Hi, welcome to another Expert Insights discussion

Today we continue our conversation around Revenue Management. Having discussed Total Revenue in last week’s video, today we are looking at Net Revenue.

In this discussion we ask is Net Revenue easier to achieve than Total Revenue? Do we know what Net Revenue actually means? And do hoteliers have a handle on their direct booking costs?

To share their insights and experience, we are joined again by:

NB: Juyo Analytics are one of our Expert Partners

Finally we will hear a little about the journeys both Amrita and Jens have been on as they move towards implementing Total Revenue and Net Revenue.

Really hope you enjoy the conversation

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Jens Egemalm

In a way, I would maybe argue that it’s a little bit more complex, because all of a sudden, you have all of these channels to take into account, right? Because the the distribution landscape for hotels is very complex. And there’s so many distribution channels, and there’s so many different models, in terms of compensation and cost.

Amrita Makkar

I think even for net revenue, we probably need to define what is net revenue. So, from a rooms aspect, you know, I think I’ve talked about it before, but we look at cost of acquisition. So it’s not just your commissions, but it also any kind of fees that you’ve made pay for every reservation coming into your PMS are whatever else it may be, right. So, again, I do that, but I do that quite manually, still. So you look at all your segments, you look at all the courses attached to each segment, and then you have your cost of acquisition.

Karin Van Rhee

Then once all those costs are listed, then comes the discussion of the allocation of the costs, because you’ve got the very obvious one, that your direct distribution costs, but then return to your point like your sales manager, how are you going to allocate his salary, and that leads to big discussions and what we see even with very large organisations, those discussions are actually going on for years and years and years and prevent them from moving forward. And just starting with something,

Jens Egemalm

I think that the majority will probably look at Channel mix or contribution and measure the success of their distribution efficiency based on how how much through your brand web or your direct is, because there’s like the buzz around booking direct and direct bookings. So I think it’s a lot about that. But I think that can also be a little bit misleading in the sense that yes, it’s great to have a good brand web. But what did you pay for that? Or, alternatively, it’s great to have a good brand web direct. But how much revenue did you miss out by potentially closing out other channels, maybe your total net revenue is lower than then it could have been if you would even had other channels open. And

Amrita Makkar

It goes back to technology, right? As we’ve been talking, like we’ve great, like RMS systems, we’ve got everything we need, but cost of acquisition, I’m still doing it on Excel spreadsheets. But I’m doing it and I think even myself, like I’ve been in revenue for 10 years, I can’t say that 10 years ago, I was doing it I wasn’t, you know, and I’m doing it now, because awareness is there. But you know, as Karin, you said, like, we don’t know, what’s the direct cost? I don’t know the cost, you know, so just blindly saying direct is best and OTAs are the enemy. – it’s very wrong. And I think to understand all of that, we need the data behind it and we need technologies that can give us this data.

Jens Egemalm

The first step was, which we discussed a little bit, was pretty much to sit down with finance, and with rooms, and together with pretty much all departments and look at the P&L and say, okay, what are my actual costs here? So it was a, it was a big job to group costs, so that we could identify them easily. And then could also then use them for reporting purposes. So there’s a lot about going kind of through all the all the accounts and say, okay, this is a cost and this belongs to that and so forth. So, that was one of the jobs, which is pretty much done once once you have that set up – you’re pretty much good to go. And of course, it’s essential that you have that set up with all the properties that actually mean that you’re looking after.

WATCH NEXT (A few of our other videos)




01:00 What is Net Revenue and is it easier to achieve than Total Revenue?
05:47 Do hoteliers at least have an idea of their cost of acquisition?
09:04 Journey so far – Amrita at Virgin Hotels
11:38 Journey so far – Jens at Pandox
15:38 Further videos and Subscribe