Open For Business: How to Ensure an Independent Hotel Is Revenue Ready From Day One.
By Rachel Grier - Exclusive for 4Hoteliers.com
Tuesday, 12th January 2016

Exclusive Feature: Based on the economic growth and investor confidence in recent years, the hotel sector in the Asia Pacific region is experiencing continuously high levels of construction: there are 2,393 hotels that total 556,637 rooms under contract in the Asia Pacific region.1 

The rapid pace in which these hotels are being constructed and opened is leading many in the industry to question whether these hotels, in particular independently owned properties, are adequately prepared for the challenges they face in optimising their revenue potential.

This is especially apparent in the face of strong competition from the existing properties, in addition to the well-resourced and established global hotel chains.

Many independent hotels across the region struggle to reach their optimal revenue potential due to poor pre-opening preparation and a lack of in-depth pricing strategies to address varying market demand and conditions. It is no longer enough to build a great property, ensure the rooms are nicely decorated and have staff in place to service potential guests.

An integral component to the pre-opening process should be considering the optimisation of room type configuration, as well as the implementation and integration of revenue management technologies with the hotel’s IT infrastructure and platforms.

There are many areas that must be covered throughout the pre-opening phase of an independent hotel, ranging from establishing market segment revenue and sales strategies, undertaking comprehensive competitor evaluation, pricing research, pricing processing and forward planning of market demand cycles. It is also important that properties follow a structured, standardised approach to pre-opening to ensure consistent and effective results from day one.

Independent hotels under development should consider addressing their pre-opening processes in two stages to allow for a mixture of onsite training and strategy preparation. The strategy setting process (in which pre-opening revenue, marketing processes and actions are developed) should be undertaken a minimum of six months before a hotel has their soft open.

It should ideally consist of:

  • Strategic hotel analysis that includes a study of the micro market and overall economic factors that could affect the hotel’s performance.
  • Finalised competitor analysis, including competitor value and benefits positioning.
  • Set pricing structures based on market conditions and hotel positioning.
  • Established channel strategies according to product positioning and market environment and cement “product positioning” (i.e. Hotel Descriptions, Room type descriptions etc) through all channels.
  • Market segmentation strategies and action plans with a particular focus on business with long lead times (wholesale/groups etc.) This should be developed in collaboration with the sales and marketing department.

A pre-launch process is also critical in ensuring that all stakeholders are fully trained, aligned with strategies and able to implement appropriate revenue management strategies across rooms and ancillary revenue streams.

This process should be undertaken three months prior to a hotel’s opening, and be focused on checking that all pricing and operational systems are in place and that all tools and processes that track key competitor performance data, including daily competitor performance and competitor pricing activities, are functioning.

Key tools used to support daily revenue management processes should also be developed at this time, focused on the construction of a comprehensive 365-day demand calendar and the evaluation of tracking actuals and on-the-books (room nights and revenues) business by market segment.

All staff working alongside, or within the hotel revenue management team, should be provided guidance and support during the hotel’s crucial soft opening period, which occurs between 60-90 days after its initial opening. Once a new hotel has opened, continued staff support and additional training will ensure that staff members are able to meet their defined strategic goals and handle developing market expectations.

Throughout the entire pre-opening preparation process, it is important that both the corporate revenue management team and general hotel managers are briefed at regular intervals, given honest feedback about any potential issues, notified of successes and alerted when critical milestones have been achieved. It is key to re-evaluate the original assumptions and planned strategies developed during opening, as pre-opening plans and post-opening realities often differ.

Hotels need to be flexible in the initial stages of opening so that they can adjust strategies and respond to outcomes and evolving market conditions. This allows an independent hotel to prepare staff and get overall management buy-in for the hotel’s approach to revenue management, which will help ensure that their revenue management systems are used effectively.

If an independent hotel is to succeed in Asia Pacific’s increasingly competitive marketplace, it must be able to meet the challenges of varying demand upon opening. The success of a particular hotel or resort can be determined in the initial few months, both in terms of industry reputation and financial success.

This makes the implementation of an appropriate and flexible revenue management program essential to a hotel’s entrance into the market at the right price, in the right channels and at the right time.

1 - according to the September 2015 STR Global Construction Pipeline

This is strictly an exclusive feature, reprints of this article in any shape or form without prior written approval from 4Hoteliers.com is not permitted.

Rachel Grier is Managing Director Asia Pacific for IDeaS " A SAS Company


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