Transcript Posebnosti računovodenja in Revenue management v hotelirstvu

I. konferenca
Združenja hotelirjev Slovenije
Posebnosti računovodskega
poročanja in Revenue
management v hotelirstvu
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Dr. Gorana Ivankovič, izr. Prof.
UP FTŠ Turistica
Benchmark hotelske verige
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European Hotel Prices in April 2013 increase by up to
38% following last month’s decrease
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Leto 2013 v Sloveniji
V
prvih petih mesecih je v Sloveniji padla povprečna
stopnja zasedenosti hotelskih zmogljivosti za 10 % v
primerjavi z lanskim letom.
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Osnovne kategorije v hotelirstvu

Sobe – temeljna kategorija (opredelitev zmogljivosti, % zasedenosti, povprečna
cena/soba, GOP/sobo, stroški dela/soba, rezervacijski in distribucijski sitemi,
segmentacija gostov, dnevi v tednu po zasedenosti…)


Hotel – temeljna enota poročanja po USALI
Zajemanje stroškov (neposredni, splošni obvladljivi, neobvladljivi)
% GOP/Rev

Rev/PAR

ADR

BAR

Yiled percentige

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USALI
-
Za namene predvsem finančnega računovodstva
Vpliv ameriških mednarodnih hotelskih verig
Enotni standardni sistem računovodskega poročanja
na ravni poslovne enote
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USALI
 POROČANJE
PO
POSLOVNIH ODSEKIH
JE V SVETOVNI
HOTELSKI INDUSTRIJI
PRISOTNO ŽE OD
LETA 1926!
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Kaj je USALI ?
 Kratica
od:
 Uniform System of
Accounts for the
Lodging Industry
 Pomeni:
 Enotni
sistem
 računovodskega poročanja
v svetovni hotelski industriji
USALI (UNIFORM SYSTEM OF ACCOUNTS
FOR THE LODGING INDUSTRY)
JE TO – Standardi poročanja v svetovnem
hotelirstvu in prvi uspešno organiziran poskus
vzpostavljanja računovodstva odgovornosti
 KAJ
 KJE
SE DOBI - Knjiga USALI - X izdaja iz leta
2006, American hotel & Motel Association
KDAJ JE V UPORABI - Od leta 1926, začetnik
Hotel Association of New York City
 OD
FUNKCIONIRA – omogoča primerjavo
dosežkov posameznega hotela s povprečjem
primerljive skupine
 KAKO
 Koordinira
konzultantska hiša
“Horwath&Horwath” – World Wide Hotel Industry
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UPORABNIKI POROČIL : ZUNANJI IN
NOTRANJI (ravni poslovodstva) :
najvišje poslovodstvo
srednja raven poslovodstva
nižja raven poslovodstva
 USALI
VSEBINA POROČILA : VRSTA INFORMACIJ, KI JIH
POSAMEZNA POROČILA MORAJO VSEBOVATI ?
temeljna finančna poročila
notranja poročila (odseki in stroškovna mesta)
odvisno od vsebine ponudbe
DINAMIKA
POROČANJA:
dnevno
tedensko
mesečno
letno
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RAČUNOVODSKE REŠITVE V
HOTELIRSTVU
 PRI STROŠKIH IN ODHODKIH
 Hotel mora zagotavljati podatke:
z
z
z
o neposrednih stroških posebej za vsako
dejavnost (stroški prodaje, stroški dela in
drugi stroški)
splošne spremenljive poslovne stroške
(administrativni in drugi upravni stroški,
splošni stroški dela...)
stalne splošne stroške (nagrade
poslovodstvu, najemnine, stroški
zavarovanja, obresti, amortizacija...)
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RAČUNOVODSKE REŠITVE V
HOTELIRSTVU
 PRI
POSLOVNEM IZIDU HOTELA:
 Čisti prihodki po poslovnih oddelkih
 - neposredni stroški po poslovnih oddelkih
 Prispevek I po poslovnih oddelkih
 - (obvladljivi) poslovni stroški
 Prispevek II (GOP hotela)
 - stalni stroški (neobvladljivi)
 Prispevek III (poslovni izid hotela pred
obdavčitvijo)
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USALI OMOGOČA
primerjanje
dosežkov hotelov (mednarodna
raven)
enotno opredeljevanje kazalcev in kazalnikov
za hotele in za posamezne ravni odločanja
nagrajevanje poslovodstva in zaposlencev
skladno z dosežki
podlago državnim inštitucijam za odločanje v
turizmu
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Temeljni odseki dejavnosti v hotelirstvu
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Hiltonova veriga vrednosti
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POSEBNOSTI RAČUNOVODENJA
KAZALNIKI
DENARNI
NEDENARNI
(hotelirstvo - USALI)
PRETEKLI
DENARNI DOSEŽKI
- transparentnost
- primerljivost
- kratkoročna naravnanost
RAZMERE ZA
USPEŠNOST V
PRIHODNOSTI
- možnost napovedovanja
- negativni trendi
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Primer dobre prakse
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Primer dobre prakse
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Finančni učinki
Primer: Hotel na letališču
2011
Zasedenost %
58 %
Povprečna cena
RevPAR
2012
65 %
+ 12 %
84,5 €
83,5 €
-1%
49 €
55 €
+ 11 %
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Finančni učinki
Primer: Letoviški Hotel
Zasedenost %
Povprečna cena
RevPAR
2011
2012
70,6 %
76,1 %
55 €
39 €
52,5 €
40 €
+8%
-5%
+3%
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Kdo uporablja YM
 letalska
podjetja
 hotelska podjetja
 rent a car podjetja
 organizatorji potovanj
 organizatorji križarjenj
 možnosti bi bile še golf igrišča, gledališča,
muzeji, turistične privlačnosti, zabaviščni
parki…
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Accor group
Radisson SAS
Forte - Le Meridien
Savoy group
Thistle group
Southern sun group
Scandic hotels
Concorde group
Holiday Inn
Grand Hotel Holdings
Jarvis
Dorint
Envergure group
Oberoi group
Best Western
Sofitel
Chateaux et hotels de
France
Sofitel Firenze
Ibis Group Milano (7 hotels)
Mercure Roma (3 hotels)
Metha group (8 hotels)
The Charming Group Roma
Hotel Milano
Eden Roma
Barchetta Hotel
Villa D’Este Hotel
Advance Group
Bertolio Hotels
Hotel Enterprise
Hotel Savoy Majestic
Antares Group
Ripa All Suites Roma
Hotel Milano Bratto
Boscolo Group (15 hotels)22
Gallia Milano ...
Dejavniki uspeha pri YM
 Učinkovita
komunikacija med porabnikom in
ponudnikom
 Ustrezna organizacija poslovanja
 Integracija sistema YM z drugimi sistemi
 Prosti tok trženjskih informacij
 Splošno dinamičen trg
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Povpraševanje: Mix elastičnosti
 Cenovna

elastičnost = % ∆ povpraševanja
% ∆ v ceni
 Prihodkovna

 Križna

elastičnost = % ∆ v povpraševanja
% ∆ v prihodih
elastičnost = % ∆ v povpraševani količinX
% ∆ cene proizvoda Y
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Potrebne sestavine YM
 Segmentacija
trga
 Podatki o preteklem povpraševanju, gibanje
rezervacij in gibanje povpraševanja po sobah
za določeno obdobje ter napovedovanje
povpraševanja
 Metode in načela oblikovanja cen
 Dobro oblikovanja načela prebukiranja
 razvit informacijski sistem
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Kako se meri uspešnost YM?
Yield =
Prodane sobe
Razpoložljive sobe
Yield =
Doseženi prihodki
x
Povprečna cena
Najvišja možna cena
x 100
x 100
Potencialni prihodki
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Implement
objectives
Pre-requisits
implement
Faze implementacije YM

Za implementacijo tipičnega YM programa se potrebuje cca.
 od 2 do 3 leta
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Identifikacija potreb
Implementacija
informacijskega sistema
Organizacija, izobraževanje,
in nagrajevanja
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Koraki YM
1.
Analiza
podatkov
4.
Zbiranje povratnih
informacij
2.
Predvidevanje
3.
Določanje strategij
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Delež prihodka v potencialnem
prihodku – Yield percentage
prihodek
= Št. prodanih nočitev
 Potencialni prihodek
Št. razpoložljivih noč.
 Dejanski
X
Dejanska povprečna cena nočitve

Potencialna cena nočitve
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Kako?
 Na
osnovi informacij, ki jih redno
spremljamo, kot so:
ò pretekle rezervacije in povpraševanja skupin,
individualnih gostov , nepričakovanih (walkin) gostov, slučajnih (chance arrivals) gostov
ò pomembni dogodki v okolici
ò aktivnosti konkurence
ò promocijske akcije
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ò
ò
ò
ò
politiko overbookinga
poznavanje vedenjskih značilnosti potrošnikov
vremenske razmere
itd...
 Te
informacije bodo dale prodajnemu timu osnovo za
oblikovanje cen svojih storitev
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STRATEGIJE YM
 Ko
smo na podlagi informacij predvideli
povpraševanje ciljnih skupin je potrebno izdelati
marketing mix za te ciljne skupine in strategije
pridobivanja teh strank
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STRATEGIJE YM pa so:
 popusti
 segmentacija
 paketi
 diferenciacija
na podlagi dodane vrednosti
 repozicioniranje
 kratki oddihi
 določitev časa bivanja
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THE PRICING STRATEGY
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Strategije oblikovanja cen
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THE PRICE: A DEFINITION
 Price
is the sum of the value consumers exchange for the
benefits of having or using the product or service.
 Further, prices are the only part of the marketing mix that
directly create revenue.
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THE PRICE: FIRST QUESTIONS

1.
2.
3.
4.
5.
6.
7.
What is the price of a room and what is the value? It is
very difficult to give an answer because, you need to
answer to several other queries first:
Where is the hotel?
How far is from sea, motorways, the centre of the town?
Which period of the year?
Which kind of hotel (stars, services, etc.);
Which kind of service (B&B, HB, etc.);
Which kind of room (single, double, suite, etc.);
How many days do you live there?
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The most common mistakes in Pricing
 Prices
are too cost oriented. They are increased to cover
increased costs and don’t allow for demand intensity and
customer psychology;
 Price policies are not adapted to changing market
conditions.
 Prices are set independent of all elements of the
marketing mix.
 Prices ignore the peculiarities of the customers.
 Prices are a decision of management rather than
marketing.
 Prices are set without to take into account the marketing
objectives to achieve.
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The Variables to make a Pricing
Strategy

1.
2.
The variables to create a pricing strategy are:
Internal variables;
External Variables.
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Internal Factors
 Financial
objectives;
 Marketing objectives,
 Volume objectives;
 Fixed and Variable costs.
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 Financial
Financial objectives
objectives are probably the most
dominant objectives in the hospitality industry.
 Profit is the one that usually comes to mind first,
but built-in profit determination may be hard to
achieve in the hospitality industry.
 Sometimes, the thesis that the higher the price
the greater the profit is not true. Infact, high prices
alone will reduce volume in most cases. So the
operators reduce the price to get the customers
with the double effect to reduce the revenue and
to depreciate the product.
 Another financial objective in pricing is target
return on investment (ROI).
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 Marketing
Marketing Objectives
objectives deal with the actions that a hotel
must do to affect in a favourable way the demand by
price.
 One of the marketing goals is to achieve the trust of the
customer by clear and steady prices. This goal can be
achieved by special rates for high spending costumers.
(corporate rates).
 Another objective could be to cut market share from the
competition by strong promotional efforts. If a hotel offers
a Unique Selling Proposition (USP) can start with the
highest price that a high spending segment of customers
can bear. In this case, the hotel can avoid the initial
discounts.
 Another objective could be to desensitize the customer to
the price by all included price strategy. This is also called
price bundling.
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 Some
Volume Objectives
volume objectives are: to increase market share
and /or customer base, occupancy or seat turnover, and
contribution to fixed costs.
 In particular, occupancy objectives are very important in
the hospitality industry, where fixed costs are high,
whereas variable costs are low. Usually, they do not
overcome 10 or 20% of revenue. As soon as fixed costs
are covered a small earn can bring an important increase
of the profit.
 The best thing to do to improve the occupancy is not to
reduce the price. The best strategy is to use promotional
efforts to attract particular segments of customers or to
convince the actual customers to stay longer.
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Fixed, Variable & Semi-Variable costs
 Fixed
costs do not vary with changes in sales volume.
Examples are rent, rates, salaries, insurances,
depreciation;
 Variable costs vary in proportion to sales. Examples are:
foods, beverages and laundry;
 Semi-variable: vary in sympathy with, but not in proportion
to, sales volume. Examples are: power, telephone and
wages.
 A hotel can reduce the prices to a certain extent
depending on the quality and the amount of service
offered. Infact, when the prices are too low the quality of
service offered can be seriously affected.
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External Variables
 The
market, the actual and potential demand;
 The availability of rooms in the area;
 The prices and the offer of competitors;
 Variables like: inflation, devaluation, downturn, etc.
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The Market Analysis
A
correct pricing strategy starts from a perfect knowledge
of the hotel’s market and position in an area and finally,
who the competition is.
 Who are potential customers and what do they look for? It
is very important to know our customers and the potential
of development.
 It would need to be always up-to-date on current
occupancies and arrivals of the area.
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Competition analysis
 It
is very important to get the statistics of the competition
on subjects such as: number of rooms available, prices,
good quality information on products and services offered,
types of customers and proposals offered There are some
indexes that can help with this analysis.
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The Fair Share
The
Fair share is determined by
dividing the number of rooms
available at each property by the
number of rooms available in the
market as a whole.
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The Market Share
The
market share is determined
by dividing the number of property
room nights sold by the total
market room nights sold.
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The Fair Share and The Market Share: an
example
Number of
Rooms
Available
Rooms
Percentage
Occupancy
Rooms Nights
Sold
Our Hotel
300
109.500
76.5
83.768
Hotel A
454
165.710
70.0
115.997
Hotel B
400
146.000
75.0
109.500
Total
1.154
421.210
73.8
309.265
06/20/13
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The Fair Share: Calculations
 Fair
Share = (Individual property available room
nights/Total market available room nights). The amount
must be multiplied x 100.
 Our example: Our hotel would have a fair share of 26%
(109.500 rooms divided by 421.210); hotel A would have a
fair share of 39% and hotel B 35%.
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The Market Share: Calculations
 Market
Share = (Individual property room nights sold/Total
market room nights sold). The amount must be multiplied
X 100.
 Our example: Our hotel would have a market share of
27% (83.768 room night sold divided by 309.265); hotel A
would have a market share of 38% and hotel B 35%.
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The Fair Share – The Market Share:
Concluding Remarks
to the suggested example, our hotel’s market
share is 1% more than its fair share; the hotel’s A
market share is 1% less than its fair share while the
hotel’s B fair share and market share are the same.
These figures show that our hotel is enjoying a small
measure of success, while the hotel A is at a
disadvantage in the market and the hotel B is just
holding its own.
 This market analysis is helpful both in terms of tracking
area market trends and in measuring the impact of
various marketing strategies.
 According
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The Market Penetration Index
 It
is the index (based on 100) that allows to verify
what is the percentage of the hotel compared to
that of the market. You can achieve that by:
(Market Share/Fair Share).
 If the result is higher than 1 (or you sold more
rooms than your fair share) your penetration index
compared with that of the market will be growing,
differently, will be falling.
 In particular, this easy ratio compares effectively
the market share that one has to achieve – based
on the number of rooms compared with those of
the total market.
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The Competitive Market Analysis
Rooms
available daily
Rooms
available
yearly
% Fair Share
Rooms Sold
% Occupancy
% Market
Share
Market
Penetration
Index
85
31.025
17.8
20.083
64.7
17.8
1.00
Hotel 1
140
51.100
29.3
32.748
68.0
27.9
0.95
Hotel 2
69
25.185
14.4
13.213
64.1
11.7
0.92
Hotel 3
124
45.260
25.9
29.814
65.9
26.5
1.02
Hotel 4
60
21900
12.6
16.681
76.2
14.8
1.17
Total
478
174.470
100.00
112.538
64.5
100.00
Our Hotel

06/20/13
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Price methods
Mathematical
methods (or costs
oriented);
Empirical methods (or market and
competitors oriented.
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Mathematical Methods
– Plus Pricing;
 Mark-Up Pricing or Percentage Cost
 Break-Even Pricing;
 Contribution Margin Pricing;
 Building Cost Rate Pricing (or 1X1000 method);
 Method of Inflationary Calculation.
 Cost
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Cost- Plus Pricing
 This
method involves establishing the total cost of a
product, including a share of the overheads, plus a
predetermined profit margin. A common use in pricing
Food and Beverages is to relate the profit margin to the
selling price.
 Thus if the desired profit is 20% of the selling price, an
item that costs € 4, plus € 2 labor and 2 overhead, would
be priced at € 10. This results in 2€ of profit for that
specific item.
 Limitations: Cost plus pricing does not allow for flexibility in
pricing decisions, nor does it take into consideration
consumers’ perceptions of a product value. This method is
totally cost oriented and ignores demand. Further, this
method is also subject to mis-allocation of fixed and
variable costs which needs to realise the hotel’s service
product.
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Mark-up Pricing or Cost Percentage
 This
method is heavily used by the restaurant industry.
The selling price can be achieved by multiplying the cost
of the product by an extablished co-efficient, or a mark-up.
If a restaurateur buys a bottle of wine for the price of €10
and resells it at €15, his gross margin is €5. It means that
he will have applied a mark-up of 50% of cost and of 33%
of the selling price.
 Limitations: this strategy is totally cost-oriented; it ignores
consumer perceptions of value, particularly in times of
widely fluctuating costs; it tends to price high-cost items up
to a level that customers are unwilling to pay.
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Break-Even Pricing
 Break-even
pricing is used to determine at what sales
volume and price a product will break-even, where costs
are equal to sales.
 It distinguishes between fixed and variable costs.
 The break-even point is graphically plotted for prices using
the same fixed and variable costs. By plotting the revenue
generated at various prices, a comprehensive picture of
profit can be created if the demand is known at various
levels.
 Break-even analysis is a fairly efficient method of
determining profit margins at various price levels if sales
volume can be accurately predicted at the different price
levels. To predict this volume, knowledge of consumer
perception and demand is still needed.
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Break-Even Pricing: An Example
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Contribution Margin Pricing
 This
technique is very useful for hotels in soft periods of
demand: Rooms prices can be discounted substantially, in
order to have them occupied. Even though no profits are
made, a portion of the fixed costs that would occur if the
room was not occupied would be covered.
 The success of this technique must be assessed by
examining the total revenues from the rooms sold. After
all, selling more rooms at discounted prices may have the
same effect as selling fewer rooms at higher prices.
 Limitations: this method looks for an increase of
occupancy, but, can be very difficult in improving the
overall profitability of the hotel. Furthermore, there is a risk
is of depreciating the offers.
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Building Cost Rate Pricing (or 1X1000 method)
 This
is a unique method for establishing the selling price of
hotel rooms. Although it should serve strictly as a rule of
thumb, it is still widely used as a measure in the hotel
industry.
 The rule is that the average room rate in a hotel should be
€1.00 for every €1.000 of construction cost for room. Thus
if a hotel cost €80.000 per room to construct and furnish,
the average selling price of the room should be €80.00
 Limitations: this rule of thumb is somewhat archaic in
today’s world and totally ignores consumer perception and
demand. It should be used more at starting point than
anything else.
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Method of Inflationary Calculation
 In
this case the price is achieved by increasing the amount
of the last year by some points of percentage according to
the inflation.
 Limitations: It takes into account the increase of costs but,
it doesn’t consider the market at all.
 Further, this method shows the customer only the increase
in price, without verifing an improvement in the quality of
service.
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Empirical Methods (or market and
competition oriented)
 Competitive
Pricing;
 Perceived- Value Pricing;
 Expectation Pricing;
 Psychological Pricing.
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 This
Competitive Pricing
cannot be considered a real strategy but an
habit of several hotelkeepers to set their prices at
the same level of the competitors. Basically,
prices are set to the level of the strongest
competitor in order to defeat it on pricing.
 This strategy has been adopted from the firms
that are not market leaders, but based just on the
idea to offer lower prices than other competitors.
 Limitations: this method brings a levelling of
prices and services and results in an
impoverishment of overall offers available in the
area.
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Perceived- Value Pricing
Perceived-value pricing uses the buyers’ perception of value,
not the seller’s cost, as the key to pricicing.
 Researchers ask buyers how much they would pay for a hotel
room with and without certain amenities. This information
provides an idea of which features add more value than they
cost.
 A successful guest price mix depends on careful study of the
behavior profiles of major guest segments. For most hospitality
companies, this begins with a separation of guests into leisure
and business segments.
 Undoubtedly,
the most important distinguishing profile
characteristics of these two major segments is their relative
degree of price elasticity. In general, business travelers exibit a
inelastic price behavior and leisure travelers an elastic price
response.
 Limitations. This method can set a price too high or too low
according to the interpretation of demands made.

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Expectation Pricing
 The
reference or expected price is that consumers have in
mind, is based on some kind of prior experience or
knowledge. Reactions to prices will vary around this
pricing.
 The research says that customers’ satisfaction occurs
when the actual experience is equal or greater than that
which is expected.
 Thus, contrarily, consumers would be also satisfied when
the price paid is the same or less than that which he or
she is expected to pay for what was received.
 Limitations: It is very difficult to understand in a correct
way the right expectations of demand and this brings the
need for continues research of the different segments’
expectations.
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Psychological Pricing




Psychological pricing considers the psychology of prices, not simply
the economics. There exists a relationship between price and quality,
for this reason prestige can be created by selling products and
services at a high price.
Another aspect of psychological pricing is reference prices; these are
prices that buyers carry in their minds and refer to when they look at a
given product.
Another psychological pricing technique is called price-lining. This
technics groups prices togehter so that a perception of substantially
increased quality is created. For example, a wine list might have a
group of wines in the €8 to €10 range and have the next grouping in
the €14 to €16 range.
Still another version of psychological pricing is called odd numbered
pricing. This is a familiar tactic. Items sell at €6.99 rather than €7.00 to
create a perception of a lower price. This tactic is often used in menu
and hotel room pricing.
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68
The Hotel’s Rate: A Definition
A
rate can be defined as the
purchasing method of a service
sold in a certain period of time;
further, it defines the kind of
customers that will use this
service.
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69
An efficient rates’ strategy

1.
2.
3.
4.
5.
6.
7.
8.
9.
In order to set a reliable rates’ strategy you need to
attend to the following points:
What is the rack or standard price?
What discounts should be offered?
How will prices vary among different markets?
How often should prices be changed?
What impact should timing have on pricing?
What prices should be set for various facilities and
services?
Should prices be unbundled for different parts of a
service package?
What prices should be charged to non guests?
Should each item cover costs or produce a profit?
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70
1.The creation of a prices’ list

1.
2.
3.
4.
5.
In order to create an efficient price list there are some
rules to follow:
It should have a graphics layout consistent with the
image of the hotel, for this reason it must be realized
from a graphic;
The price list should be reprinted every year, so, one
can change some photographs in order to present new
services offered
It should be printed in different languages, and should
not be printed just as an edition in four languages;
The photos must communicate the atmosphere of the
hotel, in order to have a powerfull effect, for example –
include people instead of showing just empty places;
The paper should be heavy weight; preferably a good
quality better cardboard;
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71
2. The Creation of a Prices’ List
The price list should be easy to read and pleasant to
see;
7. The special offers and discounts should be highlited
using colors and graphic;
8. The prices’ list should be targeted to different segments
of customers; in case the hotel has two different kind of
customers, it would be better to prepare two different
kinds of the price lists;
9. The prices list should be the same as the method of
communication adopted;
10. The prices’ list should contain various methods to
promote low season and difficult periods, with attractive
phrases such as: (“a surprising stay”; "a golden
autumn…” etc.).
6.
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72

1.
2.
3.
4.
The Prices’ List: Concluding Remarks
It should be remembered that different types of
rooms should be on the price list.
They must be clearly highlited and to achieve
this goal one can use different colours and
symbols;
One can use pleasant names, that refer to the
identity of the hotel or that refer to items in the
surrounding area;
One can adopt names that reflect the level of
quality offered;
They should be well presented with indication of
services and features offered at the hotel.
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73
The Prices’ List: An Example
Kind of Room
Occupancy
Single
Occupancy
Double
Standard
Superior
De Luxe
Junior Suite
Suite
€150
€180
€200
€320
€360
€235
€270
€300
€320
€360
The different
kind of rooms
must be
explained.
The rates offered are inclusive of Room + Breakfast+VAT+Taxes
and Services
One should explain all the different services offered.
Check-out time: at 12.00.
All different types of Credit Cards are accepted.
06/20/13
74
A Potential Pricing Strategy


Two-tier Pricing
Decisions
Pricing Methods

Cost-Plus
Rate of Return
Method






Primary
Pricing
Decisions
Going Rate
Method




Secondary
Pricing
Decisions
Contribution Margin
Method
75
75
Yield
Management
Principles & Concepts
76
Summary
 General
presentation of Yield Management
 The application to different industries
 The main concepts and techniques
77
Why use Yield Management ?

Structural changes :
More competition
 More capacity
 Market more sensitive to price
and more segmented
 A trend towards deregulation


Increasing load factors but
decreasing yields. Results
IATA for 1993 to 1999 :
+ 47,3 % in traffic
 - 7,0 % in yields

Source : The Economist
78
A Definition


Yield Management is the practice of maximizing
profits from the sale of perishable assets, such as airline
seats or hotel rooms, through a combination of pricing
and inventory controls.
 Revenue
Management
Synonyms
of YM are :
 Real-Time Pricing and Inventory Management
79
YM is applicable in different industries
 Airline
seats
 Hotel rooms
 Advertising space
 Railway seats
 Tour Operator packages
 Car rentals
 Utilities (electricity supply...)
 Retail stores
The resulting value
of all these products
will be zero if they are
not sold on-time
80
A discipline poised to explode
< 1%
Distribution
Power
supply
Automotive
Installation Rate
(estimate)
Health
± 20%
± 80%
Airlines
1980
Transport
1985
Freight
Telcos
Car
rental
Tour
operators
Financial
services
Hotels
Media
E-commerce
1990
1995
2000
81
YM involves both price and capacity
 Better
match supply to demand
Demand
Scheduling
Planning
Overbooking
Supply
Price stimulation
Fare differentiation
82
The Optimisation Cycle
- 3 Years
- 1 Year
- 6 Months
- 3 MonthsCheck-in
Strategy / Development
• Fleet definition
• Property acquisition
Tactics / Scheduling and pricing
• Flight schedule
• Fares and conditions
• Allotments
Operations / Yield and capacity adjustment
• Increase/decrease capacity
• Close/open sales quota
83
YM Performance Indicator (Hotels)
L.F.
Load
Factor
REVPOR
REVPAR
Revenue
per
Occupied
Room
Revenue
per
Available
Room
Yield Management Optimizes
REVPAR
84
YM Performance Indicator (Airline)
Revenue
per
Available seat
R / AS
=
LF (%)
Load
Factor
x
Revenue
per
Occupied Seat
R / OS
 The
350 $
60 %
583 $
350 $
70 %
500 $
350 $
80 %
437 $
same
performance can be
obtained through
different load factors
and fare policies
 A yield index can
compare actual result85
to maximum theorical
Each application of YM is unique
 The
Concepts of Yield Management are identical for
any service company
 Its
Applications differ significantly between
companies
 The
analysis of the Sales Cycle allows to point-out
key differentiation criteria between companies
86
Hospitality Characteristics

The Market is Huge …





…but fragmented



356 000 hotels
15 millions of rooms
3,6 Billions of night stays
1,6 Billions of reservations
Independents : 85% of hotels for 65% of rooms
Chains (300) : 15% of hotels for 35% of chambres
…with a variety of management schemes



Independents
Franchised
Chains
Management Contracts
Associations : Best Western, relais du silence
87
Market Size
Hopitality has the strongest potential for growth
88
Distribution Channel

Many Intermediaries

Client
Travel Agent
Rate
$100
Commission
$10
GDSs
Booking fee
$3.5
$20

Many systems, often not properly
interfaced, and technologically obsolete

Many « fees » affect RevPAr
Switches
Booking fee
$2.5
Call Center
Hotel
Management
fee $4
Net Revenue
$80
Customers
Travel Agent
GDSs
Aggregators
& Switches
Hotel Chains
Central
Reservation
Systems
Property
Management
Systems
Direct (Phone, email, fax, hotel website, …)
Regional/local
On-line
Aggregators
Online Travel
Agents
Brick & Mortar
Travel Agents
Sabre
Galileo
Worldspan
Direct (Phone, email, fax, hotel website, …)
Switches
CRO
Call
Center
90
Hotel Specifics
Hotel Chains
Properties

PMS’s are THE source of information
for both fares and availability

PMS
CRS

The CRS is the « marketing » center

PMS

PMS

Several PMS’s may coexist for one
given hotel chain
Availability and fares may not be as
accurate as in the PMS’s
All distribution channels may not have
access to the PMS’s and they may not
have access to all available fares and
to true availability
Capacity control is decentralized
CRO
Call
Center
91
Few Standards




15 CRS : Rezsolution, Xenon…
60 PMS : Fidelio, Hogatex…
A few « PRS » : Opera
Switches (mere connections to GDS’s, with little added
functional value) : Pegasus, Wizcom
There is no IATA for the hospitality
92
Hotels versus Airlines
 Length


O&D are more numerous than LOS, but…
…Early departure and unexpected stay overs during a flight are not
recommended
 Hotels



of Stay Control versus O&D
have yet to embrace the fencing concept
Few Apex or senior/youth fares
Bargaining skills of guests can make a big difference
Hotels communicate on highest rates…not on lowest
 Airlines


are more flexible in adjusting capacity
Hotels can’t fly to where customers are waiting
A new hotel cannot open suddenly to cope with excess demand
93
Preconceived ideas ...

Assume an hotelier wants to improve the yield of a
standard room which usually sells at 80 € the night …
 His first idea will be to improve
the comfort of this room…
80 €
200 €
94
And reality ...
 However,
if this hotelier cannot sell this room anymore,
because it is too expensive for his usual guests, the
investment made has served nothing …
.…but make him bankrupt !!
95
How to sell hotel rooms...
 The
basic principle is to sell rooms according to
demand and not according to the level of comfort
Comfort
Demand
96
Facts …
1.
The Hotel management makes
more or less realistic rolling
forecasts, under the pressure of
the owner or the headquarter…
2.
The marketing people like innovation :
new markets, new products, new
fares, marketing campaigns… all the
better if it serves the revenue
optimisation objective…
1.
The reservation office answers all
reservation requests and try to
accomodate them, without
necessarily applying all restriction
rules …
1.
The "corporate" department will
try to negotiate as many room
nights as possible
97
And Problems
 Conflicting

objectives
A marketing campaign is
launched when the hotel has no
room available

The human factor

A clever reservation manager can
have a good picture of his hotel
business for the next two months
Group bookings produce high
spill of individual demand


The front desk is faced up with
high walk out rates due to
excessive overbooking


…

But he certainly cannot consider all
parameters for the whole year to
come
Besides, making a good forecast is
dependent on the « living
memory » of the hotel
98
How to do well ?
A
good forecast must integrate two things
Environment
Analysis
History
Analysis
Data must be relevant to the hotel and to its environment
99
Concepts
* A good optimisation must produce recommendations based on :
Hotel
Strategy
A good
Forecast
Intuition is replaced by a scientific blend of probability calculation
and capacity optimisation
100
Concepts
* Accepting or denying a group business can be made after an
economic trade off between group requests and future individual
bookings :
A group
Materialization
analysis
Forecast of
Incremental
Demand
101
A three part play
Optimization
Revenue
What
guest will book
when?
Forecast
Capacity
What
capacity for a
given price?
What
price for a given
capacity?
Revenue
Management
Demand
Price
102
The different controls used in YM
 Pricing
 If price is flexible
 Fare/Rate availability control
 If multiple fares are offered
 Open/close or booking limits (sale quotas)
 Alternate availability
 if multiple flights serve the market or if alternative dates/accomodations are
possible
 Overbooking - Capacity management
 If capacity is limited and reservations cancel or do not show-up
 Origin and Destination Control
 for multileg flights or hubs or hotel stays
or Length of stay
 Reservations Control
 80 % of the time of yield analysts...
 Group
Quotations
103
Components
Data
Analyzer
• Reservations
• occupied rooms
• Revenues
• denials
Models &
forecast
•Time series
•Long term
•Dynamic forecast
Front-Office
Daily capture
Optimisation
Recommendations
• Booking limits
• Overbooking
• length of stay
Deal
Quotation
Centralised
ReservationSystem
104