Hotel Group Sales Blog

Optimizing Groups Sales, Revenue & Cost

Increase Direct Bookings in MICE Segment

The 90s marked the birth of OTAs and hotels gladly welcomed a new distribution channel but online booking on the hotels’ own websites was either not possible or not promoted. Fast forward to the 2010s and hotels start realizing that while OTAs are a good distribution channel, commissions are becoming a significant drain on revenue & profitability and are scrambling to increase direct bookings.

Yet, hotels today are making the same mistake in the MICE segment, especially as it relates to small meetings and groups. MICE Marketplaces a.k.a. Small Meeting OTAs offer a new distribution channel for a commission and yet again, hotels don’t have a booking engine for meetings on their own website.

The time has come to enable meeting & group booking on hotel websites. Not only will you save on commissions, but it also provides other significant benefits.

Enable Customer Convenience

A recent industry survey had meeting planners saying they don’t even consider hotels that don’t have an online option for smaller meetings. Contrary to the human touch is better service presumption, faster response in this case is essential for the business. Larger chains like Hilton and Marriott have recognized the need and built a solution for their websites, but smaller chains and independents still rely on RFPs potentially losing business from such planners.

Improve Sales Efficiency

Not only is online meeting booking efficient to customers, it’s efficient to hotels’ sales teams too who no longer have to write contracts for meeting and group business that can be booked online. This is especially true for smaller meeting business where contracts are relatively static and easily accepted online.

Increase Revenue

Aside from the obvious advantage of increasing direct bookings, there are other revenue increasing capabilities that hotels can implement when the booking is from their own website. Let’s look at a few here.

Rebooking 

Many corporate planners and executives have similar recurring meetings and if hotels can provide a one-click rebooking capability, it suddenly becomes not worth some planners’ time to look at a marketplace and compare rates especially when the amount is insignificant.

Alternate Dates

 Customers are often flexible with dates if they can get a deal. On their own websites, hotels can easily guide customers to their need dates to increase overall occupancy and revenue. While you can offer a lower rate in a marketplace, they have no incentive to promote your lower rates.

Upsells and Cross Sells

 Personalized and targeted up-sells and cross sells are other ways to further increase revenue from meeting business as hotels have started doing for transient business.

The only tool that provides all these features and doesn't charge a commission is GroupRevMax Meeting Booker


Check Out GroupRevMax Meeting Booker Now  

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3 Reasons Why Hotels Must support meeting booking on their websites

While the major chains (Hilton, Marriott, Hyatt) now allow small meetings to be booked online completely and paid with a credit card, majority of the hotels still require an RFP to be submitted for group and meeting bookings. Following are three reasons why the brands built it and why you must too.

Eliminate Competitive Disadvantage

Many meeting planners today rely on online meeting booking provided by the larger chains to book their smaller meetings and don't consider the ones that don't since they don't think it's worth the trouble of sending an RFP and evaluating responses. If you don't have a tool that can book a small meeting online, you are losing business to the nearest large brand. 

Gain Sales Efficiency

Smaller meetings really don't need the long process of proposals, contracts, etc. that larger events probably need. When customers book smaller meetings online and accept general terms and conditions, your sales team saves time that can be spent on other productive work

Gain Customer Loyalty

Small meeting are planned many times with executives with little time on their hands. The easier you can make it for them to book, the likelier they are to book with you. Providing options like booking history and capability to rebook a similar meeting can reduce the likelihood of the customer looking at other hotels.

GroupRevMax enables hotels to sell guest rooms, meeting space, F&B and A/V online guaranteed by credit card and charges no commission. Click Here to Learn More
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Group Segment Takeaways from STR Data Conference in Nashville

GroupRevMax attended the STR data conference in Nashville and the following are our key takeaways for the group segment and our perspective on the data.

  1. Demand Growth is Nil to Negative : Demand Growth is predicted to be stagnant to slightly negative (-0.3%) in 2017 in both group and transient segment.
  2. Group ADR growing faster than transient: Group ADR has grown at a 3.4% rate, double the transient growth rate of 1.7%. 
  3. Greater demand swings in groups: Historically, group demand tends to swing more than transient demand as markets move up and down
  4. Greater ADR swings in transient over the years: Historically, transient ADR tends to swing more than group ADR as markets move up and down
  5. Large Conferences Growing: Meetings with more than 1000+ attendees are growing while others are slowing down
  6. Ancillary revenue grew at 28% from 2014 to 2015
  7. F&B Revenue grew by 20.2% from 2014 to 2015

Our Perspective

Watch the Group Pipeline

Group ADR is strong and demand is trending down and if we get into a slower growth market, demand could fall quickly given the tendency of group demand to swing more. So, it might be wise to build the group base now or at least closely watch the group pipeline across channels.

Evaluate Total Profit

Given the strong ADR growth in group segment, hotels can quote higher rates. However, strong growth in F&B and ancillary revenue and tendency for groups to drive more of those components make it necessary for hotels to consider total revenue when pricing groups and when considering transient displacement.

Focus on Conversion

As demand reduces, hotels will need to focus more on conversion of leads. Hotels that evaluate the leads better to find a match with their own strengths and then present them a strong proposition will get ahead of the competition.

GroupRevMax already scores leads based on fit and does e-signatures for faster closing. We are also all set to announce the launch of e-proposals in October that will enable hotels to give groups a much more immersive proposal through the use of pictures and videos in your proposal.

Extract More From Group Attendees

Cross selling F&B and ancillary services can help hotels capitalize on the trend of increasing ancillary revenues. Also, as large conferences grow, there is more opportunity to tap into the attendees to stay more nights by up-selling rooms at the time of booking.



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Integrating Profit Measures Into Group Sales Process

Typical hotel sales teams are focused on bringing in maximum business and revenue teams on bringing maximum revenue, measured by ADR or RevPAR. We take a step deeper in this post to discuss how sales teams can measure and improve profitability of group business without it becoming a hindrance to speed to market. Some suggestions follow.

Prioritize Best Leads

Focusing on profitable leads is a great first step to improving profitability, but sales teams are ill-equipped to make the determination since group profitability changes meaning based on various factors. For example, total profitability is improved by selling more when you are below desired pace, but actually decreases when you are above pace and displace potential transient business. So, how do we focus on the best leads without adding another step to the process? Automating pre-qualification of leads is a great way to achieve this without having to add more to the revenue manager's plate or impacting speed to market. 

Price Based on Profit Goals

Revenue Management systems factor supply, demand and competition to predict a price for a day, which works well for transient business since costs associated with each segment of transient customer is fairly constant. However, costs can vary considerably across different groups when you factor commissions, rebates, concessions, etc. and further optimization is required there. Revenue managers can consider outflows when pricing groups but it becomes a tedious process when there are several group leads to quote. Calculating costs and varying pricing is actually a pretty simple task when automated and can be done by a system as well. 

Automate Up-sells & Cross Sells

Hotels can significantly improve overall revenue from their guests through targeted up-sell and cross sell offers. These offers should be made available at every touch point and hotels should ideally strive to create more such opportunities and touch points. Trying to up-sell or cross sell at check in, like many hotels do, takes the agents' time, but up-sells on booking sites can be automated and cost next to nothing. 

Enabling conference attendees to mix business with pleasure by staying on a night or two more with targeted activities for those days is one way to sell more rooms. Offering a room type upgrade when a group hasn't negotiated certain room types can also increase revenue per person. 

Hotels can even create new channels of communication by having special offers for conference attendees on the event app. Many events, however do not have their own app, so what if the hotel had an app that is free for events at the hotel? GroupRevMax has built such an app and has made it available to hotels that sign up for their cloud based system.

Understand & Optimize Sales & Booking Costs

Last but not the least, less cost means more profit. Making sure that every action that a sales person performs that doesn't involve actual customer contact is automated can go a long way in selling more with a lean team. Also, to consider are costs associated with bookings like CRS costs which can sometimes be eliminated by implementing a system that connects directly to the PMS instead of using a CRS.


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3 Steps to Improve Hotel Sales Efficiency

Efficiency of sales teams leads to improved customer satisfaction and better speed to market, but it's not just up to the sales teams, it's also management's responsibility to give them the right tools to be efficient. While sales & catering systems have existed for years, they are in dire need of several efficiency improvements. In this post, we look at some improvements that can be achieved in hotel sales teams.

Improve Lead Management

Hotels get leads from various sources like third party websites, call-ins, brand websites, etc. and sales people often struggle to prioritize and manage the leads that are spread across all these sources. Significant efficiency improvement can be achieved by implementing the following.

Consolidate Leads

Implementing a tool that consolidates all the leads into one place eliminates the need for sales to visit multiple sites daily and saves a lot of time. Also, having the status of each lead in one place helps ease tracking.

Pre-Qualify Leads

With an automated lead qualification process, you can save 20% or more time that sales spends on looking at leads that are not relevant to the property. Qualification should be done on criteria like profitability, need period, pace, conversion probability, etc. This will also have the added advantage of improving speed to market for the best leads since they can be prioritized higher.

Auto-Assign Leads

Technology today can easily assign leads to different sales personnel using rules, which further saves time by only seeing segemnts, geographies and lead sizes that a sales manager is responsible for


Eliminate Pricing Bottleneck

Speed to market of sales teams is constrained by other factors like how fast a revenue manager can return a quote for a specific group. While eliminating the role of the revenue manager will have adverse impact on revenue, 95% of the quotes can be generated automatically using a system that lets revenue managers set rates and rules and sales to retrieve it at will


Speed Up Proposals & Contracts

If you have the right technology in place, sales personnel should never have to spend more than a few seconds to generate a proposal or contract for customers. If the steps before are already implemented, the system should have enough information to generate these automatically. Further gains can also be achieved by moving to electronic signatures to elimiate fax, scan, etc.

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4 Steps to Increase Group Revenue by over 15%


In today’s post, we will take a hotel that manages its group business reasonably well and increase its revenue by over 10% with 3 steps anyone can implement and we will do it by the numbers instead of vague theory

The Sample Hotel

Our hotel already has great revenue management on the transient side based on demand/supply and uses a percentage off of transient rates for group rates. Following are some facts about the hotel we are considering

# Guest Rooms

400

Meeting Space (Sq. Ft.)

25000

Annual Occupancy

80%

Annual Revenue

20 Million

Group Contribution to Rooms

50%

# Group Rooms Annual

58400

Group ADR

$200

Transient ADR

$250

 

From here, we are going to adopt some simple steps to increase revenue.

Step 1: Incremental Rates

The first step is to introduce small incremental change to group pricing when the group has more than 10 guests. Of about 160 group rooms average per day, 95% or more than 150 rooms are occupied at our hotel by groups that had more than 10 guests and incremental pricing is applicable to them. Following is the difference in pricing

Revenue Model

Revenue Calculation

Total Revenue

Fixed Group Rate

$200 X 150

$30,000

Incremental Pricing

$200 X 10 + $202 X 10 +… + $228 X 10

$32,100

 

Impact

 

Daily Additional Revenue - $2,100

Annual Additional Revenue - $766,500

GroupRevMax incorporates incremental pricing and relieves revenue managers from the pain of quoting rate for every group.        

Learn More About GroupRevMax Pricing  



Step 2: Factor Outflows

Next step was to factor outflows into group pricing. Hotels spend up to 18% of revenue on commissions & concessions, so pricing groups that have outflows higher than the group that doesn’t can improve net profitability. For this example, let’s say that the hotel decided to take 50% of all commissions and concession into the pricing and 50% of the groups have commissions.

Revenue Model

Revenue Calculation

Total Revenue

Flat Discount

200 X 160

$32,000

Dynamic Pricing (Recapture 5% Outflows

200 X 80 + 210 X 80

$32,800

 

Impact

Daily Additional Revenue - $800

Annual Additional Revenue - $292,000

GroupRevMax automatically prices groups based on revenue leak recapture rules   and relieves revenue managers from the pain of quoting rate for every group.         

Learn More About GroupRevMax Pricing

 

Step 3: Upsell Rooms

The hotel implemented discounted upsell on their group booking site and offered shoulder rooms and room type upgrades.

Upsell Type

Calculation

Revenue

2% Shoulder night upsell

2% X 160 X $225

$720

5% Upgrade @ $25

5% X 160 X $25

$200

 

Impact

Daily Additional Revenue - $920

Annual Additional Revenue - $335,800

GroupRevMax can automatically offer upsells on its group booking site.

Learn More About GroupRevMax Booking Engine

Step 4: Cross Sell

The hotel implements cross sell through mobile targeting technology and reaches conference attendees.

Daily Conference attendees

800

Conversion Percentage

2%

New Customers

16

Average Spend

$50

Daily Revenue

$800

 

Impact

 

Daily Additional Revenue: $800

Annual Additional Revenue: $292,000

GroupRevMax has a free mobile app for attendees that helps hotels with targeted promotions to conference attendees.

Learn More About Free Event App

Total Impact

 

Total Additional Revenue (Approx.): 1.7 Million

Additional Revenue as % of Group Revenue: 17%

GroupRevMax automates all of the above techniques to significantly increase your revenue. It also improves bottom line profitability and improves efficiency.

Learn More About GroupRevMax

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Time to Demand More From Hotel Sales Technology

The primary technology component in group sales at hotels has been a Sales & Catering system. While these systems served sales teams well in the past, these are just sales tracking systems and it’s time to demand a lot more from technology we use for group business. Following are a few.

Profitability Integrated in Sales Workflow

Group Systems must integrate profit into each step of the group sales process. It should integrate profitability into your lead pipeline and surface best leads, into the pricing process, and into contract and negotiation phases. And it should do all this automatically without any manual intervention at every stage so your speed to market is not impacted.

Holistic View of the Business

While groups use services of various departments, profitability shouldn’t be segmented and must be presented in a holistic manner with all aspects of the business across department boundaries. This will enable sales teams and management to make intelligent decisions like increasing pricing of one component to cover profit degradation in another.

Enable Consistent Control

Technology should allow built-in management control into the sales process as well. Systems must allow management to control the group sales process without producing overload by surfacing sales that are outside of set parameters or business that is not meeting specific goals.

Help Upsell and Cross Sell

Technology should help hotels generate more revenue from group attendees with targeted offers. Systems should have functionality that support up-sell of rooms or cross sell of services like a bar or spa.

Facilitate Continuous Improvement

Technology can aid continuous improvement by surfacing the right analytics about sales, revenue, profit and your customer behavior. Hotels can continuously tweak their sales & revenue strategy based on outcomes that are available immediately instead of taking days and weeks to prepare reports quarterly or annually.

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4 Steps to improve GOPPAR in Group Sales

Hotel Performance measurement has evolved over time and one of the latest measures is GOPPAR( Gross Operating Profit Per Available Room). This is considered a better measure than REVPAR(Revenue Per Available Room) for the hotel's performance as a whole since REVPAR only looks at room revenue and ignores non-room revenue and cost completely. GOPPAR becomes even more relevant for the group segment since hotels have many costs associated with selling and servicing groups and groups have significant spend on non-room aspects like F&B, meeting space rental, audio-visual, etc. each of which have different profitability. 

While many hotels have now started measuring performance by GOPPAR, how do we actually improve it? In the group segment, following are some of the aspects to manage well to improve GOPPAR.

Manage Contracted Non-Room Revenue

Revenue management has become increasingly sophisticated for guest rooms,but many hotels still use the gut-feel technique (well, not really a technique) to manage non-room revenue. This must change and equal responsibility for meeting budget must be assigned to meeting space and catering as revenue and profit generators. More specifically, hotels should define targets  for revenue and profit for conference rooms by seasonality and strive to meet that in every quote. It should also be reviewed often and updated for changing market conditions.

Consider the following from HOTSTAT MENA report. Even though ADR and occupancy fell, and expenses increased, GOPPAR increased due to F&B demand,.
Doha hotels felt the effects of the summer slowdown early as performance levels dropped during May with a 1.3 percentage point reduction in occupancy to 74.9% and a 2.8% fall in ARR to US$210.27. The softer rooms performance saw a 4.4% decline in RevPAR, however stronger food and beverage demand resulted in a 4.9% growth in TRevPAR to US$408.85. Although operating expenses were higher during the month, the increase in overall revenues was sufficient enough to ensure the GOPPAR increase of 1.8% to US$181.52.

This shows how important it is to have a holistic view in order to capitalize on one aspect when another is not doing so well.

Increase Non-Contracted Revenue Per Attendee

Conference attendees have budgets beyond what the conference organizer has contracted. Hotels should aim to get the most from that spending ability by cross selling other services and amenities to group attendees. For example, hotels can offer a discount on their bar or spa to group attendees and attract not just the attendees staying in the hotel but ones staying elsewhere too. Getting these promotions in front of the attendees at the right time can be a challenge, but can be done effectively using the event's mobile app or hotel's own mobile app like the free app provided by GroupRevMax.

Plug Profit Leaks

To win group business, hotels offer a myriad of freebies including upgrades, complimentary rooms, discounted rooms, etc. While these may be necessary to gain the business, it's important to watch what you give away and factor it into the price. Make sure your revenue managers and revenue management systems factor all these into pricing a group. 

Further, all costs associated with group sales and service must be factored into the budget and profitability goals should be assigned with those factored in. Group sales staff salaries, costs of reservation agents entering group reservations into PMS, agents taking calls for group bookings should all be factored in to get the full picture. 

In essence, all group pricing should be done based on not just revenue goals, but also profit goals if you are to really support an increase in GOPPAR.

Aim for Balanced Sales

Revenue managers at hotels with significant meeting space understand that space is more profitable when sold with room component than when it's sold to catering only events. So, in order to achieve maximum profitability, hotels should try to sell these two assets in a balanced way so as to not sell out one and reduce value of the other.

Implementing these can go a long way in optimizing your GOPPAR, but these are tough to include in a sales process without the proper tools. GroupRevMax has revenue management for contracted non-room revenue, a mobile app to cross sell and increase non-contracted revenue, profit goals based pricing, and room to space ratio analysis to support increasing your GOPPAR while improving your speed to market significantly. To schedule and online one-on-one presentation or request a free trial, send us a note by clicking here.
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A Lesson From Retail Industry to Reduce OTA Commissions

Retailers, online or brick and mortar, have used one technique effectively to increase repeat sales that hotels can learn from. The concept is simple - offer incentives or coupons to existing customers for repeat business. Hotels can use the same technique to gain more direct bookings and make OTAs more of a referral partner like online shopping comparison sites.

This might be an over-generalization and there are obviously differences between retail and hotel industry. We look at some of these below.

Rate Parity

Unlike retailers, hotels have a rate parity agreement with OTAs they don't want to violate, but it only covers publicly available rates. Websites like Hotwire offer unpublished rates without making them available online, so a coupon should work the same way and shouldn't be available online and hence doesn't violate parity agreements

Coupon Delivery

An additional complication that hotels have in terms of sending out coupons is to make sure that the coupons cannot be transferred or republished on coupon sites, which then becomes a grey area in terms of it being a publicly available rate. Some delivery options are as follows.

Loyalty Program

One way is to tie the coupon to a loyalty program so you have to sign in to use the coupon. This makes it easy for the customer to use it since it's stored in a convenient location and no code is necessary. 

Mobile App

If you have a mobile app, make sure users register themselves and tie the coupon to that specific instance of the app. The app also makes it easy for the customer to find and use the coupon and can also be built to remind customers of coupon expiry. 

PMS Profile

Another way is to tie it to the PMS profile at booking, so the coupon is only valid for a profile that already existed in the PMS. Hotels will have to add this feature to their booking engine or redirect coupon users to an engine that supports such a check and sits on top of the regular booking engine.

Audience

Retailers send coupons to as many people as they can and don't worry too much about whether the person or someone else used the coupon or if someone published a coupon code online. Hotels, however have to be careful due to rate parity reasons mentioned before. So, how can hotels have go beyond their existing customers and have a broad audience while making sure rate parity clauses are still met? Following are some segments that can be targeted.

Group Attendees

Attendees of events at your hotel is one such segment even if they are not staying at your hotel using other touch points with the hotel. It's possible to physically hand out paper coupons to attendees, but is more likely to be lost. If the group has a mobile app or facility, hotels can partner with the group to push the coupons. For groups that don't have a mobile app, hotels can provide them one by partnering with companies like GroupRevMax Mobile App to provide groups an app they can use for their marketing and hotels can use for coupons as well as future marketing.

Friends and Family

Hotels can also allow people to book for a certain number of their friends and relatives. By limiting the number of people, hotels eliminate the risk of the rate being public, but still broaden the audience by that multiple. 

Conclusion

In conclusion, like referral sites work for online retailers, OTAs should ideally be just a referral site for the first time customer. Once a guest has stayed at your hotel, he/she should have an incentive to book your hotel direct on your website and a coupon gives them just that. They could still compare hotels on OTA sites and you might lose him if your compset is better in spite of the coupon, but if they decide to book your hotel, chances are they will book on your website and use the coupon. It's not as good as a direct reservation generated through reputation and digital marketing, but can be still better than paying OTA commissions.

GroupRevMax allows hotels to convert group attendees to leisure travelers using their mobile app that hotels can provide free to group organizers and can then use as a marketing tool to enhance direct booking and customer loyalty. Click here to learn more.
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Efficiency of your RFP pipeline

Sales Efficiency Series - Efficiency of your RFP pipeline


More than ever before, hotel sales teams are finding themsleves under RFP overload along with increasing demands on speed to market. How can they meet these competing demands? In today’s blog we look at how GroupRevMax eliminates RFP hell in three simple steps

 

Step 1 – Consolidate Leads


GroupRevMax consolidates leads from any lead sites that a hotel signs up for and displays all leads in one place, nicely tabulated with pertinent information like source, due date, dates of stay, rooms requested, etc. It supports independent lead generation sites, brand websites, and convention bureau sites for consolidation, eliminating the need for sales managers or a coordinator to visit multiple websites looking for leads.

Step 2 – Score Leads


Once the leads are consolidate, GroupRevMax scores them relative to each other for best fit and probability of conversion. Following are some of the factors used to determine which groups are best fit for the hotel and which have the highest probability of converting.

 

Best Fit


  1. Profitability
  2. Current group pace on requested dates vs. historic pace
  3. Space to room ratio requested vs. available
  4. Lead Time
  5. Group Size

Conversion Probability


  1. Rate requested vs. hotel’s current group rate
  2. Star rating if requested
  3. Is this a repeat customer?

Step 3 – Assign Leads


Once leads are consolidated and scored, they are assigned to different sales managers based on pre-set criteria like geography, market segment, group size, lead time, etc.


End Result 


These 3 steps help hotels in the following ways

  1. Increase sales efficiency and productivity by eliminating all manual tasks that are not associated with actually responding to an RFP
  2. Increases probability of conversion by responding to the best fit leaf with maximum probability of conversion first and gaining the first response advantage

 

Does your hotel need to streamline RFP management? Click here to request a free trial of GroupRevMax.

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