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“Questex Webinar Producer”


Stowe Shoemaker, Ph.DDeanCollege of Hotel Administration atUniversity of Nevada, Las Vegas


Mike MedskerDirector, Revenue Analytics & TechnologyDestination Hotels


Lyra Hynie, CRMEDirector of RevenueThe New Tropicana Las Vegas


Stowe Shoemaker, Ph.DDean

College of Hotel Administration atUniversity of Nevada, Las Vegas


• UNLV works with industries to provide our students with practical knowledge combined with the theory of 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


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


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.


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


The Value-Pricing “Thermometer”


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


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



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



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


Example of Measuring Competitors


OwnershipStructure

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


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


6. Monitor prices realized at the transaction level



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


7. Assess customers’ emotional response

Behavioral economics



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



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



10. Understand Supply

Cost structure

Capacity utilization

Product perishability

Extent of product differentiation

Number and diversity of competitors

Impact of sales volume on cost



11. Understand Demand

Price sensitivity of selective demand

Efficiency of price shopping

Degree of brand loyalty

Industry growth rate

Buyer concentration

Complementary product



12. Understand Distribution Channel

Customers that use the different channels


The Evolution of Pricing Strategies in Hotels


Rates vary by season, some Measurement,Some DF

Profitability

Strategic

YieldManagementSystems; muchDF

Revenue Management; look at the total valueof the customer

Pricing based upon value received, not costto produce;consider loyalty

Bundling and

other

techniques to

change

perception of

value

Pricing based on customer knowledge

Tactic


Positive Value

Negative Value

GainsLosses

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.DDean

College of Hotel Administration atUniversity of Nevada, Las Vegas

E-mail – [email protected] – 702-895-3308


mailto:[email protected]

Mike MedskerDirector, Revenue Analytics & Technology

Destination Hotels


We are true to our place,

diverse by design.

Authentically Immersed

Service With A Story

Unscripted Discoveries

Individually Empowered


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


Rate Efficiency by Channel


$0 $100

$100IBE

Direct Voice3rd Party Voice

GDSOTA Hotel Collect

$90Consortia

$75-90OTA Merchant

$60-75Opaque

Wholesale

$10-183rd Party

Voice

$19-25GDS

Consortia

$13-31OTA

Hotel Collect

Variable Channel Costs


$0 $100$3-6IBE

OpaqueWholesaleOTA Merch

$6-18Direct Voice

Optimizing Profitability


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



• Leverage booking window by channel and segment

– Build base through group and corporate accounts

– Targeted pricing

– Outbound marketing



• Enhance e-commerce efforts

– Ease of booking

– Mobile

– Social media

– PPC, SEO, retargeting

– Meta-search



• Develop smarter OTA partnerships

– Inventory and LRA

– Parity

– Consider limiting affiliate participation

• Build a revenue-centric culture

– Reservations sales and staffing

– Key operating departments


Thank You!

Mike MedskerDirector, Revenue Analytics & Technology

Destination Hotels

E-mail – [email protected] – 303-268-6882



Lyra Hynie, CRMEDirector of Revenue

The New Tropicana Las Vegas


Tropicana Las Vegas

• One of the last iconic casino hotels on 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


Penn National Gaming

• 26 properties, 17 jurisdictions, 32K slot machines, 760 tables & 3,100 rooms

• 1st time on the LV strip

• Marquee Rewards Card


What low-hanging fruit is out there?

• What sets your hotel apart from the competition? Find it & market it!

• Social Media


What low-hanging fruit is out there?

• Upgraded room types

• Upgraded amenities

• Views

• Late check-out

• Early check-in


Let’s Talk About Up-sells


Speed is Money

• When competing against corporate giants – speed is one 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


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?


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!


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


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=jwsrAUwgD8Dm6M&tbnid=wzVRauyC1FyrgM:&ved=0CAUQjRw&url=http://toonclips.com/design/10404&ei=tWCzUtmIO5LboAS6uYGgBw&bvm=bv.58187178,d.cGU&psig=AFQjCNG-dhuNlVA0QnD1TSvO_ftyEfnKgQ&ust=1387573796202467

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=jwsrAUwgD8Dm6M&tbnid=wzVRauyC1FyrgM:&ved=0CAUQjRw&url=http://toonclips.com/design/10404&ei=tWCzUtmIO5LboAS6uYGgBw&bvm=bv.58187178,d.cGU&psig=AFQjCNG-dhuNlVA0QnD1TSvO_ftyEfnKgQ&ust=1387573796202467

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


Revenue Culture


Thank You!

Lyra Hynie, Director of RevenueThe New Tropicana Las Vegas

E-mail – [email protected] – lyralynn1

Phone – 702-739-3608



A Word From Our Sponsor…

Dom Beveridge

The Rainmaker Group

E-mail – [email protected]

Phone – 415-713-0489



About Rainmaker


Innovators Committedto 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 ProfitOptimization

Pioneers of Total Guest Value

Culture Built ONCustomer-Centricity

Rainmaker’s Industry Recognition



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


Thank You!

Download the webinar:Hotelmanagement.net/webinars


http://hotelmanagement.net/webinars


Date post:	17-Oct-2020
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