Exit the Dark Ages: Tech Can Help Hoteliers Create a Demand-Based Pricing Strategy for Meetings/Events Business
Ask any hotelier what their occupancy was last night, and chances are they’ll know almost instantly. But if you ask a similar question to an event manager, they might struggle to provide you with the exact occupancy for their meeting space yesterday.
The guest room side of any hotel has been able to measure and analyze its business for decades, and technology and analytics continue to automate what was once a horribly manual process. But an equally important profit center for many hotels – meeting & event space – hasn’t experienced the same evolution despite seismic shifts in technology and connectivity. This article from IDeaS Revenue Solutions discusses how savvy hoteliers and function space leaders have been taking a more dynamic approach to pricing meeting & event spaces, and how they are utilizing technology to bring the business of meetings out of the dark ages.
Shifting from Static to Demand-Based Pricing
Traditionally, events managers have used a fixed-price approach when booking function spaces. You set pricing for the year and perhaps adjust every so often as you react to changing demand. In a time where so much technology is at our fingertips this approach is just far too restrictive, because it prevents teams from tailoring proposal responses and optimizing revenue based on demand and profitability. Although meetings & events teams may manage a steady stream of business, a static strategy can lead to missed opportunities to secure the business that is most profitable. Fixed pricing also emphasizes a focus on booking based on urgency rather than holistically. For example, meetings & events managers often focus on business with shorter lead times first, even though rejections and longer-lead inquiries may yield better revenue. Why? Manual record keeping or underperforming sales and catering systems simply don’t allow for visibility into demand that helps hoteliers execute a more strategic approach to pricing.
However, with better tools to access and visualize demand data, sales & event managers can apply a demand-based pricing strategy to meetings & events – similar to how the rooms side of the hotel business operates. And the results are increasingly impressive.
Applying Revenue Management Principles to Function Space
A demand-based pricing strategy is rooted in data. Easy access to the right data along with interactive visualization provides powerful insight into meetings & events performance and influences strategic business decisions. As hoteliers are starting to optimize their other revenue streams, they’re compelling new stakeholders to think differently and focus on new KPIs to measure business success and profitability.
How are you maximizing your space? Are you booking the right events for the highest revenue? Space utilization measurements, like venue occupancy, can help identify tactics to increase revenue by strategically pricing rooms based on their individual demand. The historic usage of meeting rooms and the pattern of occupancy can also highlight whether optimal space utilization has been satisfied by the demand in the market.
Another performance indicator is the number of attendees attributed to a meeting room at any given time. Measuring the number of attendees, the optimum capacity of the function space, and the overall revenue generated can also help determine if meeting & event spaces are being utilized effectively.
Is your space effectively generating optimal revenue? This measurement goes beyond the space itself. Food, beverage, room hire/rental and audio visual revenue can all be contribute to the bottom line. Not to mention the huge impact meetings & events space can have on guest room occupancy. This insight can be used to compare the revenue of function space alongside other revenue-generating areas of the hotel, or highlight the underutilization of the space in relation to those other areas.
Speaking of revenue, if a hotel gets $100,000 per month worth of inquiries or leads, what percentage of that revenue value is being converted to bookings? In most cases, it’s a low conversion due to the high volume of inquiries common in the industry. But by using a strategic management tool to increase the overall percentage of booked revenue, even a small percentage will have a significant impact on the bottom line. The boss can’t be too upset that you have new, more efficient ways to monitor conversion performance.
Technology Yields Results and Better Revenue
Technology and software tools continue to break down silos across the hotel enterprise. The good news is that by applying standard revenue management practices to meetings & events resources, hoteliers can price, forecast and measure business performance with the same confidence as they do with guest rooms. The result is better revenue, higher profitability and much more visibility into data that empowers meetings & events teams to answer even the most challenging business questions.