Its time for hotels to take restaurant revenue management seriously

Hotel Room Revenue Management Story

Hotels are typically very good at rooms revenue management; indeed, the top 10 hotel brands have the financial systems, the analytics, the know-how and people in place to maximise rate and occupancy in high demands periods and drive occupancy and length of stay in lower demand periods for predominately the right guest. Most hotel GMs, revenue and sales managers understand what their ideal segmentation is (or have information to be able to) and have calculated the cost per room accurately; therefore, property leadership tends to have a good grip on the expected profit per available room and expected month in month performance. On top of this, typically, hotels focus on having the right room sold for the right person at the right time and location. Equally, many hotels are trying to shift from OTAs platforms, and drive the bookings to direct bookings /brand.com and aim to have rate parity. All in all, hotels manage room revenues quite well when compared to other hotel revenue streams which are given less attention and in particular when compared to food and beverage revenue management which is almost non-existent.?

The food and Beverage revenue management story?

Often EPOS systems are not optimised or correctly set up, therefore, sales data is not reliable, often F&B reporting in the week for the week is generally not analysed for opportunity. Most hotel companies use only 40% of their table management systems capability because they use it more as a table management system ( if they have one in place), often data is missing in terms of customer information rendering it useless for following up with customers, marketing and sending newsletters etc. Although it's likely the F&B director and chef will have a good idea of financials, at the venue manager and team level often they do not know the week and month to date venue performance against budgets, forecasts including the profit and loss and YTD financial performance of the restaurants, and bar etc.

A major change I would encourage hotels to undertake would be to have food and beverage revenue management feeding into the Hotel revenue management team and ask them to give food and beverage the same level of analytics and focus. This will drive some changes in behaviour which are needed in operations and help build a more resilient business and give better market intelligence for growing revenue in low demand periods and maximising revenue in peak times. A big benefit of this change would be that no longer will F&B Directors be burdened with a lot of administration taking them away from being customer and team focused, they can have access to the analysed data helping them be proactive in timely decision making. Hotels need to ensure that all F&B areas are being offered to the right guest at the right time with the right menu pricing depending on demand as with rooms. Lastly, very few restaurants give any real focus to where the revenues come from other than if the revenue is from an "in house guest" v. walk-in. If hotel leaders approach F&B in the same way as room analytics they could proactively focus on building multiple revenue channels.?

What Things Should Hotel Restaurants & Bar Revenue Management Consider??

Time-sensitive pricing - Exploration?

With the growth of online ordering and third-party delivery options, restaurants should investigate using time-sensitive pricing for their menu items. Using point-of-sale data, restaurant revenue managers can determine whether certain menu items are more susceptible to price changes than others. If so, they should increase/decrease prices for specific menu items at specific venues or times. A study on the perceived fairness of?rate?fences/discounts has also been published in several journals. In order to avoid pricing shocks, revenue managers / F&B directors/venue managers should carefully monitor guest reviews and satisfaction scores. I believe it is time for restaurants and bars to start to use?RevPASH.?

Customer relationship management (CRM)

The importance of customer relationships in the restaurant industry cannot be overstated. A strong online ordering presence, digital loyalty programs, and a comprehensive customer relationship management system are now more important than ever. The current trends in the restaurant industry have also influenced customer expectations. A good customer relationship strategy can enhance customer satisfaction reviews and encourage word-of-mouth marketing.?

A CRM helps you understand your guest booking behaviour better. By analysing data about your guests, you can improve guest retention, increase profitability, and customise experiences. CRM systems are designed to capture data from a variety of sources, including social media, surveys and review websites. They can also be used to collect more detailed information about guests, such as their preferences, birthdays and anniversaries. The more information you collect, the more likely your customers will be to return because you have the information to personalise experiences.?

Menu Analysis?

It s critical you understand as part of revenue management what drives revenues and use menu analysis to understand buying behaviour and margins. The best menu analysis model to me is the?Boston consulting?nevertheless, I would look at both cash and % margin as two separate analysis. I'd rather sell a bottle of wine with a margin of 50% and make a cash profit of 30 Euros than two glasses of wine with a margin of 70%- and 6-euros profit. It’s essential to?use both?revenue management with menu analysis.?

There are more aspects to revenue management than I have included here, however, I do want to keep this article to the points I believe will make the most difference. I would love you to share your thoughts and ideas on restaurant and bar revenue management, and what you do in your hotels in terms of F&B revenue management. I have kept out events, room service, and To-go revenues; however, I believe there are real opportunities here too for them. Proactively food and beverage should look to maximise revenues in high and low demand periods daily. I hope you found this article helpful and valuable for conversation and reflection.?