Big data or Relevant data (part 2)

Big data or Relevant data (part 2)

Last week we looked at the first data points that I evaluate when starting to consider a rate strategy:Base Rate / Lead Times / Day Trends / Current Rate Levels / Market Segment Behaviour and ADR bySegment - so you can evaluate how your business will materialise.So what next?Business Status - How much of your business is Guaranteed?  How much is Un-Guaranteed? How much is Tentative?  Not all hotels use all 3 booking statuses but at the very least will have Guaranteed and Un-Guaranteed and this will of course effect your rate decision.  One of the most common issues I find, even after 12 years of being a freelance Revenue Manager, is that lack of communication between departments can have a huge detrimental affect on revenue.  One of the most common issues lies with how weddings are handled.  I often find that the events team just don't ask the right questions and often room division are then left holding too many rooms for a block that doesn't materialise. This is of course true for all types of events but I can guarantee that poor communication is impacting your revenue.Making sure that you are on top of allocations and understanding expected 'group wash' is key.  What happens if you under estimate the number of rooms a group may need? You potentially get yourself into an over-booking situation, or if you over estimate? You have probably moved your transient rates too soon and may have displaced business to competitors.Understanding if a group will confirm and when it will confirm should be key in every rate decision.Competitive Set Data - if you don't have a competitor rate shopping tool, then I would advise you to get one.  That said, understanding what your competitors are selling at should only be one part of your rate decision and not something that should directly impact your decision. Too often I see hotels quite literally following what their main competitor is doing and then adjusting their rates accordingly.  Whether that is £5.00 more expensive or £5.00 cheaper, is that really a sensible strategy? Absolutely not.  What your competitors are selling at should always be a 'soft metric' - after all, their Revenue Manager might be an idiot!  But seriously, you don't know what is happening within their 4 walls.  They may have lost a group which has made them adjust their rates down or perhaps picked up a piece of business that will only ever impact them which increases their rate. So why would you mirror what they are doing?  Make sure your own house is in order first, then take their rate into consideration.  If you have strong business and demand into your area is high, then let them make whatever rate decisions they want - you hold strong  and 'paddle your own canoe'.Length of Stay - do you really understand your LOS patterns and the impact that they can make on your business? I often see hotels try to enforce a 2 night minimum stay at weekends and this usually just doesn't work.  You have to know when to put these restrictions in place and when to understand that heavy restrictions can often be detrimental to business if they are 'blanket enforced'.  Often it is a case of suck-it-and-see and hotels often try and put weekend restrictions in place, sometimes they work and sometimes they don't but you always need to measure them.Most hotels find that stays are shorter and shorter but if you do have a pattern of longer length of stays then these need to be understood.  You might have corporates that tend to stay three or four nights midweek and if so how does this effect business either side?  Don't forget that multi-night stays effect both stays after and before as they will limit your availability. So if you are the type of hotel that depends on multiple night guests, then you need to understand the impact they will have on your business.Day of Week - It seems simple I know, but I often find that hotels just don't evaluate trends but day of week. Tuesdays in March will behave very differently to Tuesdays in July, so are you accounting for that?  Do you know for example, how Tuesdays in July normally sit, 4 weeks out?  If you did, wouldn't that be impacting the decision you make on rates for July right now? Don't always assume that Saturdays are going to be busy and don't always assume that Fridays are difficult.  Know you patterns and know them well in advance and this will definitely help with your rate decision.Channel Behaviour - We all rely too heavily on the OTA's and maybe even GDS but do we really understand the impact these channels have on our business and no it is not all down to the hefty commission cheques we need to write each month.  These channels are making a significant impact on business and we need to understand when they book, the type of room they book, price point, lead time, length of stay, cost of sale and of course incremental spend.  To ensure that we are maximising our profitability from these channels and accepting business when we need it (not the other way around), we need to have a handle on all aspects of the OTA's.Cancellations - quite a good one to follow after channel behaviour as there is no doubt that one of the biggest culprits for cancelling are the OTA's.  There are hotels that fall foul of thousands of pounds of cancellation revenue in the month for arrival that month.  They potentially made decisions on rates expecting a base of OTA business that never arrived.  Perhaps rates were pushed too high on the expectation of business that never arrived. Cancellations should be one of your first measurementsSo from last week to this week, I have given you 12 measurements - there are dozens more but if you are tracking just these 12, I have every confidence that your business will benefit.Happy tracking and for all things revenue just ask@rightrevenue.wpengine.com