Monday, July 22, 2019

Why Data is Crucial For Pricing and Budgeting

Clinton Campbell, Commercial Director for Apex Hotels, has been working in the UK hotel industry for more than 15 years, with experience working for international brands and smaller, family owned collections.

In 2010, Campbell joined independent chain Apex Hotels, offering a collection of 10 contemporary hotels located in some of the UK’s most popular cities.

We recently caught up with him to find out more about how he manages the budgeting and pricing processes of such a diverse portfolio, and to get his input on comp set benchmarking and the importance of data in revenue management.

Q: How do you tackle the budgeting process and how much of it is feeling versus science?

A: Campbell: I think the budgeting process can sometimes be seen as quite a daunting process. A lot of it can appear to be feeling, but it has to be based on the fact of how you’ve performed previously, so you can apply that to the future (if you’re happy with how you performed). Otherwise, if you want to change your strategy, you have to anticipate a little bit more feeling and emotion into the budgeting process.

Q: How do you make sure that your strategies get put into place?

A: Campbell: You have to base what you’re recommending on some sort of historical data, so using data to your advantage is going to be the best way to get your recommendations into place. Sometimes it’s going to be a straight cut decision to say, “This is what we’ve calculated, and this is what’s going to work best in the future.” Other times, you’re going to have to use some trial and error to say, “If we try this with a small percentage of the hotel or if we try this particular rate on an individual Tuesday or Wednesday, let’s see how it performs, compared to a previous Tuesday or a Wednesday.” It’s constantly testing about what you want to put into the hotel and what’s going to come out the other side.

Q: So, data is vital when it comes to pricing and budgeting?

A: Campbell: Having data at your fingertips is crucial, so having the reports that you can show people. Using emotion when you’re trying to influence people is one way and it’ll get you so far but having data to back you up where you can give clear evidence of about what the result could likely be is going to get you over the line, so that’s what I would say. Get your data and get your reports in line before you approach other departments, before you try and influence what some of their KPIs may be.

Q: How do you decide on an optimal market mix for a hotel and also, a good channel mix?

A: Campbell: Market mix and channel mix can be complicated. I would suggest looking at what some of your competitor hotels are doing. Have a look at what market they’re attracting.

Look at your profitability by market segment, as well as profitability by channel mix. And then, you try and optimize it, so you’re making small marginal gains on what you’ve set as a base strategy.

Q: When should you take competing hotels into account when making pricing decisions?

A: Campbell: I think you need to understand what situation you’re in. If you’re in a high-demand situation, this is generally easier because everyone’s going to try and push their rate and sell as high as possible.

Where it becomes tricky is when it becomes a slightly lower demand season. Then, looking at what your competitors are doing is not always going to deliver the best result for you.

You need to understand what product and what offering you’re putting out to your guests and you need to maintain some level, so that you’re not undercutting yourself just to satisfy where your competitors are pricing. There’s no guarantee that what your competitors are doing is the right price.


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

Duetto
Duettohttps://www.duettocloud.com/
Duetto is hospitality’s only Revenue Strategy Platform. A powerful suite of cloud applications addresses the industry’s complexity in distribution and technology, providing solutions that increase organizational efficiency, revenue and profitability.

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