Hotel Revenues this summer are anticipated to be gargantuan – high demand and high rates.  What more could an hotelier ask? 

A lot!  Hoteliers who blindly accept the demand that comes their way at the rate they ask will never know how good it could have been had they fed the elephant of hotel revenue with guests that were not measure solely by rate but by value. 

Amitava Chatterhjee in the upcoming edition of Hospitality Upgrade has an excellent article that states, "…a 2% increase in customer retention is equivalent to a 10% reduction in costs."   He goes on to say that "… hospitality enterprises (should) start measuring and tracking a guests profitability "

How much money are you leaving on the table?   How many of the customers that you get this summer at the rate you are asking will never return?  How many of them are not the demographic that will feed the revenue elephant in the future?  How much does it cost you when you squeeze out the high value customer for the ‘one night stand' at a higher rate?  What is the cost of constantly appealing to those customers without the potential to return?

So what does this have to do with Revenue Management – everything!  Most revenue management proponents, (including me – see past articles on this subject) advocate measuring the value of a guest not just in terms of room rate or REVPAR but also in terms of potential for other profit centers such as F&B, the spa, other attractions within the hotel or facility. 

This is a revenue management function.  The more sophisticated revenue management systems can drill this down relatively easily.  For those of you who are doing it the ‘old fashioned way' it isn't impossible – just a bit more work.

Capturing the Information. 

This is a training issue with the front desk/reservations.   Many GMs say ‘I tell them to do that' – there is a huge difference between ‘telling' and ‘training'.  Email addresses offer a fast, cheap and easy way to cement guest relationships.  There are several points at which you can capture this information – ask at check in or check out or on a ‘permission' box on your web site.  

Email Guest Comment Surveys.  

This is a rationale for asking the guest for their email addresses upon check in or departure.   If you are not using this medium now, it is readily available through companies that perform this function or easily accomplished by someone who is relatively familiar with technology.  The studies indicate that guests are more likely to respond to email surveys than to a survey mailed to them (let's see – fill it out, put in an envelope and mail – who knows where the mailboxes are anyway -- and for what benefit to the guest?)   The survey also contains a section where permission is given to receive occasional promotions from the guest.

Capturing the Identity of Guests Booked by the Distribution Systems. 

Who are these people?  (This could get me in serious trouble with my friends at some of the larger portals – you know who they are.)  The guest that arrives and departs that has booked through a travel portal is invisible to the hotel in terms of market segment or demographics unless we capture the information at check in or check out.   If we can get them into our system, we can develop relationships with them. 

The Functionality of the PMS System. 

Most PMS systems are capturing guest information that can then be sliced by demographics such as when they stayed, for how many nights, total bill at checkout, etc.  The problem is that many hotel GMs and DOSs aren't aware of this or how to access it. This info can be use to target certain guest demographics at times of the year when they are most likely to be making reservations.  It can be used for all market segments and the promotions can be used for email postcards and flyers or mailings in the absence of email addresses.  

Many of you are now thinking that this involves CRM, Customer Relationship Mangement.  This is a term that either provokes the ‘glazed over eyes' or total ‘brain lock' for many hoteliers.  When I mention determining the ‘value of a guest', many find it difficult to get their minds around it.   Most of you are now thinking, "It's summer, I'm too busy to worry about this stuff".  Capturing the information now will enable you to use it later

Most franchises focus their efforts on their frequent guests for whom they are able to collect this information relatively easily.  However, there is a segment of guest, such as leisure, that may not be a member of the frequent guest program but whose business is valuable and can be targeted from the property level.  If you are waiting for the franchise to do all this work for you, you are missing the boat.

This is especially critical for independent hotels.  I work with many independents.  The CRM process is not difficult but needs to be thought out and become a part of the overall marketing and revenue management strategy. 

It is the most ‘valuable' guests that feed the Revenue Management elephant most profitably.  The cost of CRM in feeding the elephant is far lower than the cost associated with most of the other reservation channels.

(PS – Have fun and learn a lot at HITEC.  I wish I could be there with you and at HSMAI's Revenue Management conference immediately following.  Due to prior commitments, I will be there in spirit!) 


Carol Verret Feeding the Elephant (South Africa, summer '05)

Carol Verret And Associates Consulting and Training offers training services and consulting in the areas of sales, revenue management and customer service primarily but not exclusively to the hospitality industry. To find out more about the company click on www.carolverret.com. To contact carol send her an email at carol@carolverret.com or she can be reached by cell phone (303) 618-4065.