Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008 - - PowerPoint PPT Presentation

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

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Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Stowe Shoemaker, Ph.D Dean College of Hotel Administration at University of Nevada, Las Vegas

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Mike Medsker Director, Revenue Analytics & Technology Destination Hotels

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Lyra Hynie, CRME Director of Revenue The New Tropicana Las Vegas

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Stowe Shoemaker, Ph.D Dean College of Hotel Administration at University of Nevada, Las Vegas

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

• UNLV works with industries to provide our students

with practical knowledge combined with the theory

• f the art, science and business of hospitality.
• This way our students can make an immediate

impact on their first job, but also have the knowledge to progress to their third job. This is called the “practice understood by theory.”

College of Hotel Administration at UNLV

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What Webinar Will Cover

• Reservation price and price sensitivity
• Introduce concept of price and ways to think about

pricing

• Steps to better pricing
• Behavioral economics and influence on pricing
• Value pricing versus cost based pricing

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Les Miserables

The duty of the innkeeper is to:

• Sell to the first comer, food, rest, light, fire, dirty linen,

servants, fleas, and smiles;

• Charge for the open window, the closed window, the chimney

corner, the sofa, the chair, the stool, the bench, the feather bed, the mattress, and the straw bed;

• Know how much the mirror is worn and to tax that;
• And, by five hundred thousand devils, to make the traveler

pay for everything, even the fleas that its dog eats.

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Steps to Better Pricing – Blueprint for Webinar

• 1. Assess what value your customers place on a

product or service

• How to create value
• What is the economic value of this product or

service to customers

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The Value-Pricing “Thermometer”

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Measure of the benefits that the product delivers to the consumer Consumer’s incentive to purchase (PV – Price) Firm’s incentive to sell (Price – COGS) Objective Value Perceived Value Product Price Cost of Goods Sold Marketing Efforts Components of Value

From Principles of Pricing by Robert Dolan and John Gourville

Steps to Better Pricing – Blueprint for Webinar

• 2. Look for variation in the way customers value the

product

• Do customers vary in their intensity of use
• Do customers use the product differently
• Does product performance matter more to some

customers, even if the application is the same

• How can members of different segments be

identified prior to purchase

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Steps to Better Pricing – Blueprint for Webinar

• 3. Assess customers’ price sensitivity
• How to influence the customers’ willingness to

pay

• Behavioral aspects of pricing
• 4. Identify an optimal pricing structure
• Bundle pricing

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Steps to Better Pricing – Blueprint for Webinar

• 5. Consider competitors’ reactions
• Who are key current and potential competitors
• If competitors are currently in this market, what

actual transactional prices do they charge

• Given competitors’ past behavior, personalities,

and organization structures, what is their goal in pricing

• What are their strengths and weaknesses

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Example of Measuring Competitors

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Ownership Structure Financial Goals Who is RM and what is their background/ characteristics Promotions Run in Past Response to our promotions Rates and business by channel

A B C D

Price Response

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Market Segment Your pricing action/ reaction Competitor A response Competitor B response Market Segment Response Why pricing action taken Value or cost

• base. Evidence

A B C D

Steps to Better Pricing – Blueprint for Webinar

• 6. Monitor prices realized at the transaction level

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Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Channel Percentage of Guests in Hotel Given Night Median Room Rate Average Room Rate Cost of Channel/room % of revenue hotel gets (100% ideal) Average Spend not including room rate Brand Web Site Our Call Center Brand Call Center Call Hotel Direct Walk-in Loyalty Club Members Off Line TA Off Line TA-1

Steps to Better Pricing – Blueprint for Webinar

• 7. Assess customers’ emotional response
• Behavioral economics

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Steps to Better Pricing – Blueprint for Webinar

• 8. Analyze whether the returns are worth the cost to

serve

• Group pricing
• Analysis of whether or not to take group and

at what price

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Steps to Better Pricing – Blueprint for Webinar

• 9. Understand costs
• What is the incremental variable cost of sales
• At what levels of output will additional

expenditures on semi-fixed costs be required, and how much will they be

• What are the avoidable (not yet sunk) fixed costs

involved to offer this product at the proposed price

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Steps to Better Pricing – Blueprint for Webinar

• 10. Understand Supply
• Cost structure
• Capacity utilization
• Product perishability
• Extent of product differentiation
• Number and diversity of competitors
• Impact of sales volume on cost

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Steps to Better Pricing – Blueprint for Webinar

• 11. Understand Demand
• Price sensitivity of selective demand
• Efficiency of price shopping
• Degree of brand loyalty
• Industry growth rate
• Buyer concentration
• Complementary product

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Steps to Better Pricing – Blueprint for Webinar

• 12. Understand Distribution Channel
• Customers that use the different channels

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The Evolution of Pricing Strategies in Hotels

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Rates vary by season, some Measurement, Some DF

Profitability Strategic

Yield Management Systems; much DF Revenue Management; look at the total value

• f the customer

Pricing based upon value received, not cost to produce; consider loyalty

Bundling and

• ther

techniques to change perception of value

Pricing based on customer knowledge

Tactic

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Positive Value Negative Value Gains Losses Reference Point (state of well being)

1.6 1.0

Station A ($2.30 – 0.10) Value Function Station B: ($2.20 +.10)

Thank You!

Stowe Shoemaker, Ph.D Dean College of Hotel Administration at University of Nevada, Las Vegas E-mail – stowe.shoemaker@unlv.edu Phone – 702-895-3308

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Mike Medsker Director, Revenue Analytics & Technology Destination Hotels

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We are true to our place, diverse by design.

Authentically Immersed Service With A Story Unscripted Discoveries Individually Empowered

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All channels were not created equal…

• Rate efficiency: % of paid room rate captured

by hotel

• Channel costs: transactional costs paid by

hotel

• Profit efficiency: margin remaining after

backing out variable channel costs

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Rate Efficiency by Channel

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008 $0 $100

$100 IBE Direct Voice 3rd Party Voice GDS OTA Hotel Collect $90 Consortia $75-90 OTA Merchant $60-75 Opaque Wholesale

$10-18 3rd Party Voice $19-25 GDS Consortia $13-31 OTA Hotel Collect

Variable Channel Costs

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008 $0 $100

$3-6 IBE Opaque Wholesale OTA Merch $6-18 Direct Voice

Optimizing Profitability

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Channel Hotel 1 Rooms Sold @ $200 Hotel 1 Profit Hotel 2 Rooms Sold @ $200 Hotel 2 Profit IBE 30 (15%) $5,865 38 (19%) $7,429 Direct Voice 36 (18%) $6,768 43 (21.5%) $8,084 3rd Party Voice 6 (3%) $1,044 6 (3%) $1,044 GDS- Standalone 12 (6%) $2,016 12 (6%) $2,016 OTA Hotel Collect 42 (21%) $6,741 42 (21%) $6,741 OTA Merchant Collect 42 (21%) $6,741 42 (21%) $6,741 GDS- Consortia 12 (6%) $1,800 12 (6%) $1,800 Opaque 10 (5%) $1,305 0 (0%) $0 Wholesale 10 (5%) $1,305 5 (2.5%) $652 Total 200 $33,585 200 $34,507

Top Strategies for Shifting Mix

• Know your numbers

– Complete channel analysis

• Build loyalty

– Compelling brand – All guests are VIP’s – Bottom up pricing – Value adds

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Top Strategies for Shifting Mix

• Leverage booking window by channel and

segment

– Build base through group and corporate accounts – Targeted pricing – Outbound marketing

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Top Strategies for Shifting Mix

• Enhance e-commerce efforts

– Ease of booking – Mobile – Social media – PPC, SEO, retargeting – Meta-search

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Top Strategies for Shifting Mix

• Develop smarter OTA partnerships

– Inventory and LRA – Parity – Consider limiting affiliate participation

• Build a revenue-centric culture

– Reservations sales and staffing – Key operating departments

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Thank You!

Mike Medsker Director, Revenue Analytics & Technology Destination Hotels E-mail – mmedsker@destinationhotels.com Phone – 303-268-6882

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Lyra Hynie, CRME Director of Revenue The New Tropicana Las Vegas

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Tropicana Las Vegas

• One of the last iconic casino hotels
• n the strip, born in 1957
• 1,470 Rooms (smallest on the strip)
• 3 Restaurants & 1 food court
• 100,000 sq. ft. of convention space
• New Illusions and Raiding the Rock Vault

shows, and the Laugh Factory

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Penn National Gaming

• 26 properties, 17 jurisdictions, 32K slot machines,

760 tables & 3,100 rooms

• 1st time on the LV strip
• Marquee Rewards Card

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What low-hanging fruit is out there?

• What sets your hotel apart from the competition?

Find it & market it!

• Social Media

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What low-hanging fruit is out there?

• Upgraded room types
• Upgraded amenities
• Views
• Late check-out
• Early check-in

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Let’s Talk About Up-sells

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Speed is Money

• When competing against corporate giants – speed is
• ne of the biggest items
• If you are that corporate giant, boost your speed!
• Being agile in a highly competitive & exciting market

can win the revenue from your competition

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Managing Your Market Segments

• Start at the macro level - top 5-6 before you deep

dive into sub-segments: Casino, Transient, Leisure & Convention

• Track the behavior of your no-shows, overall and by

segment

• Examine each one and determine cost to bring

customer to your property…was it worth it?

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Are You Automated?

• If you’re automated, you have a huge

advantage over the competition

• Know who you’re up against. If you’re main

competition is automated, watch their rates and movement

• Even if you’re a small property, you can price with

the most profitable people in mind!

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Look Into The Future

• Don’t be short-sighted - set a goal and look further

into the future than normal, at least once a month!

• Don’t set it & forget it!
• See how far your comp set is pricing and beat them

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Revenue Culture

• Cultivate an environment that encourages profit

discussions

• Work with each segment & show them the reporting

– OVERSHARE!

• Hold weekly, bi-weekly & monthly meetings - don’t

waste time, make meetings count

• Foster accountability for the bottom line

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Revenue Culture

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Thank You!

Lyra Hynie, Director of Revenue The New Tropicana Las Vegas E-mail – lhynie@troplv.com Twitter – lyralynn1 Phone – 702-739-3608

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A Word From Our Sponsor… Dom Beveridge The Rainmaker Group E-mail – DBeveridge@letitrain.com Phone – 415-713-0489

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About Rainmaker

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Innovators Committed to Continuous Research & Development Leaders in Hospitality Business Intelligence Partners in Maximizing the Benefits our Customers Gain from our Solutions Founded on the best Science & Math in the Industry 17-year Track Record of Delivery for our Customers Industry Leader in Profit Optimization Pioneers of Total Guest Value Culture Built ON Customer-Centricity

Rainmaker’s Industry Recognition

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Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Enter your question in the Q&A box found by hovering

• ver the menu at the top of your screen.

You can submit a question any time during the webinar. Any problems - use the chat function and message “Questex Webinar Producer”

The Holy Grail of Profit Optimization

• Stowe Shoemaker, Ph.D, College of Hotel

Administration at University of Nevada, Las Vegas

• Mike Medsker, Destination Hotels
• Lyra Hynie, The New Tropicana Las Vegas

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Thank You!

Download the webinar: Hotelmanagement.net/webinars

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008