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The New Hotel Sales and Revenue Management Metrics

Posted on: 10-Apr-2009 12:00AM

By Carol Verret

It has never been more urgent or more imperative that the effectiveness of hotel sales and revenue management activity has objective metrics for effectiveness - not only on the part of management but especially on the part of hotel sales and revenue managers. Up until this economic reset the standard was production over the previous year in revenue, room nights, etc. It is obvious to anyone that looks at reports and reads industry trends that demand and subsequent revenue are way down from 2008. If everything goes well, 2010 numbers will make heroes out of the same sales and revenue management managers as increases over 2009 should materialize.

Does this mean that the same sales and revenue managers suddenly got better at their jobs? If there are new people in these jobs in 2010 that were not there in 2009, does this mean that the new team is more accomplished than the old team? The answer is 'No, not necessarily', to both questions.

Yes, there are sales and revenue managers that managed to ride the wave of a good economy without fundamental skills and well thought out and executed sales strategies. The current economic climate is the perfect opportunity for management to lay them off. However, the honest approach is to let them know that their skill sets and strategies are insufficient to generate positive activity in this economy, give them an opportunity to acquire these skills and measure the results.

The benchmarking of hotel sales and revenue management activity is arbitrary at best. It is interesting how few managers set objective standards and strategies with success metrics in mind. The individuals on the sales and revenue management teams as well as executive level managers are responsible for this. It didn't matter much when revenue was constantly increasing year over year. It matters now!

Revenue and/or the number of sales calls is irrelevant -- what is relevant is that we have an opportunity to develop metrics that many sales organizations in most other industries have adopted. The HotelSalesBlog has had a survey running for three months in which it asks the top issues of concern to hotel sales people -- the big winner is 'Am I going to keep my job?'

Sales and Revenue Managers -- develop metrics for your activity - don't wait for management to impose it on you.

Develop a Personal Sales Plan. What are the routes to achieving your goals? How many prospects are in the pipeline? Identify the business you can steal and develop a strategy to do it! What is the DNA of your ideal prospects by market segment? How are you going to find them? How are you going to approach them and what can you use to close them? Engage your manager in the development of the plan - they will be impressed that you are doing this.

Prioritize vs. Organize - Discipline yourself Trust me, no one will care if your desk has clutter if you are producing. Prioritize your activity to focus on those activities that have the highest likelihood of generating revenue. First things first- chunk out the day. Prioritize traces - those with the potential to produce revenue the fastest come first. Decide how many new prospects you will contact in a day. What will be the tailored appeal for each - remember it's not about you -- it's what your hotel can do for them. Make time for new prospect contacts - prioritize from hot to 'cold'. Do admin work, social networking, etc. during lunch periods, before 8am or after 5pm. Schedule meetings for non sales time - ask the GM to do the same. How many referrals from existing clients are you going to ask for in a day, week, and month? Be prepared to make two to three times the number of contacts that you did last year to achieve the same results.

You can't manage what you don't measure! If you can't measure it, you can't improve it! RMs, set metrics for the production on new promotions with the OTAs, set metrics for the success of 'hot dates' on the web site. Set metrics for each new strategy -- for example, how many prospects do you want to close from an online lead site in the next 3 months? If the metric isn't achieved change the strategy! What is the contact to closing ratio for the department and individual sales team members? Get proactive -- measure your own results, don't rely on management to do it for you!

Make the plan and share the metrics and results with your manager. Your Manager should be impressed with your initiative and your plan to measure the effectiveness of what you are doing. If you are the only one in the department who is doing this, your manager might be inclined to fight for you if the subject of layoffs arises. Having a personal plan allows sales people to reduce their anxiety know that they are working their plan and measuring the results rather than continuing the same activities that worked in the past but are insufficient in this economy.

Hotel management and DOSs should give up the idea of measuring year over year numbers as the sole success metric for sales and RM activities and initiatives. Try these metrics:

Smith Travel Indices. The three indices on the STR report are the only ways to evaluate whether the hotel is successful in this economy. If you are increasing your share of a smaller pie, that is a true accomplishment for your sales and RM team. As this year's revenue over last year is bound to be discouraging and next year's revenue over this year will give distorted success metrics over this year, the STR results are the only reliable metrics of progress.

If you are measuring the number of sales calls - give it up! Sale activity is about sales 'contacts' not quantity of calls. It is also about the quality of the prospects they are contacting - how many are new qualified prospects, how many are 'servicing' contacts, how many are database mining contacts? Calls are not the only measure of sales activity - email contacts, social networking activities also need to be included in the new metrics and accounted for.

Social Networking Sites. Log into their LinkedIn and Face book pages to evaluate how effectively they are using these new channels. If you are a group meeting hotel, be present on iMeet, a social networking site for meeting planners and suppliers. While it is difficult to 'dollarize' social media activity, it is important to be present where contacts are.

Evaluate the ROI on each sales and revenue management strategy. Set a time limit on each strategy with interim benchmarks - don't be afraid to abandon or switch strategies. Better to abandon one strategy and try another than stick with a failed strategy!

Evaluate the lead responses from online RFPS sites. Is there a process for handling each of these leads in a timely manner, within hours instead of days? Does the department respond even when they are declining to bid on a lead? Those planners may have other meetings that you would like to have and will be impressed. The lead to closing ratio in this economy will be lower than in the past but any leads closed puts the department ahead of where it would have been. Measure the effectiveness of social group sites - social groups this year are a bright spot in the group mix.

The effort spent by individual sales people and revenue managers that put together a personal strategy and measure the results will make them the 'rock stars' of the recovery. Management will be more effective in managing sales and RM activity if they adopt new metrics for measuring sales and RM activity and strategies.

Remember, you can't manage what you don't measure! If you can't measure it, you can't improve it! How important is this - it could save your job!

Catch me in Tucson presenting a public sales seminar for the hotel sales community of the Tucson CVB on April 28th.

Do you know of a CVB in your community that might be interested in co-sponsoring a sales seminar for your hotel community? We are partnering with CVBs this year to bring affordable sales training to their hospitality communities. Have them contact [email protected] for more information.

Carol Verret And Associates Consulting and Training offers training services and consulting in the areas of sales, revenue management and customer service primarily but not exclusively to the hospitality industry. To find out more about the company click on www.carolverret.com. To contact Carol send her an email at [email protected] or she can be reached by cell phone (303) 618-4065. Visit www.hotelsalesblog.com.

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