The Next Frontier for Revenue Managers
In their quest for revenue per available room Index, most revenue managers miss other high profit revenue streams, ranging from meetings and event space to banquet revenue contribution to total RevPAR.
It’s time to shift the paradigm from a guestroom-only revenue focus. Savvy revenue managers will factor in the size of groups, arrival and departure patterns, and banquet revenue per occupied group room night (ROGR) contribution into their yield management decisions. The devil’s in the data for creating more accurate, demand-based forecasts. Here are some areas to consider when helping revenue managers maximize revenue (and profit) opportunities beyond just rooms revenue.
Review the basics
How is meeting and event (M&E) space revenue and banquet revenue being used to make guestroom pricing decisions at your hotel?
Factoring in these additional revenue data points could lead to a very different revenue strategy at your hotel, and if executed well, could result in significantly higher levels of profitability. Yet for some reason, revenue managers overlook this meaningful opportunity to boost their impact. Guestrooms are, of course, the lifeblood of any hotel, but the time has come to expand the scope of your hotel’s revenue strategy, and the next target should be your M&E space and banquet revenue per occupied group room night.
Shift the paradigm
Despite its significant money making potential, function space historically has been viewed by operators and revenue managers as a second-rate profit producer, only there to help fill guest rooms. A cultural shift is in order, with resources properly allocated and aligned with this high profit margin revenue stream.
Develop a data-driven M&E revenue strategy to gain alignment across your hotel’s executive team and key stakeholders on the M&E revenue strategy.
With stakeholder buy-in, the next step is to apply some fundamental revenue management practices to the M&E area. If you’re a seasoned revenue manager, you’re in luck because many of the tried-and-true guestroom revenue principles apply to M&E as well. No need to reinvent the wheel. You’re leveraging the same set of tools against a different area of revenue opportunity, and in a slightly different manner.