“It’s important to get F&B to build a relationship with revenue management,” Fegan said. “You need to teach revenue manage the basics of F&B and teach F&B the benefits that having a revenue management program can bring.”