Hotel Revenue Management Implementation
By Patrick Landman
Wednesday, 23rd December 2009
Unconstrained Demand -

The unconstrained demand is your total demand for a particular date irrespective of your capacity. Hotels should identify when unconstrained demand is above the capacity of the hotel.

The unconstrained demand will help you calculate your Last Room Value for certain dates, and possible length of stay restrictions that may apply.

Once peak periods are detected, you can start regretting low paying business. Historical data capture will help to calculate potential unconstrained demand. It is possible to develop manual tools which would help to identify those periods, such as with excel.

The unconstrained demand shall help you to evaluate the Last Room Value and displaced revenue.

Record your denials for individuals but also for group bookings: by length of stay, by market segments, with total value for groups. What is your group unconstrained demand?

Develop your denial and regrets reasons:

You may also record on your demand calendar when you main competitors are fully booked or sell high rates as this affects the demand to your hotel.

Group Trends

Group patterns and trends are different from your regular demand. You can look at your reservations on the Books (OTB) and pick-up, but this does not reveal all the trends. You will have to record all the requests to read trends.

Evaluate what you should record:

  • How many leads have you received?
  • How many leads do you currently receive in total?
  • How does that compare to the past months, and to the same period last year?
  • What are the trends?
  • How can you incorporate that into your forecasts and selling strategies?
  • What is your conversion ratio? (number of groups converted by leads received).
Depending of the size of your hotel, you may develop the calculation by group market segments.

Elements to consider:

  • Conversion ratio
  • Lead time ratio on basis of the dates of request.
  • Total spend by group
  • Size of the groups
  • Wash factor
  • Segmentation of groups: leisure or corporate
  • Denial and cancellation stats with reasons.
What are our trends?

Do we have a surplus in demand? How many people did we turn away for a specific date? How far out do groups book? To answer these questions and map our unconstrained demand we will have start measuring all requests.

Here are some hotel revenue management action steps to help you out.

Step 4 in our revenue management strategic plan is:
1.Record your turnaways or denials for all types of business: individuals, groups, day meetings, conferences etc.
2.Decide of the level of details of recording turnaways: days of stay, market segment, total revenue value
3.Develop reasons for turn-aways in order to evaluate your decisions.
4.Track your conversion ratio for groups, day meetings, conferences, etc.
5.Anticipate your room blocks wash in your decisions : analyze periodically the wash per group types (initial versus actual room blocks)

For more information click here: revenue management or contact;

Patrick Landman
Phone: + 34 931 824 537
Skype: plandman
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