Interview: Optimising Price, Protecting Loyalty

Auchrannie Resort

How do you optimise revenue while pricing sensitively when you are the only hotel on an island, have no competition and a loyal customer base?

Add to the mix that your resort is run as a co-operative, owned and managed by its staff, and you have a very unique revenue role to fulfill.

This is the daily responsibility of Gordon Hay, business development manager for Auchrannie Resort on the Isle of Arran off the coast of Scotland.

We caught up with Gordon to talk about his role revenue managing a completely stand-alone product.

Q: Auchrannie is a fairly unique resort. How do you decide on market mix and channel mix?

Hay: It’s very difficult because the geographical spread of our market is very limited. We’re quite unique in a sense that probably about 70% of our business comes from within a 30-mile radius.

Because we’re on an island, people think they’re traveling much farther to get here. The island of Arran is seen as a destination for people from St Columba, west of Scotland, to go to. That helps greatly in the whole mix.

Q: Does that mean that you do a lot more direct business?

Hay: Auchrannie Resort has been built on loyalty. Probably about 60% of our business is repeat or referral. So, we have far less reliance on other channels such as online travel agents (OTAs) than, I guess, a city centre hotel would. Or even a hotel where there’s a lot of competition about. Our reliance on OTAs is about 7% of our business, which, when you look at industry norms, is fantastic.

We see multi-generations of families coming. We now have young adults who came as kids with their parents or their grandparents. And then as they grow, they’re bringing their kids with them. It’s quite unique in the sense that it’s a very generational thing.

Q: That must make your job quite a delicate one because you want to optimize the price, but you want to protect that generational loyalty.

Hay: That is very delicate. I always say that Auchrannie employs a workforce of 170 and we have 169 people who are there to look after guests and we have one person to bring in the money!

We as a business realize that revenue has to be backed up by service. And you cannot just keep putting prices up if you’re not delivering the service that people expect. So, we pride ourselves in delivering five-star service and then if we do that, we can maximize the revenue opportunities.

Q: How does being an independent, employee-owned hotel impact your revenue strategy?

Hay: It’s been family run, family owned hotel, and since 2017 employee owned, so we’ve had the ability to create the very personal experience for a lot of people and built the business up very slowly. That has done far more for the business than, I guess, revenue management. The core elements of the business and the customer service are all there, which makes my job a lot easier than if I was working at a city centre hotel or somewhere where there was a lot of competition nearby.

This post originally appeared on the Duetto website and is reproduced with their permission.

80 DAYS Benchmark
80 DAYS Benchmark
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