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Hotel Statements: A Model of Profit Maximizing Premia and Discounts
By Bram Gallagher, Economist, CBRE Hotels' Americas Research
Profit maximizing is the goal of the hotel owner; however, incentives or lack of information may lead the revenue manager to revenue-maximize instead. This paper examines a theoretical model of the differences in the approaches and suggests a simple statistical model to estimate the outer bounds of premia or discounts that should be applied to the revenue-maximizing ADR to achieve profit-maximizing. The model is applied to hotel statements, and I find that the amount charged in extended stay and limited-service hotels should be higher, full-service somewhat higher, and resort hotels the same or lower to maximize profit.
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| TRENDING THIS WEEK |
Be Aware Of Restrictive Covenants When Assessing Hospitality Agreements
By Steven D. Weber, Managing Partner, Stark Weber PLLC
Interests in the hotel industry are bought and sold. Contracts in furtherance of the sale of those interests may contain restrictive covenants. In some cases, restrictive covenants might take the form of contractual provisions that, among other things, restrict competition from a new owner or prevent certain uses. Use of a restrictive covenant may lead to litigation when one party contends that another party is in violation of a restrictive covenant. Hospitality industry players should be aware of the risks associated with restrictive covenants, and aware of the hospitality-related litigation that can result from them.
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This week's Top Pick... |
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5 Things Every Property Management Company Should Consider During Budget Season
By Lisa Bonanno, Vice President, Marketing, Knowland
Hotel property managers are tasked with ensuring that the ROI goals for their portfolio of properties are met. As part of that responsibility they are an integral to the budgeting process. Budget season is the perfect time to evaluate the efficacy of existing group sources of business to determine if they will continue to produce the same level of return going forward. As we approach economic uncertainty, it will be important to focus on controlling the bottom line and the impact derived from group business.
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DAILY HEADLINES - Thursday Oct 17, 2019 |
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More from our online Library Archives... |
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Breaking the Boundaries Between Hotel Revenue, Marketing and Sales
By Wendy Stevens, Chief Commercial Officer, First Hospitality Group
The field of revenue management is evolving with breathtaking speed. While fundamental priorities remain unchanged, new tools and new technologies have introduced new priorities. Hotel owners and operators who want to remain competitive need to work to break down the traditional boundaries that have existed between revenue, marketing and sales. Making that happen requires a more engaged and versatile revenue management team and an organizational commitment to applying a keen revenue-management-driven eye across departments. But breaking down those departmental silos means overcoming inertia and institutional resistance, and building a resourceful, coordinated and collaborative team.
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Optimizing New Hotel IT Revenue Tools to Your Advantage
By Yatish Nathraj, Hotel Broker, HTL Hospitality Advisors
Technology is becoming an ever more growing part of the hospitality industry and it has helped us increase efficiency for guest check-inn, simplified the night audit process and now has the opportunity to increase our revenue production. These systems need hands on calibration to ensure they are optimized for your operations. As a manager you need to understand how these systems work and what kind of return on investment your business is getting. Although some of these systems maybe mistaken as a "set it and forget it" product, these highly sophisticated tools need local expert like you and your team to analysis the data it gives you and input new data requirements.
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Integrating Ancillaries Into a Revenue Optimization Strategy
By Stefan Wolf, Senior Vice President Revenue & Distribution Strategy, Onyx Hospitality Group
Considering ancillary revenue streams can make up to 60% of hotel revenues of why would not any operator embark on the journey of total hotel revenue management? Apart from challenges related to the creation of a functioning revenue management culture the inclusion of F&B, spa and event revenue streams into that culture brings its own set of challenges. This article will explore these challenges and offer a guideline to successfully integrate additional revenue streams into a comprehensive revenue optimization strategy. Revenue per available room or RevPAR is a measurement of the success of a balanced occupancy versus average daily rate strategy.
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November 2019: |
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Architecture & Design: Biophilic Design |
The hospitality industry is constantly evolving to meet and exceed guest expectations. As a result, hotels are always on the lookout for new ways to improve the guest experience, and architecture and design is an essential part of this equation. Bold design is often the most effective way to make an exceptional first impression - an impression guests use to distinguish between brands. One design trend that is being embraced worldwide has become known as “Biophilic Design.” Biophilic design is based on the concept of biophilia, which is the theory that human beings have an innate tendency to seek out nature, natural elements, and natural forms. Biophilic design is more than hotels simply adding a surplus of plants; it involves incorporating specific design elements into a hotel in order to imbue it with a sense of wellness and well-being. Some of those elements include exposure to natural lighting; views of nature and rooms with a view; natural architectural patterns; salvaged or reclaimed woods of all types; reclaimed metals; sustainably sourced stone; living green walls and vertical gardens; and direct and indirect exposure to nature. Hotels that have incorporated biophilic design into their properties are reaping the benefits associated with this trend including reduced stress responses, better air quality, lower energy costs, and more positive guest reviews. Biophilic design has also been shown to improve guest moods and to satisfy consumer demand for environmental responsibility. Savvy hotel owners and managers are aware that nature-inspired elements enhance their guests' comfort and well-being, which is why this trend is becoming so prevalent. Biophilic design is just one topic in the fields of hotel architecture and design that will be examined in the November issue of the Hotel Business Review.
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Revenue Management: Focus On Profit
