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.

What is the difference between revenue management in the field of events compared to accommodation? Aren’t both cases about balancing supply and demand in the best possible way?

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.

Why is that?

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.

So what’s to be done?

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.