Guest Blog by Birgit Haake
Ask a hotel manager today about the number of rooms in his hotel and you will immediately receive the correct answer. If you now ask the same manager about the optimal participant capacity, or the available capacity of the meeting and event rooms in square metres, you will be met with silence and look into thoughtful faces.
Why does the hotel industry find it so difficult to apply the knowledge and principles of revenue management to the other revenue streams in a hotel?
Limited data and information, time-consuming reporting, a lack of integration of revenue management into the MICE strategy are just some of the obstacles hotels face.
Limited data sources
Sales & Catering systems have hardly evolved over the past decades and are only focused on the operational MICE (Meeting, Incentives, Conferences & Exhibitions) processes in a hotel. They are limited in the data and information they provide to the different team members to make the right decisions. General Managers, Sales, Event Sales, Revenue Managers have different requirements on the output of the system. Individual and dynamic business views for each stakeholder group do not exist.
It requires time-consuming and often disjointed manual reporting. The tedious entry of data in works of excel spreadsheets pools resources in the hotel and has a high potential for errors.
In addition, the terminology used in the data source systems is ambiguous and leads to misunderstandings in communication. For example, the term “forecast” in the S&C system describes the business on the books (OTB), i.e. bookings already made, instead of the forecast (expected) demand for a period in the future.
One-sided knowledge and skills
Revenue managers generally master the principles of revenue management for their strategic planning and day-to-day decisions in the logistics sector. However, when it comes to managing meetings, events and other ancillary revenues, which for most hotels account for 40-60% of their turnover, appropriate skills and knowledge are lacking.
On the other hand, there are seasoned event sales managers who know the MICE business like the back of their hand, but are heavily involved in the operational processes of event sales. They make decisions about accepting and rejecting bookings based on bookings already made and previous experience. They lack experience in revenue management. Goals are often pursued in isolation due to the usual silo mentality. Cross-functional teams from sales, event sales and revenue management do not exist or are not aligned.
The science of revenue management for MICE is still in its infancy.
To find additional revenue opportunities, insight into the totality of meetings and events is required. Thus, to quantify demand, attention is only paid to the requested and materialised bookings in the S&C systems, but not to the total demand, i.e. the total demand per day. To determine the total demand, therefore, the rejected (Unable-to-Confirm) and lost bookings, including their turnover values, must also be taken into account. However, Unable-to-Confirm requests (UNCs) are rarely recorded by the hotel and thus remain unconsidered. Information on the demand for room size and number of participants is also missing.
Missing key figures
Another challenge is the inability to accurately measure strategy effects in the total management approach and performance in the MICE sector. Key performance indicators such as space utilisation in %, revenue per available square metre (RevPASM) or attendee density as well as enquiry and revenue conversion in % are hardly established as KPIs in hotels. Cover figures and turnover, divided into food & beverage, room rental and technology, still measure the success of event sales.
Which processes as well as data and organisational structures are required for revenue management in the MICE sector? What tools and technology are needed to support the teams in the hotel? What skills and knowledge do the revenue-generating managers in the hotel need?
Answering these and other questions by the hotel director, revenue manager and sales & marketing teams are critical to laying the foundation for successful revenue management in MICE and achieving revenue performance growth for the entire organisation.
Increase your MICE revenue by applying the typical revenue management tactics specifically for meetings, incentives, conferences and events and selling your meeting space at the right time, at the right price. For more information on a 2-day MICE revenue management training, click here.
About Birgit Haake
Birgit Haake has more than 25 years of practical experience in the hospitality industry and healthcare. With her company Haake Revenue4U, she supports individual hotels and hotel chains in Germany and Europe as an expert in revenue management. Her core competencies are booking management, (MICE) revenue management, pricing and online distribution. Birgit Haake holds a degree in business administration and has completed her training as a hotel manager. She is a certified trainer and has been a university lecturer in international hotel management and tourism management for many years.