The Asia Pacific region is experiencing a hotel construction boom. Based on years of strong economic growth and investor confidence, more hotels are constructed in our region on an annual basis than in any other place in the world. Importantly, the frantic pace in which these hotels are being constructed and opened is leading many in the industry to question whether these hotels are adequately prepared for the challenges they face in optimizing their revenue potential.
According to the Global Authority for Hotel Real Estate, Lodging Econometrics, as of October 2007 there were a total of 1,555 hotels with a combined 366,679 rooms under construction in the 24 countries making up the Asia Pacific region.
While increased construction is occurring throughout the entire region, development underway in China in preparation for the upcoming Beijing Olympics is underpinning the regional boom. In total, China has 7882 different projects underway with a combined 222,591 rooms. China currently accounts for 50% of all planned projects in the region and a staggering 60% of all guestrooms.
Hong Kong, as a financial and transportation hub in the Asia Pacific region is also experiencing record levels of construction. This, in part, can be attributed to the expected freeing-up of the Hong Kong economy which will allow for Chinese investors, both individuals and institutions to openly invest in the market. In preparation for this economic resurgence Hong Kong is anticipated to open 50 new hotels in coming years, split evenly between Hong Kong Island and Kowloon Island.
However, in spite of the number of hotels and resorts opening annually throughout the Asia Pacific region continuing to rise, many hotel's are struggling to reach their optimal revenue potential due to inadequate pre-opening preparation and a lack of in-depth pricing and channel strategies.
With a Hotel typically requiring 9 - 12 months post opening to achieve its full potential, every effort must be undertaken to ensure a Hotel is "Revenue Optimized" from well before its doors open, therefore ensuring a higher revenue flow and in turn better return of investment for both Hotel Owners and Hotel Managers alike.
There are many areas that need to be covered throughout the pre-opening phase of a Hotel, ranging from establishing market segment strategies, undertaking comprehensive competitor evaluation, pricing research and processing and forward planning. It is also important that all hotels follow a structured, standardized approach to pre-opening to ensure consistent and effective results from day one.
Being adequately prepared prior to a hotels opening is of particular relevance in India, where current economic growth has driven record levels of hotel and lodging construction take place in recent times. With 261 projects currently underway and a total of 47,647 rooms India is second behind only China in terms of hotel construction.
Hotels, such as those new facilities being built in India and throughout the region, should consider addressing their pre-opening processes in three stages, which allow for a mixture of on-site training and strategy preparation.
A strategy setting process, in which pre-opening revenue, marketing processes and actions are developed, should be undertaken six to nine months before a hotel is to open and ideally consist of:
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Hotel strategic analysis including a study of micro market/overall economic factors that could affect the hotel's performance.
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A thorough analysis of the market and competitive set, including competitor value/benefits positioning across a range of price points.
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Sophisticated pricing structures, based on market conditions, segmentation and hotel positioning.
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Relevant channel strategies according to product positioning and market environment and cement "product positioning" (i.e. Hotel Descriptions, Room type descriptions etc) through all channels.
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Together with the Sales & Marketing Department develop market segmentation strategies and action plans, with a particular focus on business with long lead times (Wholesale/Groups etc.)
A pre-launch process, such as that carried out within the IDeaS pre-opening support program, which ensures that all stakeholders are fully trained and able to implement appropriate revenue management strategies is also vital. This process should be undertaken around three months prior to a hotel's opening and focus on checking that all systems and channels are revenue optimised, all revenue influencers are appropriately equipped with knowledge and tools are in place to maximize a Hotels' performance from day one.
Lastly, all staff working alongside or within the hotel revenue management team need to be provided with guidance and support during the hotels crucial initial operating period, between 60-90 days after opening. Continued staff support once a new hotel has opened, together with post opening strategy evaluation, will ensure staff are able to meet their set strategies and handle market expectations as they develop.
The success of a particular hotel or resort can be decided in the initial few months, both in terms of industry reputation and financial success, making the implementation of an appropriate and flexible revenue management program essential.
Through the ongoing support and assistance of IDeaS, hotels and resorts opening throughout the Asia Pacific region are now able to maximize their revenue potential from day one, ensuring positive growth and longevity. For more information please visit www.ideas.com
Sunday, March 2, 2008
Friday, February 22, 2008
$1.5 Million-plus Dove mountain homes are linked to high-end resort hotel
The Residences at The Ritz-Carlton, Dove Mountain, will ultimately include 324 homes built in and around the two golf courses associated with the Ritz-Carlton Golf Club, which is tied to the Ritz-Carlton resort hotel being built in Marana's Dove Mountain neighborhood.
The grand opening was held earlier this week for the development's first three neighborhoods, totaling 91 homes and 16 custom lots, just in time for the thousands of people in town for the WGC-Accenture Match Play Championship to view the models and their minimum $1.5 million price tags.
Karen Jernigan, vice president of sales and marketing, said The Residences is a housing concept that The Ritz-Carlton has at a handful of its more than 100 worldwide locations.
"They're in some of the nicest places on Earth," Jernigan said. "If you look at where they've decided to build The Residences, it's where the exclusive jet set would like to go."
Such a description is not one often associated with Marana, but some local Realtors feel that Dove Mountain has rapidly become more appealing to high-end buyers who want a home in the Tucson area.
"It's going to be someone who likes the resort lifestyle," Debbie Valdes, a real estate agent based out of Oro Valley, said of prospective buyers. "What's bringing them to Tucson is what is bringing everyone to Tucson -- the mountains, the sunshine and the golf."
David Mehl, whose Cottonwood Properties is developing the housing with partner Greenbrier Southwest Corp., said Ritz-Carlton has been the pioneer in the five-star-hotel world in terms of incorporating a full-time living aspect to its properties.
"It started with attaching penthouses to the top of downtown hotels, and then the first to use the residential golf- course concept was in Jupiter, Fla."
Unlike standard housing developments, The Residences will include many of the services and amenities available to people staying at The Ritz-Carlton.
Jernigan said homeowners will have access to the Ritz's spa facilities and catering services and be able to use a version of the hotel's concierge services to schedule maid service or to have something fixed in the home.
"It's really personal service. Whatever you need, they get for you," Jernigan said. "They will call the plumber for you."
All of The Residences' homeowners will also be members of the Ritz-Carlton Golf Club, which starting next year will be the site of the Match Play tournament currently under way just to the east at The Gallery Golf Club.
The Residences' residents will be required to be members of the club, Jernigan said, and they will make up most of the club's 495 members.
With such amenities and exclusive membership comes a high price.
The homes range from $1.5 million to $3.5 million, while land for custom homes ranges from $750,000 to $1.8 million. The cost to join the golf club: $100,000, plus monthly dues, which are not likely to be set until the club opens next year.
While Jernigan said it is possible that some of the homes could serve as the primary residences for buyers, it's more likely the homes will end up being the second, third or fourth homes of a clientele she expects to be made up of sports figures, screen actors and CEOs.
The grand opening was held earlier this week for the development's first three neighborhoods, totaling 91 homes and 16 custom lots, just in time for the thousands of people in town for the WGC-Accenture Match Play Championship to view the models and their minimum $1.5 million price tags.
Karen Jernigan, vice president of sales and marketing, said The Residences is a housing concept that The Ritz-Carlton has at a handful of its more than 100 worldwide locations.
"They're in some of the nicest places on Earth," Jernigan said. "If you look at where they've decided to build The Residences, it's where the exclusive jet set would like to go."
Such a description is not one often associated with Marana, but some local Realtors feel that Dove Mountain has rapidly become more appealing to high-end buyers who want a home in the Tucson area.
"It's going to be someone who likes the resort lifestyle," Debbie Valdes, a real estate agent based out of Oro Valley, said of prospective buyers. "What's bringing them to Tucson is what is bringing everyone to Tucson -- the mountains, the sunshine and the golf."
David Mehl, whose Cottonwood Properties is developing the housing with partner Greenbrier Southwest Corp., said Ritz-Carlton has been the pioneer in the five-star-hotel world in terms of incorporating a full-time living aspect to its properties.
"It started with attaching penthouses to the top of downtown hotels, and then the first to use the residential golf- course concept was in Jupiter, Fla."
Unlike standard housing developments, The Residences will include many of the services and amenities available to people staying at The Ritz-Carlton.
Jernigan said homeowners will have access to the Ritz's spa facilities and catering services and be able to use a version of the hotel's concierge services to schedule maid service or to have something fixed in the home.
"It's really personal service. Whatever you need, they get for you," Jernigan said. "They will call the plumber for you."
All of The Residences' homeowners will also be members of the Ritz-Carlton Golf Club, which starting next year will be the site of the Match Play tournament currently under way just to the east at The Gallery Golf Club.
The Residences' residents will be required to be members of the club, Jernigan said, and they will make up most of the club's 495 members.
With such amenities and exclusive membership comes a high price.
The homes range from $1.5 million to $3.5 million, while land for custom homes ranges from $750,000 to $1.8 million. The cost to join the golf club: $100,000, plus monthly dues, which are not likely to be set until the club opens next year.
While Jernigan said it is possible that some of the homes could serve as the primary residences for buyers, it's more likely the homes will end up being the second, third or fourth homes of a clientele she expects to be made up of sports figures, screen actors and CEOs.
What the heck is Hotel Revenue Management, anyway?
Revenue management has become a somewhat controversial buzzword in our industry. As with many common terms, revenue management seems to have various definitions depending upon whom one asks. Since its inception in the early 80's, thousands of hotels and just about every airline have used revenue management successfully.
As is my practice, I looked for a simple definition of revenue management; how it came about, and how it is being utilized. In straightforward terms, revenue management is a technique to optimize income revenue from a fixed, but perishable inventory. The challenge is to sell the right rooms to the right customer at the right time for the right price.
The Brief History of Revenue Management
The airline industry launched revenue management practices after government deregulation in the early 1980s. Although yield management techniques became a common practice among airlines during that time, revenue management may reasonably be assigned an inception date of January 17, 1985 when American Airlines launched its Ultimate Super Saver fares in an effort to compete with the low cost carrier PeopleExpress.
Revenue management was born out the need to fill at least a minimum number of seats without selling every seat at discount prices; the idea was to sell enough seats to cover fixed operating expenses. Once fixed expenses were covered, and there were now fewer remaining seats to sell, they could then sell the remaining seats at higher rates to maximize revenue and profits.
Revenue management uses the basic principles of supply and demand economics, in a tactical way, to generate incremental revenues. There are three essential conditions for revenue management to be applicable:
*
There is a fixed amount of resources available for sale.
*
The resources to sell are very perishable.
*
Customers are willing to pay a different price for using the same resources.
The hotel industry fits these criteria extremely well. Obviously, hotels have a fixed inventory of rooms to sell; these rooms are also extremely perishable. You may not have thought about it, but hotel rooms perish every day; any room that is unsold tonight is gone forever. There is also no question that different segments of business are willing to pay different rates under various circumstances.
Revenue management is of especially high relevance in cases where fixed costs are high as compared to variable costs. The less variable costs there are, the more added revenue will contribute to overall profit. This makes revenue management perfect for the hotel industry.
Effective market segmentation is the key to successful revenue management for hotels. Market segmentation begins with seasonal demand. For years, hoteliers recognized that almost all hotels experience periods of high and lower demand. This is even more obvious in hotels, located in resort and attraction areas.
Hotels quickly recognized that consumers would also pay more for rooms with a superior view, such as ocean or mountain views and other unique features of their location; larger or unusual rooms; and rooms with unique features.
Hotel revenue management hit its stride when hoteliers examined airline RM and realized that the factors of supply and demand, beyond natural seasonal demand, present opportunities to generate higher revenue. As room demand increases and room supply decreases, hotel rate opportunities also increase.
The airlines have taught us that supply & demand opportunities appear all year long because of conventions, group bookings, room production through web site marketing, special events and local attractions; all create revenue management opportunities.
How Revenue Management is Applied
Most hotels start with market segmentation to begin the revenue management process; what types of business can your hotel serve and based upon market conditions, room supply vs. room demand. What rates are marketable for each segment of business?
I have seen many different market segmentation breakdowns; it largely depends on the location, type of hotel, franchise or independent, number of rooms, public space, and other factors. A sample might include corporate transient, leisure transient, Internet bookings, conference groups, association groups, etc. Each market segment has its own level of rate tolerance.
Remember to concentrate on occupancy first and average rate, second. As advance reservations increase, rates should also increase. The strange part is that many hoteliers think the opposite. How many times have you seen hotel rates suddenly decrease a week or so before the arrival dates? This is the direct opposite of good revenue management.
Too many hoteliers set rates blindly for the future and then, panic when reservations are disappointing just a week or two in advance. Most hotels should take a picture of reservations at least six months in advance; many hotels should lookout a year or more into the future. Advance reservations represent occupancy demand for each night in the future. Use special rates, packages, and group discounts to build future demand; then adjust rates upwards to match that demand.
When reviewing future reservations remember to check past history for those dates, movable holiday dates, current and past booking pace. There is little room for guesswork when planning your sales strategy. Revenue management can benefit almost every hotel. Get to know the business flow of your hotel and adjust rates and promotions based upon knowledge and not guesswork.
As is my practice, I looked for a simple definition of revenue management; how it came about, and how it is being utilized. In straightforward terms, revenue management is a technique to optimize income revenue from a fixed, but perishable inventory. The challenge is to sell the right rooms to the right customer at the right time for the right price.
The Brief History of Revenue Management
The airline industry launched revenue management practices after government deregulation in the early 1980s. Although yield management techniques became a common practice among airlines during that time, revenue management may reasonably be assigned an inception date of January 17, 1985 when American Airlines launched its Ultimate Super Saver fares in an effort to compete with the low cost carrier PeopleExpress.
Revenue management was born out the need to fill at least a minimum number of seats without selling every seat at discount prices; the idea was to sell enough seats to cover fixed operating expenses. Once fixed expenses were covered, and there were now fewer remaining seats to sell, they could then sell the remaining seats at higher rates to maximize revenue and profits.
Revenue management uses the basic principles of supply and demand economics, in a tactical way, to generate incremental revenues. There are three essential conditions for revenue management to be applicable:
*
There is a fixed amount of resources available for sale.
*
The resources to sell are very perishable.
*
Customers are willing to pay a different price for using the same resources.
The hotel industry fits these criteria extremely well. Obviously, hotels have a fixed inventory of rooms to sell; these rooms are also extremely perishable. You may not have thought about it, but hotel rooms perish every day; any room that is unsold tonight is gone forever. There is also no question that different segments of business are willing to pay different rates under various circumstances.
Revenue management is of especially high relevance in cases where fixed costs are high as compared to variable costs. The less variable costs there are, the more added revenue will contribute to overall profit. This makes revenue management perfect for the hotel industry.
Effective market segmentation is the key to successful revenue management for hotels. Market segmentation begins with seasonal demand. For years, hoteliers recognized that almost all hotels experience periods of high and lower demand. This is even more obvious in hotels, located in resort and attraction areas.
Hotels quickly recognized that consumers would also pay more for rooms with a superior view, such as ocean or mountain views and other unique features of their location; larger or unusual rooms; and rooms with unique features.
Hotel revenue management hit its stride when hoteliers examined airline RM and realized that the factors of supply and demand, beyond natural seasonal demand, present opportunities to generate higher revenue. As room demand increases and room supply decreases, hotel rate opportunities also increase.
The airlines have taught us that supply & demand opportunities appear all year long because of conventions, group bookings, room production through web site marketing, special events and local attractions; all create revenue management opportunities.
How Revenue Management is Applied
Most hotels start with market segmentation to begin the revenue management process; what types of business can your hotel serve and based upon market conditions, room supply vs. room demand. What rates are marketable for each segment of business?
I have seen many different market segmentation breakdowns; it largely depends on the location, type of hotel, franchise or independent, number of rooms, public space, and other factors. A sample might include corporate transient, leisure transient, Internet bookings, conference groups, association groups, etc. Each market segment has its own level of rate tolerance.
Remember to concentrate on occupancy first and average rate, second. As advance reservations increase, rates should also increase. The strange part is that many hoteliers think the opposite. How many times have you seen hotel rates suddenly decrease a week or so before the arrival dates? This is the direct opposite of good revenue management.
Too many hoteliers set rates blindly for the future and then, panic when reservations are disappointing just a week or two in advance. Most hotels should take a picture of reservations at least six months in advance; many hotels should lookout a year or more into the future. Advance reservations represent occupancy demand for each night in the future. Use special rates, packages, and group discounts to build future demand; then adjust rates upwards to match that demand.
When reviewing future reservations remember to check past history for those dates, movable holiday dates, current and past booking pace. There is little room for guesswork when planning your sales strategy. Revenue management can benefit almost every hotel. Get to know the business flow of your hotel and adjust rates and promotions based upon knowledge and not guesswork.
Sunday, November 18, 2007
Bavaria Hotels to add 5,400 beds to Dubai's Hotel Apartments Inventory
Bavaria Hotels International will be adding an inventory of 5,400 beds in 2,100 luxury suites to the rapidly expanding hotel apartments market in Dubai when the Bavaria Executive Suites Dubai opens on Sheikh Zayed Road at Dubai Media City in 2008.
Attending the World Travel Market 2007 in London this week, Ms Claudia Siebecker, Corporate Director of Sales & Marketing, said, "Judging by the number of enquiries we are receiving for 2008 from both the UK and European markets, arrivals will certainly reach if not exceed the 1.4 million visitors from the UK and Ireland forecast by the Dubai Department of Tourism and Commerce Marketing (DTCM) by 2010. Whilst we are not issuing contracts and allotments at this stage in our preopening, the reception for Bavaria Executive Suites Dubai has been excellent and we look forward to being an integral part of the tourism development in the UAE in the coming years."
Ms Siebecker has been meeting with many of the 200 tour operators featuring Dubai in the UK, and with potential new operators interested in large scale properties for the growing group and incentive market. She said, "Bavaria Executive Suites Dubai is targeting not only Dubai’s existing travel industry partners, but also looking at ways of developing new relationships that will benefit the city as a whole. Many of these new relationships will be operators looking for large scale properties to accommodate groups, meetings and incentives that the city has previously been unable to welcome due to high demand for existing accommodations and function rooms. We are all working together to promote the destination, which makes this a very exciting time to be opening hotels!"
Attending the World Travel Market 2007 in London this week, Ms Claudia Siebecker, Corporate Director of Sales & Marketing, said, "Judging by the number of enquiries we are receiving for 2008 from both the UK and European markets, arrivals will certainly reach if not exceed the 1.4 million visitors from the UK and Ireland forecast by the Dubai Department of Tourism and Commerce Marketing (DTCM) by 2010. Whilst we are not issuing contracts and allotments at this stage in our preopening, the reception for Bavaria Executive Suites Dubai has been excellent and we look forward to being an integral part of the tourism development in the UAE in the coming years."
Ms Siebecker has been meeting with many of the 200 tour operators featuring Dubai in the UK, and with potential new operators interested in large scale properties for the growing group and incentive market. She said, "Bavaria Executive Suites Dubai is targeting not only Dubai’s existing travel industry partners, but also looking at ways of developing new relationships that will benefit the city as a whole. Many of these new relationships will be operators looking for large scale properties to accommodate groups, meetings and incentives that the city has previously been unable to welcome due to high demand for existing accommodations and function rooms. We are all working together to promote the destination, which makes this a very exciting time to be opening hotels!"
Saturday, November 17, 2007
City hopes to revive hotel
The storied Baker Hotel that symbolized Mineral Wells' booming past as a resort hasn't booked a guest in more than three decades.
Through the years, various developers have unsuccessfully attempted to redevelop the 13-story structure, which looms over Mineral Wells' downtown.
But this time, the city of Mineral Wells is taking the lead.
With the creation of a tax increment finance district and a 14-month agreement with the Baker's owner, city officials will market the building to potential customers, they said Thursday.
"We're taking an aggressive posture to get out in front of the development community," said City Manager Lance Howerton. "We're hoping to identify a developer and be proactive rather than reactive."
Last year, Dallas developer Bill Pratt Jr. attempted to revitalize the Baker with a mixed-use development that would have included a hotel, condominiums and retail space but he eventually pulled out.
City officials said he could re-enter the picture with the city's latest incentives.
The Baker, which was built during the height of the mineral-bath craze of the 1920s, entertained revelers during Prohibition and soldiers during World War II.
In a 1993 Star-Telegram article, former assistant manager Roy D. Walker said: "Back in those days, the Baker would probably rival anything in Las Vegas today. Big-name stars like Lawrence Welk, Sophie Tucker, the Dorsey brothers. You couldn't find a parking place for blocks."
Former employees recalled all-night poker games with plenty of liquor flowing.
"It was cheap rotgut whiskey," Clifford Linsey, a former night bellhop, said in the 1993 article. "All I had to do was reach under the stoop of a building and there would be a pint. I would leave $2 and then sell it for $10. It was quite a markup, but I was the only game in town."
But in recent years the Baker has been known more for ghost hunters sneaking into the hotel than for bringing tourists to the city 45 miles west of Fort Worth.
Mayor Clarence Holliman said bringing back the Baker would help revive Mineral Wells' downtown. He said it's a top priority for residents.
"I've always heard, 'When are you going to do something about the Baker?'" Holliman said. "Now we have the chance to put something together. We have the cooperation of the owner. We just need to sit down and put a packet together that is attractive to investors."
City officials will be conducting feasibility and architectural studies over the next 60 days.
"It's a beautiful, historic building," said Steve Butcher, director of economic development. "We don't want to see it rot away."
Redeveloping the Baker
Asking price: $2.2 million.
Redevelopment costs: Expected to be between $30 million and $50 million.
Opened: In 1929 by T.B. Baker at the height of the mineral-water craze.
Amenities: Mineral baths, a golf course, three dance floors, including one in a rooftop nightclub with doors that would swing open on summer nights.
Closed: 1963. The Baker reopened two years later and ceased operations for good in 1972.
Through the years, various developers have unsuccessfully attempted to redevelop the 13-story structure, which looms over Mineral Wells' downtown.
But this time, the city of Mineral Wells is taking the lead.
With the creation of a tax increment finance district and a 14-month agreement with the Baker's owner, city officials will market the building to potential customers, they said Thursday.
"We're taking an aggressive posture to get out in front of the development community," said City Manager Lance Howerton. "We're hoping to identify a developer and be proactive rather than reactive."
Last year, Dallas developer Bill Pratt Jr. attempted to revitalize the Baker with a mixed-use development that would have included a hotel, condominiums and retail space but he eventually pulled out.
City officials said he could re-enter the picture with the city's latest incentives.
The Baker, which was built during the height of the mineral-bath craze of the 1920s, entertained revelers during Prohibition and soldiers during World War II.
In a 1993 Star-Telegram article, former assistant manager Roy D. Walker said: "Back in those days, the Baker would probably rival anything in Las Vegas today. Big-name stars like Lawrence Welk, Sophie Tucker, the Dorsey brothers. You couldn't find a parking place for blocks."
Former employees recalled all-night poker games with plenty of liquor flowing.
"It was cheap rotgut whiskey," Clifford Linsey, a former night bellhop, said in the 1993 article. "All I had to do was reach under the stoop of a building and there would be a pint. I would leave $2 and then sell it for $10. It was quite a markup, but I was the only game in town."
But in recent years the Baker has been known more for ghost hunters sneaking into the hotel than for bringing tourists to the city 45 miles west of Fort Worth.
Mayor Clarence Holliman said bringing back the Baker would help revive Mineral Wells' downtown. He said it's a top priority for residents.
"I've always heard, 'When are you going to do something about the Baker?'" Holliman said. "Now we have the chance to put something together. We have the cooperation of the owner. We just need to sit down and put a packet together that is attractive to investors."
City officials will be conducting feasibility and architectural studies over the next 60 days.
"It's a beautiful, historic building," said Steve Butcher, director of economic development. "We don't want to see it rot away."
Redeveloping the Baker
Asking price: $2.2 million.
Redevelopment costs: Expected to be between $30 million and $50 million.
Opened: In 1929 by T.B. Baker at the height of the mineral-water craze.
Amenities: Mineral baths, a golf course, three dance floors, including one in a rooftop nightclub with doors that would swing open on summer nights.
Closed: 1963. The Baker reopened two years later and ceased operations for good in 1972.
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