Increasing cash flow and profits through financial management, revenue management, and enhancing operation standards and performance
Although data is available from numerous sources for benchmarking the performance of a property against industry norms, the most effective way is through a deep understanding of the hotel operations.
Our extensive operational experience from different style of operations and our understanding of each line cost item in the P&L, and each revenue-generating opportunity for each department, give us the advantage of in-depth understanding of the business.
Examples of what could well need to be done are as follow; they give you a feel for the scope and variety of our financial benchmarking and other processes.
Food and Beverage Operations:
- Benchmark area restaurant prices via the hotels pricing and menu mix
- Local resident demand generator’s, to evaluate and plan for increasing food and beverage income
- The sales team and the food and beverage staff, establish clear and achievable sales goals
- Put in place an annual calendar of off site and local catering opportunities and promotions
- Education on how to improve the biding process with suppliers
- Its $ banked, not just cost margins, what’s the best overall yield strategy
- Menu engineering; what dishes are most popular, most profitable, what needs to be taken off, what to change, where can yields be increased
- Are all outlets needed, is it best to streamline and focus
- Kitchen skills set, service skills set, v complexity of the offering and quality delivery
- ROI on capital expenditure plans, review entertainment costs, define priority areas long term and shorter term investment
- Labor productivity in housekeeping and front office, are front of house cross training programs needed, incentive programs in place?
- Is outsourcing housekeeping and laundry required?
- Could reservations be done at hotel level at a reduced cost than rolled over at hotel level to a national reservation system?
- Is a “Green” program actually in place and operational?
- Guest amenities and linen standards, are they exactly meeting the market demand?
- Revenue management, how are all staff involved, what’s the operational plan for all income generating departments?
Hotel Operating Costs:
Are each department’s individual line cost items actually as they should be to maximize profit? That’s maximizing profit, not just minimize expenditure.
Maximizing cash flow through selling the right product at the right price to the right customer.
The basic key components of a successful revenue management strategy include:
- Understanding market dynamics, the local industry demand drivers, key market demand drivers and new supply aspects
- Once a basic understand of these issue is collected a competitive analysis is undertaken to assess how ones property is positioned to its most relative and competitive peers
- A market segmentation process is then undertaken to more clearly define the market business types which can best drive a hotel’s profitability
- Demand forecasting models are then created on a rolling yearly calendar on both transient and group business, where targets are set and established business patterns are established
- The plan can then be finalized, with discussions with ownership on agreements made on the main aspects, pricing strategies especially groups bookings that have relevance to the market dynamics, the properties competitors and those market segments identified as opportunistic, and the distribution channel plan
We will help put revenue management on the top of the agenda for all employees, so everyone can be involved in one way or the other. Devise strategies and an awareness culture of revenue management within an organization. Ensure Smith Travel Research reports are part of the day to day evaluations of the business if available, devise strategies on a day to day basis to ensure your resort revpar index in relationship to your competitors is above target. Review the competitive set with an expert’s eye and establish a forecast model to identify peaks and troughs, e.g. are optimal group room booking targets in place?
Sales and Marketing:
In all aspects of management and operations Sales and Marketing take priority. Effective marketing is crucial to transforming under-performing businesses into market winners. We use a multi-faceted and structured approach to market the property to its targeted market segments, based on realistic appraisals of the property’s strengths and current market trends.
We will formulate re-positioning strategies to meet changing market conditions, open new business channels as well as consolidate existing market base.
- Sales and Marketing audit
- Devise new strategies to meet changing market trends and capitalize on new business opportunities
- Re-define products and services to reposition the property
- Review pricing
- Review distribution
- Implement marketing communications and promotion programs