Revenue managers reveal that it pays to take a closer look at the hotel’s financial statements to get relevant information for income optimisation
By Vinita Bhatia
His title might be that of a revenue manager of Crowne Plaza Jaipur Tonk Road. However, every month Mudit Kaushik conducts a P&L meeting with all HODs of his hotel. This is to analyse the property’s topline business and brainstorm on ways that his team can generate revenues for each division, including F&B, laundry or salon. His revenue team also conducts weekly yield meetings to discuss the performance of each market segment, compset hotels’ performance, price demand, market scenario and forecast as well as strategies to meet targets.
According to Kaushik, examining the hotel’s financial statements gives a revenue manager a complete overview from the market-segment perspective and helps them make a detailed analysis of the performance of each segment. “Since these reports go hand-in-hand with rate strategies, we consult it for finalising pricing policies for rooms and F&B as well. However, while designing revenue strategies we also consider market trends, current occupancy, business pickup trends, hotel topline budget, etc,” he explained.
This scrutiny also helps them identify if any department needs improvement. For e.g. by analysing the room performance, they can do segment shifting to meet its topline revenue and design season-based strategies to increase room occupancy. “Every market segment plays a vital role in deciding average room rates and net yield, and each has different buying capacities. For e.g., airline crew, which moves at the lowest rate, are important as it helps to build a base occupancy for the long term. The same applies for inbound business from tour operators. These days, weddings and conferences are other major segments that hotels focus on, so we do weekly analysis on selling strategies to target these segments depending on current hotel performance and market scenarios,” Kaushik pointed out.
FOOD FOR THOUGHT
Often, proceeds from F&B outlets and banquets are recorded separately so revenue managers can understand each outlet’s performance and examine the available opportunities to refine it further to maximise revenue generation and profitability. Also while undertaking budget exercises; this approach helps in outlining the accurate details on F&B revenue and average per-cover cost.
Many hoteliers have started breaking food sales down into meal periods, to better track business volumes throughout the day in their F&B outlets to understand where they get their maximum revenue and profits. According to Kaushik this is a good practice as it gives them better understanding on how much footfalls the property is actually getting for different meal periods. “This helps revenue managers to calculate food cost involved during different meal stages and helps to calculate profit or loss. Weekdays and weekend analysis of the footfall can also assist in controlling wastage for F& B outlets,” he said.
More hoteliers, and by extension their revenue managers, have understood the benefits of evaluating top line property operating rates and binding it to their unified revenue accounting system. Starting from ADR, historical business trends, targeted segments, operational costs and going all the way down to the desired gross operating profit, it gives them a clear idea on performance of each segment and operating head. This reiterates a well-known assertion that revenue management strategies cannot work in isolation – they need to be integrated with all the other systems and divisions to be really effective.
