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Client SuCCeSS Story

Gastwerk and 25hours Hotel Hamburg No. 1 Achieve RevPAR Index Increases of 7.5% and 2.7% Respectively After Enhancing Revenue Management Structure

Gastwerk, the first Design Hotel established in Hamburg, is situated in the uniquely stunning surroundings of an 1896 former gasworks building. Situated in the west of Hamburg, this brick house has 141 rooms, lofts and suites in addition to 200 person capacity conference facilities and a restaurant, bar and spa for guests to enjoy. Neighboring to, and under the same management team as, Gastwerk, the 25hours Hotel Hamburg No.1 is a contemporary design-led boutique hotel with 128 rooms. In Germany and further afield, the 25hours Hotel Group has gained a reputation for its affordability and offbeat creative brand voice.

Fast Facts
Hotel Gastwerk and 25hours Hotel No.1 - members of the Design Hotel Group Challenges Understanding the value of revenue management Difficulty establishing optimum rates Solutions IDeaS Revenue Management System (RMS) IDeaS Hospitality Consulting
- IDeaS Insight - Revenue and Channel Opportunity Analysis - IDeaS Virtual Revenue Management services

The Challenge
As we were facing several challenges, such as the economic downturn and increased competition in Hamburg from the addition of 6,000 beds per year from new hotels, calling IDeaS Hospitality Consulting was the right decision, at the right time, explained Kristin Seel, General Manager of Gastwerk and 25hours No.1. In order to meet the challenging market conditions, the hotels elected to invest in developing a best practice revenue management culture across the organizations while also enhancing its systems by utilizing the IDeaS Revenue Management System (RMS).

The main challenge that prompted Gastwerk and 25hours No.1 to partner with IDeaS Hospitality Consulting was the issue of pricing transparency. For example, prospective guests asking for prices on the phone were, on occasion, given rates that differed significantly from the rates quoted online, Seel explained. This was, in part, due to a lack of an integrated pricing structure within the organization and the increasing ability of customers to view multiple prices and products as a result of growing strength of on-line channels and hotel review sites. In addition, when it came to the optimization of shoulder periods of traditionally high-demand days, the management felt there was room for improvement. While we were happy with our performance on periods of high-demand, we were still struggling to optimize demand on shoulder periods in order to optimize revenue consistently. And actually, the marked difference in occupancy levels throughout the period was making our strategic business planning difficult and causing us human resource issues in that we were never sure how much support staff we would need in the hotel, said Seel.

The Solution
IDeaS Insight - Revenue and Channel Opportunity Analysis IDeaS Virtual Revenue Management services The process was started with a comprehensive review of current revenue management practices and opportunities, and the creation of a detailed revenue roadmap as to how the hotels could best develop a revenue management strategy to improve performance. Based on this roadmap, IDeaS Hospitality Consulting provided personalized support and assistance to Gastwerk and 25hours No.1 in distinct project phases, over the period of a year. Each phase had specific products and activities customized to the individual hotels requirements. One of the key recommendations delivered by the IDeaS Consultants was for Gastwerk and 25hours No.1 to create a dedicated revenue management role. As part of the roadmap, the hotels also implemented a new process for the determination of rates, and adjusted their group pricing structures and market segmentation, according to industrywide best practices. In order to maintain the revenue management momentum and ongoing business performance, IDeaS Hospitality Consulting also delivered daily tactical revenue management support to Gastwerk and 25hours No.1 in the form of Virtual Revenue Management Services. Once a dedicated revenue manager was established, IDeaS Hospitality Consulting implemented a mentoring program in order to ensure that the newly-developed revenue management culture would be self-sufficient and sustainable. This involved training sessions on revenue management principles and guidance on how to fully optimize the IDeaS RMS, in the form of weekly calls and daily support when required. This series of phases has enabled Gastwerk and 25hours No.1 to grow a sophisticated revenue management culture across the organization, resulting in optimized pricing, distribution and forecasting processes.

The Results
IDeaS Hospitality Consulting has assisted Gastwerk and 25hours No.1 in building a successful revenue management structure, utilizing the right tools, processes and people. Overhauling revenue management across our

business was exciting, but it was also an intense project that required commitment and concentration. Apart from being very satisfied with the genuine commitment to our business shown by IDeaS, as a result, we are now also able to expertly employ advanced revenue management techniques and processes, delivering recognizable business benefits, said Seel. Since the consulting project ended, the two hotels have been doing exceptionally well against their competitive set in August 2011 Gastwerk showed a 7.5% increase in RevPAR (Revenue Per Available Room) Index, while 25hours No.1 showed a 2.7% RevPAR Index increase. Following revenue management processes standardised by IDeaS Hospitality Consulting, Gastwerk and 25hours No.1 were able to forecast demand more accurately, allowing Seel to manage resources more effectively in the hotels. Accompanied by a newly instilled awareness of pricing and occupancy optimization strategies, this also meant that the hotels were able to successfully optimize peak and shoulder periods, stabilizing demand and pricing dynamically to drive revenue performance at the hotel. There is enhanced internal communication concerning revenue management across key revenue stakeholders at Gastwerk and 25hours No.1, leading to a deep understanding of this important hospitality field and driving the hotels to retain a competitive advantage and achieve long-term revenue management goals. Finally, now that Gastwerk and 25hours No.1 are optimizing rates and practicing dynamic pricing, the advantages are not only seen in increased revenue for the hotels; hotel guests also benefit from transparent pricing structures as well as competitively optimized rates in periods of low-demand.

We are now also able to expertly employ advanced revenue management techniques and processes, delivering recognizable business benefits.

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