A Strategic Approach to Meetings and Events in Indonesia

Hotelier Indonesia

A Strategic Approach to Meetings and Events in Indonesia

Written by: Tracy Dong, Lead Advisor, APAC, IDeaS Revenue Solutions

In the past, meeting and event spaces have been underestimated by hoteliers in Indonesia from a revenue management perspective due to a lack of accessible data that shows additional benefit and opportunity. However, given meetings and events revenue can account for a significant portion of a hotel's financial performance, an increasing number of hotel groups have expanded revenue management into this area to improve their bottom lines. Today, many hoteliers recognise that meeting and event spaces do a lot more than just sell guest rooms. In fact, for many hotels, meetings and events contribute 40 to 60 percent of total profit.

Surprisingly, given the financial benefits that meeting and event spaces can bring, some Indonesian hoteliers still aren’t leveraging these areas strategically, which means they risk overlooking opportunities for substantial revenue generation. Many local hoteliers fail to fully realise revenue through meetings and events due to the complex nature of event spaces that can lead to poor visibility into lost inquiries, revenue conversion and booking trends. For some hoteliers, meeting and event spaces can be an afterthought to guest-room revenue since existing reporting capabilities are disjointed and time consuming, and they may have a general lack of confidence in price setting.

To better maximise revenue opportunities from meeting and event spaces, leading hoteliers are folding revenue strategies into sales and catering processes. However, despite the positive evidence to support an integrated approach to sales, catering and revenue management, there hasn’t been a strong call for technology that fully allows hotel teams to do so. Until now.

Today there is a small but growing number of cloud-based, visual strategy management solutions on the market that help hotels analyse and dissect their business trends and meeting space performance at their properties. These systems visually consolidate data from sales diary management systems (such as Opera or Delphi sales & catering systems) to help hotel teams strategically manage property functions and collaborate on demand-based pricing strategies.

These new systems dramatically enhance hotel sales strategies and make up the gap to maximise revenue for approaches like ‘free-sell.’ The free-sell sales strategy follows a fairly simple premise: if a meeting request for a date in the future comes in, and the hotel has no guest rooms attached to its request for proposal, a catering or sales manager can’t book the business without approval. That is, unless the time frame falls in a designated free-sell period, often a short-term booking window in which the hotel will take any business to fill open meeting rooms in the near future. But what happens when that highly-coveted rooms business doesn’t end up knocking at your door? What happens if you turned down a $15k meetings-only event because they didn’t have any guest rooms and enquired too far out, but you didn’t fill that space with more profitable business later on? Think about the revenue hotels leave on the table when they rely only on this kind of rationale.

Today’s advanced meeting and event solutions allow hotels to strategise for these periods more intuitively. Trend analytics, detailed heat maps and drill-down reporting capabilities provide hotels with critical insight into group lead times by month and status. Rather than relying on blanket free-sell periods established at the beginning of the year, hotels can now evaluate lead times for every individual month—reviewing both past and present years—to understand when their target business is actually booking, and exactly when they should fill their distressed dates with more flexible business.

All hoteliers know that forecasting is critical to determining pricing strategies. However, unlike hotel rooms, many hotels are unable to properly forecast meetings and events space utilisation. Imagine, on average, your hotel receives 20 percent more leads on weekdays than on the weekend; would you charge the same price? Today’s advanced meetings and events strategy solutions help hoteliers to analyse demand patterns, therefore determine pricing strategy by high, medium, low or distressed periods throughout the year. The benefit of this approach is that catering sales managers will be more confident in client negotiations as they are aware of demand patterns and their ‘walk-away’ price.

To significantly improve revenue from meeting and event spaces, hoteliers must focus on conversion. Hoteliers may track conversion by creation date or arrival date, either by numbers of enquiries or revenue. Under a scenario where market demand (measured by the number of enquiries) is similar to the same period the previous year, any hotel which improves its conversion by even a small percentage will experience significant revenue uplift. For a hotel to improve its sales conversion, it needs to bring traditional roles of sales, marketing and revenue management, in addition to food and beverage, banqueting, finance and other departments closer together. It will take the entire team—not just one department or group—to capture the right meetings and events business for the hotel considering their overall spend. Plus, it means breaking some conventional thinking about lead time and denials, and hotels must forecast based on demand patterns of their event space for the best profits. And that doesn’t always mean accepting the first lead.

The revenue opportunities presented by meeting and event spaces mean that all financially savvy hoteliers in Indonesia need to have an integrated approach to sales, catering and revenue management in place—and the right technologies to support this. Advanced solutions can support meeting and event revenues, turning complex activities like free-sell strategies into opportunities for even greater hotel profits.

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