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The Classical Hotel with declining revenue

In 2019, following the recommendation of one of Georgina’s former colleagues, an unbranded and independent hotel reached out to Revenue by HRM as they sought to resolve complications with their revenue.

The property, an old-style building, featured a classical and traditional hotel design that was staffed by a highly reliable team, including a live-in general manager who had been with the property for over 30 years.

The hotel was made up of 34 bedrooms, a restaurant, bar and lounge area and was under the ownership of two long-term joint owners. It was located in the centre of the historical town of Bath.

The Clients’ Problem

The client approached us after noticing a year on year decline in their Average Daily Rates (ADRs) and a subsequent decline in year on year revenue.

After further analysis, this decline in was particularly prominent throughout the summer period and was highlighted throughout the summer of 2019.

This represented a major issue for the property.

Typically, the Bath market would expect to experience a peak in demand, bookings and subsequently revenue during this period. However, the property in question was unable to capitalise on this period of high demand and saw their revenue falling compared to historical performance.

The owners of the property suspected that their fall in revenue was due to a gap in bookings caused by their lack of mid-week business; however, they weren’t able to fully identify the root cause of their revenue predicament.

Following this, the owners reached out to us, in order to:

  • Determine the root cause(s) behind their revenue problems;
  • Solve the existing problems and increase revenue!

How We Solved Their Problem

After analysing the business, it became clear that both a long-term and short-term approach would be required to effectively remedy the property’s revenue downturn.

The Short-Term Approach

This involved a ‘firefighting’ strategy, whereby we had to quickly and effectively boost the property’s revenue with an initial hit to help mitigate the losses they had accumulated from trading behind month-on-month.

Consequently, we:

1. Reassessed the property’s price position in the market, as well as against its competitive set

2. Provided regular reviews of daily room rates

Specifically, this involved the adjustment of room rates on a daily basis, in line with the property’s competitors. This intervention proved to be of significant value, as room rates were previously adjusted off of a static tariff system that was irregularly aligned with current market rates.

The consistent monitoring and adjustment of room rates, enabled the property to extract the most revenue out of rooms as possible, whilst also remaining competitive.

3. Evaluated & Optimised the property’s online presence

The main aspect of this involved optimising the hotel’s online distribution channels, including various travel agencies and booking sites. Specifically, we aimed to boost the property up the rankings of these sites by ensuring that they displayed accurate and enticing images of the property, with up to date property information.

Essentially, we aimed to make the hotel more visible and more attractive online.

The Long Term Approach

The foundation of this approach involved the implementation of an optimised pricing strategy, over the course of 12 months. In doing so, the hotel would maximise their revenue throughout the year, remain competitive within the market and truly optimise their revenue during periods of high demand, like the summer and key events.

To instil a revenue focused culture into the property and business, weekly revenue calls with hotel management and staff were hosted. This ensured that all staff members were on the same page, and aligned with the overarching mission to improve the property’s revenue.

Additionally, daily and weekly revenue reports were published to management, whilst benchmarking tools were implemented to identify short-term opportunities to provide boosts in revenue.

A regular strategic review of day-of-week pricing and restrictions also took place to better capture longer lead-in business, and to maximise customers length-of-stay.

Troubleshooting

Via our systematic approach to troubleshooting, we were able to determine the true cause of their complications. This ensured that only elements of the business that needed adjusting, were adjusted, whilst elements that ran efficiently maintained as normal.

Results

Within the first month of our working relationship, our firefighting strategy yielded encouraging results. Through our short-term strategies, we were able to boost the clients net-room-revenue by 5%, and grow their average daily room rate by 4.8%, when compared with same period the previous calendar year.

These gains were also achieved in a static market, meaning that our client was able to grow their revenue during a period of market stagnation.

However, it was in the months that followed where the successes of our long-term solutions were highlighted. Having begun our relationship in October, by December we had increased net room revenue by 23% (year-on-year), occupancy rate by 12% (year-on-year) and room rates by 14% (year-on-year). This growth was similarly achieved in a static market.

In January, a traditionally torrid time for the leisure and hospitality industry, our client benefited considerably from a 29% increase in net rooms revenue (year-on-year), largely achieved through a 22.8% growth in occupancy, and a smaller ADR growth. February followed with another surge in net room revenue (+27% year-on-year) before the onset of the Covid-19 pandemic.

So, what did the client think….?

Fortunately, yet somewhat unsurprisingly, our clients were really happy with the results that we were able to deliver.

Our short-term solutions were able to mitigate some of the losses that the property had previously been experiencing, whilst our long-term solutions provided the owners with a significant increase in revenue, one that they didn’t think was possible.

Our clients remain happy with the figures that our work produces and have remained supportive and satisfied clients of Revenue by HRM since the start of our relationship back in 2019.

The Regional Golf & Spa Hotel in need of Revenue Management Support

Towards the end 2020, a Golf & Spa hotel in Oxfordshire lost their in-house revenue manager. This left the property in need of support and expertise, to assist the two junior staff members that had been tasked with taking over Revenue Management duties.

Fortunately, Georgina Houghton reached out to the 50-bedroomed property on behalf of Revenue by HRM which led to the start of a working relationship.

The property’s crown jewel consisted of a 18-hole golf course in the heart of the English countryside and also featured an on-site Spa, restaurant and bar.

The Clients’ Problem

In this instance, the client was not experiencing any particular problems with their revenue; however, they did require expertise and assistance with the management of their revenue following the departure of their previous revenue manager.

Our expertise had to be bought in quickly and efficiently to ensure that the property and its revenue was not negatively impacted by the loss of its previous manager.

Furthermore, the beginning of our relationship with the client coincided with the onset of COVID-19 pandemic. Subsequently, the property was forced to adapt its facilities and operate within government guidelines. This included the closing and re-opening of the property on extremely short-notice.

Our Solution

The complications posed by the pandemic meant that we had to play a highly reactive role and mitigate the effects of the pandemic as much as possible. Therefore, we provided fast and highly efficient support to members of in-house staff allowing them to optimise revenue during periods in which the property was allowed to open.

Moreover, our services enabled the property to maximise the unprecedented demand for leisure that was experienced following the easing of restrictions.

We also provided a more pro-active role within the business. For instance, we carried out a robust market segmentation analysis, which allowed us to develop “total” revenue management strategies which included the optimisation of other revenues streams such as spa and F&B.

Additionally, this analysis provided valuable market segment lead time information, for specific and strategic marketing schemes. Essentially, it showed us who to send which promotions to, and at what time to send them for maximum results.

Golf packages were placed under a particular focus due to their ability to generate revenue across the business, from which they carried a high TrevPAR (Total revenue Per Available Room). Through strategic pricing within our market segments, we were able to maximise on package business, which subsequently displaced commissionable business generated by online travel agencies.

Furthermore, existing distribution channels were explored and optimised, to ensure increased exposure. This provided the property with significantly improved routes to market in all aspects of the business, including the Hotel, Golf & Spa.

A series of reviews were also provided to the client. These involved a review of daily pricing, to maximise the potential of high demand periods, and reviews on restrictions; whereby multi-night stays, food & beverage or golf & spa packages were offered to help drive the total net revenue of the business.

All of our solutions, recommendations and optimisations were communicated to our client through daily reports and weekly calls, whilst any additional phone support and guidance was provided as and when required. This regular and direct line of communication formed a safety net for the in-house staff and enabled us to swiftly and adeptly troubleshoot any concerns that arose.

Results

In comparison to historic years, the pandemic had triggered an industry-wide decline in corporate demand for hospitality.

The corporate-shaped-hole left in the property’s revenue was recovered, and more, by the strategic marketing, pricing, and distribution of Spa and Golf packages.

Furthermore, as a consequence of the pandemic, the property experienced a downturn in room-nights booked. Initially, this would appear to damage the overall revenue of the property, but due to a markedly increased average daily room rate the owners benefited from an increase in total revenue. An increase in customer spend across other areas of the business also bought great pleasure to the property owners.

These results therefore highlight the diversity and flexibility of the revenue management solutions and support that we can provide at Revenue by HRM.

Our Continued Relationship with the Client

Following the clients positive reaction to our initial supporting role with the property, our relationship has continued to develop as they remain satisfied clients of ours. As our relationship develops, we are able to establish more robust strategies for upcoming years and celebrate continued success.

The Coastal B&B hoping to make the most of the high holiday demand

This particular client was a 3* B&B property that had been recently bought out of administration and placed under new ownership. Initially, the 30-bedroom property was intended for immediate closure and re-development; however, following the immense market demand for leisure during the summer of 2021, particularly in the coastal area of St. Ives, the decision to close was delayed until the conclusion of the summer period.

The new owners of the property were not familiar with the specifics of the hospitality industry but wished to have the hotel open as quickly as possible.

The Clients’ Problem

The overarching problem faced by this client, was the short-time frame in which they had to operate. Our client required urgent expertise, that needed to be delivered efficiently so that bookings and revenue could be maximised throughout the period of high demand.

Moreover, the unfamiliarity of the owners with the hospitality industry posed an additional problem as the foundational systems of the Hotel would have to be set up, optimised and put in place, prior to its opening.

How We Helped…

The primary source of support we provided the client came in the form of setting up and optimising key fundamental systems and structures to enable the smooth running and advertisement of the property.

Specifically, we completed a full set up of the Property Management System (PMS) to manage bookings and reservations; we were responsible for the creation of the hotel’s online presence on platforms such as TripAdvisor and Google Business; distribution channels and routes to market were also established and connected through to the property’s PMS.

Following the successful structural set-up of the Hotel, we then progressed into the positioning of the property in the market and against its competitors. This was achieved through a full market analysis, analysis of competitors and a self-analysis of what the property provided.

A pricing strategy was subsequently derived, and made relevant to the market and post-pandemic demand. A particular focus was placed upon supplementation for different room types and varied length of stays over the summer. The opportunity to host large-scale events within the property was also explored and delivered upon.

These pricing strategies and distribution channels were then continually monitored, adjusted and optimised throughout the summer period.

Results

Following the successful opening of our distribution channels in early June, the property achieved an occupancy rate of 95%, until its closure in September.

Additionally, the property averaged a rate of £165 (net) and confirmed over £100,000 worth of reservations within the first 24-hours of booking channels open.

These figures provide a clear illustration of how our vast experience within the hospitality industry, can enable us to harness the increased demand for hospitality into large sums of revenue for property owners – even at late notice.

Our Continued Relationship with the Client

The property in question has since closed; however, we maintain a strong and happy working relationship with the client on other additional properties.

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