PARTNERSHIP : PRODUCT

AND REVENUE
MANAGEMENT
UNDERSTANDING REVENUE MANAGEMENT
UNDERSTANDING REVENUE MANAGEMENT

• To learn how properties operate and what is important to them will help you become a
credible consultant .
• Speak the language of the industry
• Use the correct vocabulary
• Build speed and accuracy within the conversations
HOW PROPERTIES WORK

• Rooms are perishable

• Hotels objective is to maximize the profitability as much as they can .
WHAT IS REVENUE
MANAGEMENT

• To understand the buying

behaviors of prospective
travelers.
• To understand the unique
characteristics of a specific
property .
HOW PROPERTIES MEET A MARKET DEMANDS

By focusing on
1. The price or cost of the room .
2. The inventory , the number of rooms available .
HOW PROPERTIES REVENUE MANAGE

• Their Booking Patterns

• Their Position within the market
• The Future Demand of the Market to build a Strategy
MARKET SEGMENTATION

• How long a type of person stays at a property?

• When a type of person prefers to stay at a property (weekday or weekend)? 
• How much a type of person spends on a room? 
• How much a type of person spends at a property?
• How far in advance a type of person books a room?
• How often does a type of person cancel?
• How often does a type of person fail to check-in? 
• How does a type of person prefer to book a property (online, over the phone, etc)?
WHY IS MARKET SEGMENTATION
IMPORTANT?
• Once a Revenue Manager understands how travelers behave, they can divide the
individuals into specific groups. Dividing travelers into groups empowers properties to
offer different products, at different price points, at different times, thus increasing the
chance of receiving bookings.
DEMAND FORECASTING

• Once a hotel determines what type of guest they want to target, it’s time for them to
consider the demand within the market for their property and how they will target
the market. This is why they forecast.
INVENTORY MANAGEMENT

• Three Area of Consideration

• Distribution
• Lead Time
• Overbookings
REPORTING ON PERFORMANCE

• Key measurements in the lodging industry

• Occupancy
• ADR ( Average Daily Rate)
• RevPar
WHAT IS OCCUPANCY?

• Occupancy is the percentage of available rooms that were occupied or sold during a
specific period of time. It tells the Revenue Manager and other members on the property
leadership team how full a property is.  
WHY IS OCCUPANCY IMPORTANT?

• Having a clear understanding of Occupancy is important, because it helps properties

determine if they are correctly pricing their rooms. While high Occupancy is generally
desired, it could also indicate that a property is pricing rooms too low.
WHY DO WE NEED TO KNOW HOW TO CALCULATE OCCUPANCY?

• Understanding what Occupancy is and knowing how to calculate it is important because

it helps to frame phrases like “we’re full," "we’re busy" or "we’re slow” from partners. It
also helps you to understand the remaining rooms that a property has left to sell or how
many more rooms a property would like to sell to achieve their Occupancy goal.
WHY DO WE NEED TO KNOW HOW TO CALCULATE ADR?

• Understanding what ADR is and knowing how to calculate it is important because it will
help you better understand a property’s goals.
• Having a clear understanding of ADR is important because it helps the hotels understand the
average room revenue generated by each occupied room. Combined with Occupancy, it
helps Revenue Managers predict or forecast average revenues over longer periods of time,
like next year or in a 5-year pro forma.
• The Average Daily Rate, known in the industry as ADR, is the average amount paid per
room, per day. It tells the Revenue Manager the average revenue of a single occupied room. 
WHAT IS REVPAR?

• RevPAR, also known as revenue per available room in the industry, is an average of total
room revenue across all rooms in the hotel, occupied or vacant.
• Having a clear understanding of RevPAR is important for properties, because it maintains
a focus on maximizing total revenue versus a sole focus on either Occupancy or ADR.
• Understanding what RevPAR is and knowing how to calculate it is important because this
is an important metric for Revenue Managers.  They are typically goaled on this against a
competitive set of properties and are measured based on their year-over-year RevPAR
performance.
WHAT IS A COMPETITIVE SET?

• A competitive set is a group of properties that a singular property views as direct

competitors to their business. In order to stay competitive, a property will benchmark
itself against the competitors within their competitive set. By focusing on competitive set
information, properties can anticipate other properties’ strategies and make their own
adjustments to stay competitive. 
HOW TO IDENTIFY A COMPETITIVE SET?

• Location
• Property type
• Property category
• Property facilities
ADOPT A DYNAMIC PRICING STRATEGY 

• The goal of a Revenue Management strategy is to maximize the revenue a property

makes per available room (RevPAR), not just their room rates or Occupancy rate.
That’s why it’s important to consider the concept of supply and demand when
developing a pricing strategy. 
DEMAND PRICING STRATEGY

• Demand pricing, sometimes referred to as hotel pricing strategy, time-based pricing, or

surge pricing; involves changing room rates daily, or multiple times during the day, based
on real-time demand of the market.  
DAY IN A LIFE OF A REVENUE MANAGER  

• How properties use Revenue Management to create strategies that focus on creating the
right inventory at the right price, at the right time, for the right customer and distributed
through the right channels.