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[Music] hi there today we're gonna talk about yield management if you're not doing this at all it can be kind of difficult and uncomfortable but you know if you work through the challenges it can become a regular process every week or two and it can add huge value to your business you might also be doing it very infrequently because it's hard to do so we're gonna show you some ways to do that that are a little bit cheaper or a little bit easier and then there's also more expensive automated ways to do it but it is perhaps one of the most valuable things you could do to improve overall profitability of your property there's a couple reasons for that one is it kind of allows you to see into the future you know you can see your revenue and you know in future dates you know before that date arrives while there is still time to take action you know you don't run out of time and then try and sell your rooms too cheaply at the last minute and maybe you know still end up with a lot of vacancy or in other cases you know you might have an opportunity to raise rates out in the future but you can't really see that unless you're doing yield management the other reason it's important is because your business as a hotel you have high fixed costs right and that means that you know a change in revenue does not necessarily mean a change in cost and you know that's that's good in the positive sense in that if your revenue goes up your costs don't go up as much and so you can be very profitable but the reverse is also true which is that if your revenue goes down your costs don't really decrease all that much and so that can be very unprofitable so so there's a big impact on profitability there and you know there is revenue management software that automates a lot of this but it can be complicated and expensive to and to use but you can also do it with spreadsheets and I'll go through some basic concepts so that you can kind of get a better feel for the concepts and then we'll talk about you know different ways to get it done but it's something you should be doing a regardless of how it gets done so let's get started so the first data point you need are the days right so this usually starts from today going forward with yield management you're really not looking backward much except to maybe compared against the same period last year if you have that data but we're gonna kind of leave that part of it aside for the moment so you're looking from today forward and you know some sometimes it's very easy to download the next 180 days of data or maybe 365 days of data so you might extend it out all the way that far but the reality is most hotels are going to manage more tightly and make adjustments in the next sort of three or four months sort of 90 to 120 days and you know then you want to pull in your occupancy and your occupancy you should come from the pms now we are using the term occupancy but in in you know to be more specific it's your reservations right you want to pull it from from the place that's most accurate that reflects all the channels and all the sales and every reservation even if it came in from the telephone or from direct booking or any number of travel agencies so your pms should be the the ultimate source of truth so to speak and that should reflect all of your reservations for every room and every date so you want to pull in your your occupancy or some people might call it availability which is kind of the flipside right the number of rooms that are available that are not reserved then you want to pull in your rates now obviously you can pull them in from the pms in different places but the thing is your rack rate is typically in the pms and then it may get pushed out to the direct booking engine or to the channel manager where there's other adjustments made for packages or promotions or meals and and so on so you know you want to be able to compare your rates with your competitor rates and so you want to pull those from the same source and some of these sources that I have listed here Expedia or OTA insights or Rev caster profit there's there's many others but you can pull in the data that reflects your to the consumer and also your competitor rates so it's the rate that's really displayed as the final rate to the consumer and you want to make sure that you're comparing apples to apples some of you may be surprised to see Expedia there they do have a tool recently within the last year so I guess that allows you to pull in competitor rates but it's not at the room level so it's just at the property level but it is free these other services cost money varies from 50 to 100 bucks a month depending on the size of hotel that you have but but Expedia has a free tool where you can pull in the lowest available rate hmm for a property and for all your competitors and yourself now the problem with that is that if they've sold out of the cheaper rooms then that lowest available rate could reflect a more expensive room which you may be then comparing to your cheaper rooms because that's the cheapest rate available so it can't have a little bit of imperfection but but it can also work you know the times when that happens in most markets that I've seen I would say you know the data is 90 to 95 percent accurate but about five percent of five or ten percent of the time you might see an invalid comparison of in you know different room types but doing it at the property level can can also be useful and that tool is free to download that data but the important thing is you want to have your rates being the final consumer rates and also the competitor rate so that you're really comparing apples to apples and then you kind of line those up on you know the same dates your occupancy with your rates and the competitor rates so you have a spreadsheet that maybe you know 300 columns long but but it's certainly manageable once you get used to it it does take a little bit of Excel skill but you know a lot of these things can be copied out into the future for you know hundreds of columns if you need which are hundreds of days so let's look at an example here this is let's say that on the far left here your occupancy you know days from today is kind of the bottom horizontal axis right so so on the far left that's basically today or tomorrow and then you have six days from now eleven days from now all the way up to 56 days from now right and you know in the near term hopefully your occupancy is a little bit higher let's say it's 80% right for tomorrow and as you go out into the future obviously you know all your rooms are not fully booked so on day 60 you might have an occupancy that's more like 40% you know so 60% of your rooms are available now let's say that you look and and you know your occupancy is actually significantly lower in this period right here so sort of 22 to 46 days out your occupancy is unusually low now how do you determine unusually low well you do have to have some kind of a benchmark for that so sometimes you can do it by gut feel based on your knowledge of certain weekends or the market but also if you have historical data that's very helpful to determine kind of what it should be and if you're trending behind and let's say then you determined that you know these these dates have unusually low occupancy and availability is fairly high so why is that you start wondering and you look here and you look at the competitor rates and you're the blue line and your competitor average is let's say the yellow line well you can see right there that the competitors the average competitor rate has dropped substantially in that period and so you're probably losing a lot of bookings to some of your direct competitors and so this gives you a chance now in day one to kind of remediated maybe match some of your competitor rates lower a couple of rates so that you can get more of that volume otherwise you might end up with very low occupancy for that period now let's take a look at another example now this example is a little bit different let's say this is your expected trendline for availability and an occupancy and let's say you notice that you know these dates in here are unusually high and you've got you know higher occupancy higher reservations then you might expect for those dates and your availability is lower and maybe there's some some big event or or something that you knew about going on or maybe something that you are not aware of going on perhaps one of your competitors mispriced their rooms and lost a lot of share to you or maybe a competitor kind of you know closed a bunch of rooms and and and had less availability so any number of things could be happening some of which you're aware of and some of which maybe you're not aware of but you notice that your occupancy is pretty high and so you then kind of look at competitor data and you notice that yeah sure enough your competitors your average rate for your competitors during that period has gone up substantially and so you appear to be a better value versus your competitors so you're getting more of those bookings and maybe they raise rates also because they're aware of some increase in demand during that period so this is an opportunity for you to raise rates and keep that same sort of premium level that you have let me get the pointer out here but you can see here you've got a premium of about you know this is $200 a night versus maybe a hundred and eighty dollars a night but here goes up to almost the same so you might want to just kind of raise your rates a little bit in this period and and increase your revenue and profitability per night so this is another example of how you could use this sort of data to improve your profitability if your occupancy or your reservations are unusually high so let's summarize a little bit you know some of these steps in terms of building your own solution initially you would pull availability data from the PMS because it includes all the channels then you layer on top of that the competitor data for ninety days or more if you want from OTAs and and other paid data services you can pull that data and then you combine that data in a spreadsheet and you line up the dates as columns I like columns as dates because you kind of read from left to right and it's pretty intuitive to think of a time line going from left to right and then you know each row is you know your availability your rates your competitor rates and you create some key ratios as well and I'll show you some of those but some of those key ratios for example is your rate versus competitors you know and and what that ratio looks like or how much how many rooms are available based on the time left to sell those rooms so we'll show you some ratios here in a second but you create some additional rows and then you use some conditional formatting perhaps to flag some of the highs and lows so you can paint a whole range I usually like to make it sort of ninety days and it'll show you which numbers are unusually high or low within that range which numbers are above average or below average and so on and it just helps you kind of see some of the outliers out in the future when you're dealing with a lot of this data and then you adjust the rates in the spreadsheet and send them for manual changes to the PMS or the OTA now if you're doing this in a spreadsheet you're gonna probably have to send this to someone or maybe you do it yourself but you're gonna have to adjust rates right if you decide that rates are too high or too low for a period you're gonna say you know for these 15 dates change the rate from you know 250 to 230 or from 250 to 280 so that needs to get into the end of the system somehow and get implemented and you know if there's an automated system this is where some of the automated systems cost a lot of money but you can make the change right in the revenue management system and it'll push the rate changes to the PMS and then the PMS kind of makes the change on those rates for those room types and for those specific dates and it pushes those new updated rates out to the channel manager and to all the channels and the booking engine and everything so so that's part of what you pay for with the automated systems but if you're doing a spreadsheet and then you just need to make sure that any changes in the spreadsheet are tracked so that the recipient knows and can see hey okay these these rates change the rest of these all stayed the same right so they can just see the changes so you want to kind of flag that in some way when there's any kind of a change and then you implement it you just enter those dates in the pms and usually if you're doing this weekly you're not gonna have a ton of changes so it's not a lot of data entry but you know if you're making lots of changes then it can be a little bit time-consuming but but if you're doing it pretty frequently you should just kind of be tweaking certain dates and in room types so here's an example of a spreadsheet I know this is kind of a lot to look at here and I'll try and go through this slowly here and let me get the pointer working here so there's the laser pointer so at the very top here right this is the total number of rooms that you have and this could just be for a standard room or it could be for your whole property now if you're gonna do this at the room level and let's say you have four room types you would just copy all of this for each room type right but let's say let's say we're just dealing with the standard room right now and you have 15 of these okay and here's how many you've you have available which are unsold right so you've got five and five that's good so that's in green and this is kind of the conditional formatting that I talked about so you know five five six seven up here then you know the availability starts to get a little high these are a lot of unsold rooms and so this is kind of your occupancy calculation sixty-seven percent you know down to twenty percent here and so that starts to become a little bit concerning especially because those dates are coming up very soon and so what you have here is a ratio of you know unsold rooms versus days left to sell now in this particular case this was done you know a few weeks ago you know so this date here November 13th is 49 days away and you know this is fifty days away 51 days and so on so so right in here you're kind of doing okay because it's out in the future there's 49 or 50 days left to sell and you've only got five or six rooms left so it's kind of it's green right this is a ratio of rooms unsold two days left to sell now out here it starts to get a little more concerning right it kind of turns yellow because based on the amount of time left to sell you know the unsold rooms are a little high and and at some points this can also become red then you want to look at the current effective rate this is another ratio that I mentioned so this is effective rate just means that it's the rack rate after all of the changes whether it's packages or promotions or other changes it's sort of the effective final consumer rate you know yours versus the competitive set so in here you're at 68 66 or 70 and and so that's pretty good it's kind of green or yellow here it kind of turns red and maybe this is why your availability increased right and your occupancy is starting to decline because your rates are higher than usual versus the competitive set now here's your current rack rate of 269 and then here's the proposed right so the proposed is what's going to change now right here we've changed these dates down to 239 and this is where you would want to flag this in some way maybe you you create a conditional formatting here as well to kind of show that there's been a change and then here you can see also this is another way of kind of flagging that there's been a change here this is the change in the effective rate so it really looks at this effective rate here which is you know after the discount it's running in the market this is the effective rate of 191 compared to what it used to be so it's a drop of $24 and now you can see that the effective rate versus the comp set is a little more in line right you're mostly a sort of green yellow orange here instead of the red here so you're a little more in line with your competitors the there's more detail down here of your competitor rates and then usually we just use the average competitor rate now if if you if you're doing it this at the room level some of those paid Data Services can allow you to pull in specific room types from each competitor that will compete with your room type here so if you have like a two bedroom ocean view you would not compare that maybe to a two bedroom garden view or two two-bedroom pool view or you wouldn't want to compare a two-bedroom to a one-bedroom and so on so this allows you to kind of pull in specific room rates for competitors for rooms that compete directly with your room here so let's let's look at some other ways of looking at this data here now this is smaller right you may not be able to read all the numbers but I kind of wanted to show you the way you can spot some trends and issues you know with some colors this is just an expanded version of we look of what we looked at but you know here's some dates out in the future and you can see you're doing okay here everything's green in terms of your unsold rooms but then they do start to turn red here right and as you look down you see that yeah your rates are unusually high versus your comp set here and then it turns good again so you're gonna go in here you're gonna adjust your proposed rate and then eventually put that into your system in the pms and then here this is kind of flagging the whole period where you've changed rates so this is from the 15th to the 7th so I know that's probably about 2022 dates where you would change the rack rate and then it can flow all the way through to the channel manager and adjust automatically down the line and I'll talk about that more in a second because that's also another issue to think about but then you can see here also that the proposed rate is now more in line with competitors and the competitors here's the the competitor rate so we can see more clearly here that your availability rose not because your rates went up your rates were pretty consistent at 269 for this whole period but for one reason or another your competitor average dropped a lot in this period right so the average competitor rate became much lower here compared to you know 318 328 and so on here it's regularly at 280 290 and so that's part of why you were losing volume and sales there so hopefully with this adjustment you would start to get more volume again and occupancy in those dates now here's an even smaller view and obviously ya do not intend for you to be able to read this but I did want to show you a couple of other types of adjustments so every property has a different booking window right you know some properties that are maybe very urban or cater to business travelers may have a booking window that is a little shorter like maybe two or three weeks is maybe their average booking window maybe even shorter right they might have a lot of bookings that come in the day before and so you do need to think about your booking window and you know resorts and leisure travel maybe plan more in advance right like vacations so you know the average booking window there might be 30 days or even 60 days or even longer in certain markets and so you have more time to sell those rooms on the one hand on the other hand if it gets too close and these rooms are unsold you know very few of your customers actually booked to arrive next week or or tomorrow in some of those markets and so you might have trouble selling those rooms if they get you know really close so you should be looking further out to be kind of adjusting your rates because people are kind of booking further out here so you know your booking window might be here let's say where you know your average booking is sort of about I don't know what that says there maybe it's about 14 days from this date and your bookings tend to go like this and then they kind of drop off and then you have very few bookings further out but the bulk of your bookings are coming right here in this sort of a period right on the other hand if you're more of a resort where or if people book much further in advance then the bulk of your bookings is coming out here so you need to be really managing this area pretty tightly and if if these dates start to move closer in here you're gonna have trouble selling them because very few of your customers actually book in such a short time period so so you want to kind of really focus in on this area so you do need to take your booking window into account so this gets into some nitty-gritty detail but I think it's important there's two basic ways to adjust rates from a mathematical standpoint right let's say we're really just talking about one rate you could adjust the rack rate in the PMS and then it flows through to the channel manager where it gets modified right and 10% less for package rates and maybe with breakfast costs $15 more maybe you push net rates to certain channels and there may be other adjustments that the channel manager makes and then pushes those rates out and all of this happens automatically in the channel manager right I mean you do have to set it up initially of course but once these these things are set up then any rate change is coming from the pms automatically get modified with these same rules and then pushed out and then it gets pushed out to the booking engine - Expedia to booking comm and lots of other channels that you may have connected to the channel manager and some people have maybe 10 or 15 channels that gets hard to manage for a small hotel but but certainly 7 or 8 even becomes very difficult to make all of these modifications and then there's discounts applied and as I said you know each of these discounts has to be applied at the OTA or at the booking engine so you know these would also be automatic in this scenario in the sense that you make the rate change up here at the PMS and then it goes into the channel manager it gets modified automatically it gets pushed into each channel automatically and then the discount gets applied at each channel automatically so you know of course you can change the discounts more frequently if you want but then you have to replicate that change in every single channel and it does become very hard to manage very time-consuming and so so this discount here still gives you the promotional effect that we talked about in the previous webinar so it's not just a rate drop right it's not just a rate change it is actually a promotion and you get a lot of that good merchandising and the banners and strike throughs and so on that really convey extra value to the consumer so you still get that impact here but you can make adjustments to the rates up here for certain dates or certain rooms and then it just pushes through audit you know all these numbers calculate automatically now the other scenario is you adjust the promotional rates and in that case maybe you don't change the pms rates at all in other words the rack rate and the channel manager makes the same modifiers it always does and each booking engine while the booking engine receives the same rate from the channel manager and then you have to go and adjust the discount or the promotion on the booking engine maybe you have more than one you might even have two or three then you have to go to Expedia and adjust the discount there then you have to go to booking comm and adjust the the promotions there and then go to each and every one other channel and adjust those promotions in all of those places and if you don't do that properly you can have rate parity problems and that's a whole other issue that we talked about in the course but you know you may want to favour your booking engine for obvious reasons because it's more profitable and you can do that with special value add offers and other things that we'll discuss but in general if you don't if you do not have rate parity these channels will really suffer because you know they're not competitive so they're gonna they're gonna give your property less visibility the same goes with traditional travel agents if if they're selling a hotel at a particular rate and then they're there client goes and finds a cheaper rate in another channel they look really bad and so those traditional travel agents are less likely to sell your hotel as well so you get very little sales in those other channels if the rates that you give them are not competitive so so keeping parity in in most cases that I've seen is is a really good thing if you want to have lower rates in your booking engine you you're certainly free to do that there are ways to avoid some of the bots and we talked about that in the course in detail as well but you know these automated bots that check on rate parity there are ways that you can put in the booking engine for example you can require the consumer to enter a code to get a special rate that's only on your site or you can throw in lots of additional benefits or you can do something like buy four nights and get the fifth night free that type of thing but anyway those are what that's that's parody that's a whole separate conversation but bringing it back here you know if first of all this takes a lot of time and I've seen some properties even medium-sized properties with 70 or 80 rooms where it takes two people like two days to do all of this and so it becomes time-consuming it's also easy to make mistakes and keeping rate parity can become very very difficult and then your property goes down in the rankings and visibility so you have a situation where you have maybe the worst of both worlds in the sense that you've lowered your rate so now you're making less per night but if you mess this up you could also be damaging your volume so you're getting you know a lower rate and less volume if you're gonna lower rate you need to at least be getting more volume and hopefully a lot more volume so that's a whole other concept called rate elasticity which we get into in more detail as well but but I think the important thing right here to understand is that the way you implement promotions matters and this method over here is much more automatic it's much quicker it allows you to make adjustments every week by just adjusting the rack rate and if all of these things are programmed properly you don't have to mess with them often and you'll keep rate parity and it makes everything kind of more automatic whereas this one creates you know a lot more work for individual pieces and and can create additional problems so I'm gonna leave it at that we could I could probably talk about this for four hours but I'm gonna leave it at that and let's keep moving here so now we've talked about two sort of ways to adjust rates based on math and so on and doing it manually there's also two methods in terms of you know manual and automatic with with software so I wanted to give a quick comparison of that so with the manual method the benefits are you know you can you can align your your rates in the future with occupancy and with actual sales and reservations you can also align your rates with market demand and specific competitors and all of that is extremely valuable to make sure that your your your rates are properly positioned in the market relative to your competition and relative to the amount of supply that you still have now it does require some time and some some expertise in Excel you know sometimes it can take you know a couple of days for some people but if you keep it simple and you use the template that we provide in the course it can certainly get you much further down the road and it does require a little bit of customization for your property but pretty basic Excel skills would enable you to do that and you could have somebody do that maybe in a couple of hours and you could maybe do it once a week and that could add significant profit to your business now again that's if you're smaller or if you're not doing it at all or if you're struggling to do it at all there's kind of a process and a template that you can use that you know we've been using for years with a lot of properties in different countries so we've kind of worked through a lot of those wrinkles and you know it's it's it's it's pretty simple and basic so it suits a lot of people you can always add to it if you want because it is Excel if you if you really want to get more creative and more advanced you can also kind of build your own out then the other option of course is doing it more automatic with revenue management software so the benefits some of the benefits are the same right you get alignment of your rates with your occupancy in the future you get alignment with market demanding competitors but you also get more speed which means more repetition so you know if some of these systems are really fully integrated you could do this almost every day right and a lot of really big hotels have more automated systems and they do this every day but smaller ones don't necessarily have these systems so they don't necessarily have the speed which then speed translates into repetition and being able to do it daily or weekly now even smaller hotels probably don't change their rates daily although some could certainly do that if they have these systems weekly might be sufficient and but it basically allows you a lot more repetition now it does require time to set up these systems some of them are 2 or 3 months some of them are probably a month but that's probably because it doesn't have as much automation and iteration there's also some expertise and system training that's required and if you live in a very remote area you know and somebody gets trained on the system and leaves then you have to fill that that capacity again and the expertise it also requires some money and you know the monthly rates vary on some of these systems but they can go on the low end from $300 a month up to $2,000 a month and then the setup can be you know one to ten thousand dollars for the initial setup because there's a lot of programming and connections that go into this so that you can you know view the data automatically in the revenue management software and you know view it in a similar way to what I showed you with the spreadsheets and when it pulls data automatically from the PMS and then you view it you make your decisions and when you make a change right there in the RMS it pushes those changes directly into the PMS and then flows through to all your systems in a matter of minutes all the way out to each and every market every consumer touch point so that kind of automation is is pretty good pretty slick a lot of hotels have it but it but it does cost some money so something to think about so I know some of you love spending time with all of the data but some of you don't so you know hopefully that showed you at least the importance of doing this on a regular schedule and for some of you it may seem like a pretty big challenge and something that you don't enjoy doing or you might not have the skills necessarily but you know once you start doing it and work through some of the problems and challenges and you make it a regular event maybe every week or every two weeks you or your team or the two or three people involved in pulling this data together and then making decisions and then implementing the decisions you will gradually kind of develop a rhythm with it and it does become easier with practice and you know you may have to work out a few wrinkles here and there and your process or in your spreadsheet or in your data but if you start doing it on a regular basis you can kind of get a rhythm again some of you may already be doing this and maybe this helps you kind of refine your process a little bit I don't know so everybody's a little bit of a different stage but it is definitely a very valuable exercise and process to go through now we also see some hotels independent hotels in different parts of the world that you know they just want someone to tell them once a week tell me what dates you know the rates need to change and you know what the rate needs to change to and for which rooms just tell me what changes I need to make within the next say 90 days and that's all I want I don't want to mess with any software I don't want to mess with any spreadsheets or data or any of that stuff and so in those cases you know we can pull sometimes they just send us the raw data once a week that can also be very automatic and and we kind of pull it together and send it to them so if you're interested in that just drop us an email that's kind of a separate service that we offer as well but sometimes that's all people want right anyway that's about it for yield management a tomorrow I think we're going to talk about Google and HPA and generating traffic for direct booking so join us not tomorrow I guess it's in about three days actually so we're gonna have the next webinar is going to be on that topic and I hope you'll join us so I'll see you in a few days you