Rates, yield and distribution costs should not be left to chance, but instead managed strategically. Such professional revenue management has been essential for a long time, not just for rooms, but increasingly in the field of events too. Sales expert Bianca Spalteholz explains why.
text: Astrid Schwamberger
Revenue management took hold in the accommodation sector many years ago. But what’s the scenario in terms of strategic management of supply and demand in the event area?
Since so many hotels in the accommodation sector already have experience with revenue management and have been successful with this, in my opinion, it won’t take long until revenue management is also established in the MICE field. However, the private hotel industry is still in its infancy in this regard.
That’s right. But in the accommodation sector, it’s much easier to decide whether to accept a reservation or not. At the end of the day, it’s “just” a room. If there are fifty available rooms, and there’s demand for forty, then each room reservation is simply accepted. But when there’s more demand than rooms, then demand is controlled by pricing. Requests for events are much more difficult to assess. One request covers a huge number of factors in terms of sales: it could be accommodation, F&B sales, technology and room rental, it could be reserved far in advance or at the last minute. It might come to a good overall value or a very good or even excellent value, but it must also be compared to the short-term revenue that it displaces. And it can systematically make a mess of the weekly yield in the accommodation area.
Because these requests hardly ever match the offer exactly when you look closely. Suppose we have a request for forty people, for one room. But this room actually has space to seat for eighty people in a certain style. If you want to play it safe, you accept the request – and then later get frustrated when a much more valuable request comes in for more people and more F&B sales.
First of all, find out what actually happens when. So all the possible data regarding capacity and availability, demand and booking history has to be gathered and analysed. Exactly when a customer makes a request, for how many people and the date for which a meeting is to be planned and how much sales potential lies behind it. Also keep track of whether the meeting in question was rejected or accepted and for what reason or whether it was lost while the request was in progress.
Excel spreadsheets are a good way to start and better than nothing. Above all, the important thing is a structure. You need to know the objective, so that you know where to begin. At the end of the day, gathering all the relevant parameters is a very complex task. Digital revenue management tools do away with a lot of the work. Fortunately, the first solutions are already in place, including for the MICE field.
These are now on the rise and in fact, coming from several directions. As was the case for the room sector, in its time, the new systems identify processes and provide structures. And consequently, hotels are now beginning to take action. They are recognising the need to gather information. Many chain hotels are already using reasonably structured data for the request process in the new booking portals. Independent hotels are lagging a little behind, because they don’t have these processes available to them in such a structured way.
Hard to say. But an operator who has more than three event spaces and more than eighty rooms should think about how these are to be filled. This means, that both areas must be brought together, because on many days, the demand for rooms is higher than that for the event spaces, and equally, this can be the other way round. If both days exhibit similarly high demand in both areas, then things get even more complicated. This is by far the most difficult balancing act. As then you have to make decisions. If valuable business in the room area is lost (such as bookings from regulars, corporate clients or even potential new guests) due to conferences or other events, then over the medium and long term, success will fail to materialise.
It’s quite clear: sales! Backing things up with figures simply makes events more lucrative. If you look at the facts, it will give you the courage to say no to a request now and then, for example.