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7/30/2013
1
If you need technical assistance with thewebcast, contact us at [email protected]
and we will assist you immediately.
Revenue Management Webinar Series
Testing v. Shooting in the DarkJuly 30, 2013
This webinar series is brought to you by HSMAI University, HotelNewsNow, and STR
Overview of Format and Topic
Fran BrasseuxExecutive Vice President, HSMAI
7/30/2013
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POLL QUESTION #1How many people are participating
in this webinar at your location today?
� 1� 2� 3� 4� 5� 6� 7� 8 or more
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Panel Moderator:
Jeff Higley, VP, Digital Media & CommunicationsHotelNewsNow/STR/STR Global
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7/30/2013
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Today’s Presenters: Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global
Panelists:
Lauren Faulkner
Business Development
Executive
STR
5
Kim Tranter
Associate Professor/Dir of
Resort, Lodging & Tourism
Mgmt Programming
Johnson & Wales
University-Denver
Dev Koushik
Vice President
Global Revenue
Optimization
InterContinental
Hotels Group
Janelle Cornett
Regional Director of
Revenue Management
TPG Hospitality
U.S. Hotel Industry Overview
HSMAI Webinar SeriesJuly 30, 2013
7/30/2013
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Presentation is available for download.
To view this presentation, go to the “Data” drop-down menu on
www.HotelNewsNow.com and click “Data Presentations”.
Total U.S. Review
7/30/2013
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June YTD 2013: Highest RevPAR Ever (First 6 Months)
% Change
Room Supply* 880 mm 0.8%
Room Demand* 544 mm 2.3%
Occupancy 61.8% 1.5%
ADR* $109 4.0%
RevPAR* $68 5.6%
Room Revenue* $60 bn 6.4%
Total U.S. Results – YTD June 2013
* All Time High
June 2013:
Highest Monthly Room Revenue
EVER
($11.5 Billion)
7/30/2013
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-8
-4
0
4
8
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Supply Demand
.7%
Favorable Supply / Demand Fundamentals for 2013
-7.1%
-0.9%
- 4.7%
Total U.S. – Supply & Demand % Change
12 MMA 1/1990 – 6/2013
7.7%
2.3%
-10
-5
0
5
1990 2000 2010
Demand ADR
7.7%
2.3%
ADR Growth Stalls
-4.5%
7.5%6.8%
-8.9%
4.0%
Total U.S. – ADR & Demand % Change
12 MMA 1/1990 – 6/2013
7/30/2013
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-20
-15
-10
-5
0
5
10
1990 2000 2010
Positive RevPAR Growth For The Foreseeable Future
-16.8%
-2.6%
-10.1%
9%8.6%
Total U.S. – RevPAR % Change
12 MMA 1/1990 – 6/2013
65 Months 34 Mo.112 Months
Chain Scale Review
Luxury – Fairmont, Four Seasons, Ritz Carlton, JW Marriott
Upper Upscale – Sheraton, Embassy Suites, Hyatt, Marriott
Upscale – Radisson, Hilton Garden Inn, Courtyard, Best Western Premier
Upper Midscale – Holiday Inn, Clarion, Hampton Inn, Best Western US
Midscale – Best Western, Candlewood Suites, Quality Inn
Economy – Extended Stay America, Red Roof Inn, Days Inn, Value Place
7/30/2013
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Strong Demand Growth, Supply Not An Issue
-0.1
0.1
3.1
0.9
1.7
-1.2
2.1
1.5
4.3
1.9
3.5
0.2
Luxury Upper Upscale Upscale Upper Midscale Midscale Economy
Supply Demand
Chain Scales – Supply / Demand % Change
YTD June 2013
ADR Growth > OCC Growth
2.1
1.31.1 1.1
1.81.5
5.5
4.34.5
3.2
2.6
3.6
Luxury Upper Upscale Upscale Upper Midscale Midscale Economy
Occupancy ADR
Chain Scales – Occ / ADR % Change
YTD June 2013
7/30/2013
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RevPAR (Slowly) Catches Up To Prior Record Highs
$213
$113
$84
$62
$44$31
$219
$117
$87
$63
$41$29
Luxury Upper Upscale Upscale Upper Midscale Midscale Economy
2007 YTD June 2013
Chain Scales – RevPAR $
YE 2007 & YTD June 2013
Segmentation
Group – rooms booked in blocks of 10 or more
Transient – third party, rack rate, government rate. Will include single
business traveler and leisure traveler
7/30/2013
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Transient Drives Recovery
-0.3%-2.4%
6.7%
12.9%
18.3%
23.2%
-0.5%
-17.7%
-10.5%
-5.5%-2.6% -2.7%
2008 2009 2010 2011 2012 2013
Transient
Group
NOTE: Data is for upper tier hotels only (luxury chains, upper upscale chains, and upper tier independent hotels).
Segmentation Demand % Change
YTD June 2008 through 2013 vs. YTD June 2007
Pricing Opportunities Ahead
3.6%
-12.7% -12.7%
-7.7%
-3.4%
0.5%
5.4%
0.9%
-4.7%
-2.4%
0.4%
3.8%
2008 2009 2010 2011 2012 2013
Transient
Group
Segmentation ADR % Change
YTD June 2008 through 2013 vs. YTD June 2007
NOTE: Data is for upper tier hotels only (luxury chains, upper upscale chains, and upper tier independent hotels).
7/30/2013
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YTD June ADR $ :
Transient Rooms Increase Premium
$180
$152 $151
$160
$168
$174
$161
$154
$146
$149
$153
$159
2008 2009 2010 2011 2012 2013
Transient $
Group $
*Segmentation ADR $, YTD June 2008 - 2013
Top Markets Review
7/30/2013
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RevPAR Recovery by Tracts
% of Peak RevPAR
Still Mixed RevPAR Recovery Among U.S. Tracts
37 mos
41
42
44
47
48
55
56
57
59
60
60
61
67
68
69
69
72
72
74
76
82
83+
94
96+
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
San Francisco
Miami
Oahu
Boston
Nashville
Los Angeles
Denver
Detroit
Houston
Anaheim
Seattle
Dallas
St. Louis
Minneapolis
New Orleans
Chicago
Tampa
New York
Orlando
Philadelphia
Atlanta
San Diego
DC
Norfolk
Phoenix
a
Actual
Estimated
RevPAR Peak-Trough-Recovery Timeframe
7/30/2013
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Pipeline & Forecasts
In Construction: Ground has been broken
Final Planning: Construction will begin within 12 months
Planning: Construction will begin within 13-24 months
Pre-Planning: Construction will begin in more than 24 months
Construction Accelerates
Phase June 2013 June 2012 Difference % Change
In Construction 76,581 59,803 16,778 28.1%
Final Planning 125,874 121,788 4,086 3.4%
Planning 124,838 114,742 10,096 8.8%
Active Pipeline 327,293 296,333 30,960 10.4%
Pre-Planning 71,576 87,529 -15,953 -18.2%
Total 398,869 383,862 15,007 3.9%
Total U.S. – Pipeline by Phase, ‘000s Rooms
June 2013 and 2012
7/30/2013
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Under Construction Rooms Mostly In Middle Segments
5.06.8
27.5
21.6
3.41.3
10.9
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Luxury Upper
Upscale
Upscale Upper
Midscale
Midscale Economy Unaffiliated
Total U.S. – Pipeline by Chain Scale, Rooms Under Construction (‘000s Rooms)
June 2013
Total U.S. – Markets with Most Rooms In Construction
June 2013
Market Rooms % of Existing Supply
New York 11,143 10.5
Orlando 2,958 2.5
Washington, D.C. 2,948 2.8
LA-Long Beach, CA 2,132 2.2
Nashville, TN 1,963 5.4
Houston 1,699 2.3
Chicago, IL 1,678 1.5
Denver 1,675 4.1
Miami-Hialeah, FL 1,246 2.6
Some Markets are Still “Hot”
7/30/2013
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Total U.S. – Key Performance Indicator Outlook (% Change vs. Prior Year)
2013 - 2014
Outlook
2013
Forecast
2014
Forecast
Supply 1.0% 1.6%
Demand 2.1% 2.5%
Occupancy 1.1% 0.9%
ADR 4.7% 4.8%
RevPAR 5.8% 5.8%
Total U.S. – Occupancy %
2005 – 2014F
63.0 63.2 62.8
59.8
54.6
57.5
59.9
61.461.9
62.7
2005 2006 2007 2008 2009 2010 2011 2012 2013F 2014F
Slowly Catching Up to Prior Peaks
7/30/2013
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$85$104 $107
$85
$102
Nominal ADR
2000/2008 ADR Grown by CPI
2000 ADR Grown by CPI
2008 ADR Grown by CPI
$107
Total U.S. – Room Rates
Actual vs. Inflation Adjusted 2000 – 2014F Note: 2012 & 2013 CPI forecast from Blue Chip Economic Indicators
$119
$116
Inflation Adjusted ADRs Well Out Of Reach
$111
$116
Takeaways
• Supply Growth – Slowly but Surely
• Healthy Demand Growth Despite “Everything”
• ADR Growth Drives RevPAR
• Steady Outlook
7/30/2013
18
35
Testing and Measuring Case
Study
TPG Hospitality Case Study
Make the Hypothesis
• Over high weekday transient demand periods (based on
2012 data), with either internal or external
compression it would be beneficial from both a revenue
and STAR standpoint to not allow 4 night on Sunday and
3 night on Monday arrivals hotel wide. This is done to
limit the number of lower rated BT occupied rooms
that could be replaced by higher rated retail or other
accounts.
36
7/30/2013
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Timing
• There were several special events for 2013 identified
by the city event calendar including city wide group.
But also our own internal group and compression where
we saw high demand due to brand loyalty and internal
compression. Using tools to measure included
forecasted demand, denials, BT room night
displacement based on LOS restrictions.
37
Metrics – What to measure
against
• We used the following to measure our results
• STLY – or same period with high compression
• Period with similar demand levels YOY
• Reviewing LOS patterns YOY and measuring the change
in market segment mix of business over these dates
• STAR results
38
7/30/2013
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Measuring Results
• LOS 1-2 night down -3.6% YOY and 3 night up 5% / 4 night up 1%
YOY
• Booking window also has changed 20% of CNR booked 21+ day vs
10% year prior. LNR 28% booked 21+ days out vs 8% year prior –
result in putting the restricition on prior to opening inventory
• YTD through June = RevPAR up 4.8% vs comp set -3.1% = Index up
8.2% YOY
41
Conclusion
• To get a better/different outcome you need to test and
measure
• Understand what you are looking to change – make a
Hypothesis – so you understand what you are trying to do
• Determine how long and what you will measure. Then
determine the basis of the measurement
• Define the metrics or measurement
• Measure the results – they may not always be positive
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7/30/2013
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43
Kim Tranter
Associate Professor/Director of Resort, Lodging
& Tourism Mgmt Programming
Johnson & Wales University-Denver
Application of Strategic
Development, Execution, and
Evaluation in the Collegiate
Environment
7/30/2013
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A Hands-On, High Tech Approach
• Obtain on internet based revenue simulation program.
• Make it a team-based competition.
• Best with teams of 2 to 3 people.
• Start with a simulation orientation.
• Each team is given the same scenario for the property
and the market.
Strategy Development For A Practice
Round and An Official Round
• Each team must make rate, channel, and marketing spending decisions for each month.
• Participate in a 12 month Practice Round and a 12 month Official Round.
• Teams develop and submit a set of strategies per month for the upcoming 12 months.
• Provide an incentive for winning.
• Since this in an internet based simulation, each team’s decisions impact the others.
7/30/2013
24
Executing, Modifying and Evaluating
Strategic Decisions
• Teams are permitted to modify their strategies as the
rounds proceed.
• They see all teams’ results monthly.
• Teams submit an analysis of their performance,
addressing what they would have or should have done
differently.
• Changes their thinking to become
much more strategic.
Forecasting and Strategic
Development Exercise• A low-tech method to integrate forecasting and strategic thinking.
• Create a series of monthly blank calendars.
• Fill in holidays, hot dates, city-wides from Convention Center and
CVB websites.
• Create monthly forecasts. Compare to actuals.
• KEY: DISCUSS what strategies could have been employed to drive in more demand per day? Achieve higher rates? Action plans???
7/30/2013
25
Where We Are Headed Next
• Creating two different simulation scenarios: city center and resort
to show differences.
• Plan would be to incorporate annual STR data.
• Using the STR data, what do the numbers really tell them? Big
picture.
• What adjustments should they make to improve performance?
• Also moving to case analysis in RM course similar to the Strategic
Management course.
50
Dev Koushik
Vice President, Global Revenue Optimization
InterContinental Hotels Group
7/30/2013
26
51
BENEFITS MEASUREMENT METHODOLOGIES
TEST PRE-REQUISITES
� Define the Metric to measure
� Choose Test Periods and Test hotels carefully
� Plan and Build Tracking Mechanisms
� Agree on the Process with stakeholders
� Plan for failures
� Implement and Scale successes
7/30/2013
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$1.2
$1.1
$0.9
$0.8
$0.7
JAN FEB MAR APR MAY
Met
ric
Mea
sure
d
TreatmentApplied
Control Period
TreatmentPeriod
Expected Impact
Treatment Impact
The measurement model assumes that the METRIC trend continues to follow measurable seasonal trends and that any shift upwards or downwards is a result of the treatment.
STRATEGY TESTING USING CONTROL PERIOD APPROACH – METHOD 1
STRATEGY TESTING USING CONTROL PERIOD APPROACH – METHOD 2
Objective• Find the most appropriate control properties for each BETA property to use in the test
– Address key drivers: Seasonality / Group Mix / Market Factors
Process1. Select the eligible control properties using objective criteria:
TreatmentInitialization
Test Period:Time on Treatment
Baseline Period:Immediately prior period (equal number of days by DOW)
Control Property Eligibility Criteria:1.Same or similar: Brand / Size / Group Mix / Type (airport vs. non)2.Similar seasonality3.Control properties must be on similar systems4.No change in Quality Scores
Control Property Eligibility Criteria:1.Same or similar: Brand / Size / Group Mix / Type (airport vs. non)2.Similar seasonality3.Control properties must be on similar systems4.No change in Quality Scores
7/30/2013
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55
STRATEGY TESTING USING CONTROL PERIOD APPROACH – METHOD 2
Control Hotels1%
Control Hotels1%
BETA Hotels5%
BETA Hotels5%
Test Results
Ch
ang
e in
Met
ric
Total Uplift: 4%
Statistical Significance
How confident are we that the test results are not by chance?
STRATEGY TESTING USING SIMULATION – METHOD 3
Analysis
– Calculated “optimal” and “baseline” revenue scenarios to compare against actual revenue results and isolate the benefit from the test
– Optimal revenue scenario used a hindsight optimal rate based on actual demand observed
– Compared baseline, actual and optimal scenarios to measure total opportunity and percentopportunity captured
7/30/2013
29
Questions? Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global
Panelists:
Lauren Faulkner
Business Development
Executive
STR
57
Kim Tranter
Associate Professor/Dir of
Resort, Lodging & Tourism
Mgmt Programming
Johnson & Wales
University-Denver
Dev Koushik
Vice President
Global Revenue
Optimization
InterContinental
Hotels Group
Janelle Cornett
Regional Director of
Revenue Management
TPG Hospitality
Upcoming Webinars:
Next Revenue Management Webinar:
#6: Outlet and Function Space Revenue Management is Here
August 27, 2013 ♦ 2:00-3:30 pm EDT
Next Digital Marketing Webinar:
#4: eBusiness Planning for 2014
September 10, 2013 ♦ 2:00 - 3:00 pm EDT
7/30/2013
30
59
Don’t miss -
HSMAI’s MEET
Reserve your booth space today!
Visit www.hsmaimeet.com for more
information.
7/30/2013
31
61
Get Informed - Get Ahead – Get Certified!
Certified Revenue Management Executive (CRME)
Certified Hospitality Digital Marketer (CHDM)
Certified Hospitality Sales Executive (CHSE)
Certified in Hospitality Business Acumen (CHBA)
Go to www.hsmaicertifications.org
For more information and downloadable applications!
Evaluation
� Please take a moment now to click on the Evaluation link
in the LINKS box and complete the evaluation.
� Be sure to click on “Submit” when you have completed
the evaluation to send us your responses.
� Your comments & suggestions are very important to us,
and they help us to provide you with quality programming.
Today’s webinar is copyright 2013 by the Hospitality Sales & Marketing Association International with All Rights Reserved.
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