Month: September 2013
Yield Management in Hotel Industry
Yield management is the process of understanding, anticipating and influencing consumer behavior in order to maximize profits from a fixed, perishable resource. Yield Management, also called Revenue Management to sell the right product to the right customer at the right time for the price, thereby maximizing revenue.
Therefore maximize revenue in hotel by:
•Pricing: how to price the room rates
•Inventory allocation: how rooms are reserved
•Selling strategy: how to sell the room
Pricing
Hotels use Yield management to calculate the rates based on their hotel’s property, targeting customers and market situation, and like that in order to best maximize return. As occupancy demand increases and room availability decreases, lower rates are closed to sale and only higher rates are available. Hotels today need a base of business in order to cover operational expenses. So, it is impossible to sell all rooms at the same rate.
Therefore, hotel enables a rational pricing structure. For example, there is walk-in corporate, rack rates, balk discount, promotional rate and early bird discount for selling a same room. Customers can be offered a specified price for a room by fulfilled requirement or based on rooms available to sell in order to maximize the profit.
Inventory allocation
In the hotel industry, capacity is regarded as fixed. When the day passes, the unsold rooms cannot generate any revenue and thus can be said to have perished.
Therefore, Yield management teams or sale teams monitor how rooms are reserved by reservation system and react accordingly. There are various inventory controls in hotel. For example, hotel offer discounts on low-season, where the rooms will likely not sell-out. The converse, selling more-expensive rooms when there is excess demand, managing off demand.
Another way of hotel capture varying willingness to pay is to attempt market segmentation. Hotel repackage its basic inventory into different products to this end. Hotel is implementing length of stay, non-refundable rate, or close to arrival. The aim of this is increasing the profit.
Selling strategy
Targeting the right, E-Commerce, also called Online Distribution is a distribution channels that allows selling or marketing hotel online. From search engines, to booking solution sites, to social networks, and to travel marketing sites, there are thousands of ways that bring more exposure and demand nowadays.
References:
Yield management
http://www.hotels.mudransh.com/Hotel_Yield_management_note.pdf
Inventory allocation
http://scholar.lib.vt.edu/ejournals/JIAHR/issue1/
Selling strategy
http://smartehotels.com/blog/2012/09/28/yield-management-strategies-right-hotel-room-pricing/
Examples of Revenue and Cost Centers in Hotel
For a hotel, there are different room division operations which can generate revenue and incur costs.
Revenue Centers
For profit making, the operations are included the reservations, concierge, communications, Food and Beverage and housekeeping (laundry).
1. Reservations
The staff confirms the booking and the reservations by the guests. The guaranteed reservations are given when the person make the reservation wishes to ensure that the reservation will be held. The guests need to pay an amount of deposit or full payment to reserve the room.
2. Concierge
The staff provides additional tourist information for the guests, for example, helping with restaurant reservations, showing directions, selling tickets to shows.
3. Communications
They are in charge of in-house, guest communications, and emergency center. It can generate profit as hotels generally add a 50% charge to all long-distance calls placed from guest rooms
4. Food and Beverage
F&B can make profits from the sale of food, alcohol, and non-alcoholic beverages in restaurants, lounges, room service, mini-bar, and banquet rooms. It also includes revenue from public room rentals, service charges, and the rental of audio/visual and other meeting room equipment.
5. Housekeeping (laundry services)
As the guests stay longer time in hotel, they may need laundry services. Hotels can charge additional amount for washing and drying guests’ clothes.
Cost Centers
For the operations incurring costs, there are the front office, housekeeping (cleaning activities), guest services and security.
1. Front office
Staff is responsible for selling and up-selling room, maintaining balanced guest accounts, offering services like handling mail, faxes, messages, and local and hotel information.
2. Housekeeping (cleaning activities)
There is the largest number of staff in hotel and they are responsible for the cleanliness activities in the guest rooms and public areas.
3. Guest services
The staff needs to greet the guests when they arrive at the hotel, escort the guests to the front desk, personally allocate the room, and take the guest and luggage to the room.
4. Security
It provides guest safety and loss prevention.
Recent Trends About Operating Rooms Division in Hotels
1. Extensive use of technology
1.1 To facilitate guests
Since business travel becomes popular, businessmen may hold conferences and meeting in hotels. Therefore, hotels are having more advanced equipment in conference rooms and also hotel rooms to facilitate those guests. For some luxury hotels, they may have free wifi coverage in rooms, but some lower fame hotels, most of they only have wifi coverage in hotel lobby and wifi is charged in rooms.
For example, The Park Hyatt Tokyo rents guests a pocket-size mobile Wi-Fi connector to use with an smart phone or laptop to make international calls and get Internet access wherever they go during their stay.
1.2 To facilitate operations and security
In the past, workers had to count sheets, towels, robes, etc. by hand on the way out of the hotel to the laundry and when they come back in order to avoid theft. Some hotels now use small radio frequency ID tags, which transmit radio waves, so that when a cart of laundry passes by a sensor, the numbers of items inside are displayed. So, technology helps to save time and also facilitate the hotels to manage inventory.
2. More customer service-focused
Hotels are using many social media, like Facebook and twitter to communicate with their customers and potential guests. Take Ana Silva O’Reilly as an example, she is a travel blogger and marketing consultant based in London. She posted on Twitter that she would be checking into the Four Seasons Hotel in Milan. Then the hotel responded to her that Four Seasons Hotel was looking forward to her arrival. This action can surprise the customers to make them feel warm and of course to increase customer’s loyalty.
3. Personalization in guest service
Personalization means to provide something according to different guests’ personal needs. Hotels may provide different morning newspapers, lines of bath products, and designed rooms. Also, staff may be trained to remember the guest’s name and preferences. For example, Berkeley hotel in London provides special services for children and baby-sitting by prior appointment. These personalized guest services satisfy their guests.
4.Educating guests of environmental works
In order to reduce the use of resources, like water and cleaning supplies to wash the towels, hotels encourage guests to reuse the towels during their living days unless the towels are dirty and are needed to be replaced by new one. Also, hotels may not replace the bath supplies (shampoo, shower gel) unless the guests have checked out or requested by guests. These actions help to elevating environmental consciousness of guests and reduce the waste of resources in hotels.
5. Front line staff are multilingual
Due to the increase in globalized travel, the requirements, especially language requirement of front line staff are getting higher. Staff working in front office, housekeeping, concierge and guest service get in touch with customers from different countries every day. Therefore, able to speak local language is not enough. Most staff is required to be able to speak two or even three languages fluently in order to communicate with their guests. Since Chinese like to go travel to some developed countries, able to speak Putonghua is an advantage to staff who works in hotel.
6. Reducing workload on housekeeping
Hotels now encourage guests who stay more than one night that if they think that the room, especially the bed do not need to be tidied up again, guests can put the sign on the door handle or on bed so the housekeeper will only handle the waste disposal. This helps to reduce the workload on housekeeping.
Reference:
Top Hotel Technology Trends in 2012, by Ted Horner
http://hotelexecutive.com/business_review/2888/top-hotel-technology-trends-in-2012
Hotel’s facebook
1. Four Seasons https://www.facebook.com/FourSeasonsHotelHongKong
2. Ritz Carlton https://www.facebook.com/ritzcarltonhongkong
Comments on Vacation Ownership
Vacation ownership is good for travelers. For the travelers, they prefer living the accommodations with flexibility and desire to enjoy a variety of vacation experiences. With pointed-based scheme, the members could change to different resorts to reach their leisure purpose. It can release travelers’ stresses on finding the suitable vacations as they can enjoy the priority in selecting accommodations.
Apart from the travelers, it is also good for retired people. Vacation ownership hotels provide fully furnished home and housekeeping services for the vacationists. The retired people only need to pay for a one-time purchase price and payment of a yearly maintenance fee to enjoy the accommodations and vacation facilities.
However, it is difficult to target the business people due to globalization. With globalization, the advanced technologies bring the convenience to business companies such as videoconferencing. Business people could communicate with each other via internet, and the companies could reduce the travel costs in business trip. When the business travel decline, it may reduce the income source from business people of vacation ownership.
Therefore, the vacation ownership companies may need to think some promotion strategies to attract those business people. For instance, it can provide the price incentives or special packages for people in business trip.
To sum up, vacation ownership offers people to travel the world through exchange vacations. It provides fully furnished accommodations in various forms that especially benefit to long-trip travelers and retired people. Although the globalization leads the decline in business travel, there are still some ways to attract the business people by promotion strategies. Hence, vacation ownership could still popular in nowadays.
Franchising, Management Contract and Vacation Ownership
Franchising
It is a business model letting hotel franchisor to expand its franchising activities by allowing franchisee to keep operating the property using marketing, external branding and reservations.
Benefits
To franchisor:
– Being expanded without enormous capital investment
– Generating new income from franchisor’s start-up fees
To franchisee:
– Saving time to build the brand name
– Enjoying the marketing tactics from franchisor
Drawbacks
To franchisor:
– Losing control over its products and services
– Leading to unstable quality between different hotels
To franchisee:
– Paying part of the revenue from gross profit to franchisor
– Losing autonomy as following contract commitment strictly
Example 1: Hilton Hotels Corporation
– Building relationship with all of Hilton Worldwide’s hotels
– Providing suggestions or guidelines in design and renovation projects, staff training and operating procedures
http://www.hiltonworldwide.com/
Example 2: The Intercontinental Group (IHG)
– World’s largest hotel group by number of rooms
– Nine hotel brands with more than 4,500 hotels
– 34.3% revenues out of total are from franchise.
http://www.ihg.com/intercontinental/hotels/gb/en/global/hotel-directory
Example 3: Choice Hotel International
– Operating business mainly in European countries
– Paying 4-6% gross revenue for the annual fees.
– Franchising income shares 40.8% of the total revenues
Management Contract
It is an agreement of which the hotel owner pays a management fee to the hotel operator for management services. Full responsibility of the daily operations of the property is transferred to the operator.
Hotel management capabilities including a wide range of functions, such as technical operation, accounting, marketing, training, etc., is offered by the operator. Thus, operational expertise helps the owner to enjoy increased efficiency and revenue.
Example 1: Starwood Hotels and Resorts
– More than 400 hotels make a management contract with Starwood
– Providing centralized reservation services
– Coordinating national advertising and marketing and promotional services
http://www.starwoodhotels.com/
Example 2: Hilton Management Services
– Managing over 340 properties in the America
– 69,000 team members across all industry segments
http://www.hiltonworldwide.com/development/management-services/
Example 3: Mamaison Hotel Management
http://www.mamaison.com/contact-us-contact-us-head-office.html
Vacation ownership
It also called interval ownership or timeshare, is one of the fastest growing segments of the travel and tourism industry. It offers opportunity for customer to purchase fully furnished vacation accommodations in different forms.
Vacation ownership allows customer to purchase the resort apartment in either perpetual basis or specific number of years by paying the one-time purchase price.
Furthermore, vacation clubs (or point-based programs) provide customers the flexible way to use the accommodations in various locations of resorts. Resort Condominiums International (RCI) and Interval International are renowned vacation exchange companies. They provide different kinds of resorts in worldwide for customer to choose.
Example 1: Marriott Vacation Club
– Offering the desirable locations such as world-class skiing and championship golf destinations for members
Example 2: Park Hotel Condominiums
– Located in the heart of Main Street in Park City, USA
– Providing warmth and comfort theme room in Victorian style
Example 3: Hilton Grand Vacations
– Affording the members flexibility and leisure-travel opportunities
– Creating travel partnerships with travel agencies to provide members with a unique selection of resort options
References:
Marriott Vacation Club
http://www.marriottvacationclub.com/
Park Hotel Condominiums
http://www.parkhotelparkcity.com/
Hilton Grand Vacations
http://www.hiltongrandvacations.com/
The Latest Trends and Development About Hotel Lodging
Since technology is changing rapidly these days, there is different trends in hotel lodging.
1. Device and entertainment autonomy
Hotel guests travel with an increasing number of personal devices for their work or entertainment. A SmartBrief poll showed that 45% of hotel guests travel with two devices and 40% with three or more.
Marriott is responding to this trend through guestroom design, ensuring guests have the electronics (adequate and easy-to-reach plugs, bandwidth capabilities) and ergonomic support (seating and surfaces) they need.
2. Service automation
Nowadays, some guests prefer to interact with hotel staff through technology rather than picking up the phone.
The Hyatt Union Square New York offers 3 check-in options for guests:
A. an iPad check-in with a staff member called Gallery Host
B. a self-serve check-in kiosk
C. the traditional front desk
Surprisingly, About 40% of hotel guests select the iPad option.
Marriott recently launched a test in 31 hotels that will allow for remote check-in. The hotels send messages to guests 24 hours ahead of arrival asking for their planned check-in time, and the hotel answers back to let them know when their rooms will be ready.
3. Meeting spaces go high tech
Marriott recently introduced its Red Coat Direct service, which allows meeting planners to electronically communicate with hotels where they have scheduled events.
With this first of its kind app, meeting organizers can now adjust and edit their meeting requests and preferences with a touch of a button and without ever leaving the meeting room. Red Coat Direct is the first branded hotel app to grant any meeting wish (within reason) from room temperature adjustments, to coffee refills or having lunch served earlier with an additional vegetarian dish.
Red Coat Direct’s technology allows planners to continually adjust requests without missing a minute of their meeting or keeping other professionals waiting.
The app is personalized to the each organizer’s specific meeting. The app is available for all internet-enabled devices including iPhone, iPad, Android phones, Kindle Fire and laptops and will be available in 19 languages by 2014’s global roll-out.
Different Types of Hotels and Unusual Hotels
1. Airpot hotel : Hong Kong SkyCity Marriott Hotel
Location : 1 Sky City Road East, Hong Kong International Airport, Lantau • Hong Kong, China
Quan Spa at Hong Kong SkyCity Marriott Hotel
A spa near the Hong Kong airport. Relax after a hard day’s work or play, and treat yourself to an indulging spa treatment.
It also has Health Club to provide Fitness services such as Whirlpool, Sauna, Steam, Quan Spa
Special guest can have the right for 24-hour access. For Swimming:Indoor Pool
2. Casino Hotel: Lisboa Hotel
Location : Located in the Central Business District, 15 minutes from the Macau International Airport
It provides many facilities including fitness center, sauna and massage and the science fiction world amusement game center. The hotel provides free wi-fi service and drinks in the room so it makes money mainly from the gaming rather than from the rooms. It open 24 hours with the world’s largest and famous casino Lisboa.
3. City Center : Regal Hongkong Hotel
Location: Regal Hongkong Hotel is located in the heart of Causeway Bay, Hong Kong”s vibrant commercial and shopping district, and is adjacent to Victoria Park and Times Square
Rooftop Swimming Pool (1.2M)
Overlooking a spectacular harbour view, the rooftop swimming pool and the poolside sunbathing deck offer respite away from the bustle of city life.
Unusual hotel 1 : Sand Hotel in United Kingdom
World’s first sand castle hotel at Weymouth beach in the seaside Town of Dorset in the UK.For a mere 21USD a night guests can enjoy sleeping on a sand bed, bask in the summer sun and listen to the tide.
Unusual hotel 2 : Ice Hotel in Canada
Unique ice and snow hotel offers a distinctive and incomparable experience
Reference:
Unusual Hotels http://manningsheathhotel.co.uk/types-of-hotels/unusual-hotels.html
Casino 