A better standard: Setting revenue management SOPs in Indonesian hotels

A better standard: Setting revenue management SOPs in Indonesian hotels

Written by – Rachel Grier, Area Vice President, Asia Pacific for IDeaS

Many Indonesian hotels practice check-in standard operating procedures (SOPs) to support positive guest experiences and review scores. However, while SOPs are often used in front-of-house environments, they are still not commonly deployed in an area critical to a property’s financial performance: the revenue management department.

There is a distinct need for independent hoteliers across the region to establish and deploy SOPs for their revenue management departments to enhance overall staff and property performance. Revenue management SOPs can help key personnel maximise revenue opportunities for a hotel and assist new staff to better understand the hotel’s positioning, market segmentation, pricing structure, inventory and forecasts. But what SOPs are critical to a revenue manager today?

Market Analysis:
Market analysis SOPs are vital in helping hotels assess their own performance within their local operating environment. Collecting market intelligence to understand the market positioning of a property is one of the first steps in the practice of revenue management. The data gathered from market analysis SOPs help define a hotel’s benchmark rate within its wider pricing environment and inform its marketing strategies.

To create effective market analysis SOPs, hoteliers need to research or update their competitor information—including a review of their competitor set. A market analysis should also include a report on the local market conditions (supply and demand, GDP growth, inflations, key industry news) to assist with ongoing budgeting processes. Hoteliers should also develop a SWOT analysis for their property and local competitors to help define their market positioning.

Forecasting:
Accurate forecasts can be instrumental for planning inventory and staffing levels. If an Indonesian hotel can anticipate demand, it can have the right levels of staff working at the right times, even down to forecasting peak check-in and check-out times.

For hoteliers without a sophisticated revenue management system (RMS) in place, forecasting SOPs are critical to ongoing operations. To establish forecasting SOPs, a hotel should collect and compare the current and previous years’ market segment data, room-type preference data and booking pace.

Other logistical considerations include the level of forecast detail (is it by day, by market segments, or by room type?), how far into the future to forecast and how often to review the forecast. For hotels that have deployed an advanced RMS, forecasting is a straightforward matter and SOPs mainly need to focus on how to validate the forecast generated by the system to ensure that optimal best available rate (BAR) is selected.

Pricing:
Pricing SOPs are critical to any hotel’s ability to operate successfully. These commonly include guidelines and rationales around how to develop pricing structures by market segments, which ensures all revenue opportunities are maximised. Pricing SOPs can influence BAR, packages, corporate rates, wholesale rates, group rates and daily BAR rate review and changes. For hoteliers using an RMS, BAR recommendations will be provided daily for the next 365 days, and the rates are automatically uploaded to various distribution channels. This means the revenue manager’s role and corresponding SOPs are focused on reviewing and validating BAR recommendations made by the system.

Revenue Management Meetings:
Revenue management is the combination of people, processes and technology, and today’s revenue managers are key collaborators that link marketing, sales, reservations and e-commerce divisions within a property. Although many hoteliers understand the importance of having a formalised revenue management process and culture in place within their organisations, many others in different departments do not. To drive profitability across the entire organisation, revenue managers must work closely with all executives to build and instil a strong culture of revenue management.

Regularly staged revenue meetings are a good platform to align the objectives and strategies among key department heads in the hotel. Revenue meeting SOPs should outline the extended revenue management team, attendees of revenue meetings, decision makers and team leader (normally a revenue manager or sales leader), along with topics to be reviewed and reports to be used to benchmark results.

SOPs Support Revenue Generating Activities
SOPs for common revenue management tasks such as market segmentation, forecasting, pricing and market analysis are critically important to Indonesian hoteliers today. SOPs support the ongoing function of revenue managers, enabling them to concentrate on targeting the right guest at the right time for the right price—and maximising revenue opportunities for their hotel.

For more information on this topic, or how hoteliers can maximise revenue opportunities through adopting an RMS, please visit: www.ideas.com

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