The Role of Next Gen Venue Technology in Profit Optimisation
With a brand-new year stretched out ahead of us, the hospitality industry continues its forward momentum towards a more streamlined, personalised and more importantly — optimised — group business landscape for planners and hoteliers alike. Not only are planners coming to expect a more customised, digital-savvy experience from properties, but hoteliers are empowered with the technology they need to enhance their operational model and optimise their groups and events revenue potential.
As a hotelier, ask yourself — what does your full profit picture look like? Are you making the most of each guests’ stay and implementing an effective sales strategy? Have you optimised occupancy across highs and lows of the season? Are you primarily depending on transient business, or have you cracked the code of group business?
Ultimately, are you empowering your property with technology that reveals your hotel’s true profit potential?
In the past, group business was often treated as a revenue filler while transient business received priority. However, over time it has become increasingly apparent to hoteliers that group business (and the revenue it generates) is an vital piece of the profit puzzle. And with occupancy rates reaching a 30 year high and inspiring increases in average-daily-rates and RevPAR, group business should be an integral part of any hotel’s overall revenue management strategy. Of course, this becomes a rather tricky proposition when hotels are relying on an outdated venue management system that fails to adequately account for various revenue streams.
Given the dynamic (and sometimes complicated) nature of group business, hoteliers require the appropriate tools and strategies to effectively identify and maximise group value. With this in mind, it’s more important than ever before for hoteliers to shift away from the limitations of legacy systems and invest in a sales and catering venue management system that includes profit optimisation and revenue management capabilities.
How can hoteliers truly understand and anticipate the value of prospective group business? This represents an important consideration faced by sales teams, as they look to accurately evaluate and prioritise group business.
Traditionally, legacy venue management systems have focused more on RFP management, rather than revenue management as groups and event booking management has been, until now, behind the pace of other technology advancements seen within the hospitality industry. The pricing strategies that were available predominantly focused on RevPAR as the primary performance metric when developing a pricing optimisation strategy for group business. The problem with this? RevPAR index growth or decline is not always the best indicator of overall profitability. While RevPAR is a valuable metric, a sole focus on room rates alone fails to account for other, valuable revenue streams that are unique to the group business sector.
With this in mind, we are seeing an important shift in profit optimisation strategies to consider Total Group Revenue Management which considers these other, key revenue factors (beyond the room itself) to optimise profits in a new, improved way. Total Group Revenue Management simply creates a more precise and holistic overview of potential group profitability. If RevPAR is the micro-level view of group revenue potential, Total Group Revenue Management is the macro-level view, allowing hoteliers to optimise time-perishable inventory across all available function space and products.
Utilising a venue management system that provides holistic views and integrated revenue management, hotels can account for various ancillary revenue streams including food and beverage, specialty packages, receptions, meeting room rentals, audio/visual equipment rentals and more. These revenue sources represent significant profit opportunity, especially within an age in which unique and personalised guest experience expectations are raising the bar for group events and activities. Taking it one step further, hoteliers can then also consider group history, stay pattern, preferred booking methods, room type preferences and associated cost of displacement (i.e., forecasted loss of transient business) to develop a complete view of each prospective groups’ revenue potential.
This may seem, at a glance, to be too many moving parts to consider and evaluate in a timely manner within the already time-restricted group booking process. In fact, that is precisely why we’ve witnessed the rise in venue management technology that not only creates a streamlined online booking process for prospective planners but also offers profit optimisation capabilities to help hoteliers maximise their revenue potential with an optimal business mix for their property.
So, what do you think? Is your venue solution ready for an upgrade? If so, we can help. Click here for more information.