( 3 min read)
Which agreements will optimize your revenue
To have easy access to different data components on how a agreement is performing is of high value for the hotels. It will help the hotels to sort out which agreements you should focus on in your implementation and also when you evaluate the agreement for next re-negotiating round.
Often it’s very time consuming for the hotels to look at different components and in worst case the only parameters they will consider is volume and rate. However, to have easy access to all data, without getting caught in hours of administration time, is vital for the Commercial Team at the hotel to optimize the revenue and profit.
To begin with I will exclude 2 of the most important data: Volume and rate. Those components is of course vital and can’t be ignored.
1. Day of Week - Which weekdays do the customer have the most volume. If the company travels during your low demand days this is a company you really should focus on in your implementation in order to increase the volume. If the company only have volume during your high demand days, make sure this reflect the price even if they have high volume. When you negotiate the contract rate, make sure to show and include this data in your conversation.
2. Months - Which months of the year do they have the most volume. Same analysis thinking as “Day of Week”.
3. Length of Stay - Do they have a stay pattern with more than 1 or 2 nights. It’s no secret that you want corporate customers that have a longer length of stay pattern.
4. Booking Pace - How many days before arrival do they book? If it’s a company where the employees book many days before arrival it can motivate a lower price. This is also important to show in your negotiating with the company. Especially when they point out lack of availability at your hotel.
5. Distribution Channel- In most cases there is no commission for the corporate agreements, however you usually have some sort of transaction fee when they book through the GDS. If the booking is combined with commission this is something you need to evaluate in your calculation. You should also consider the administration time from your side when it comes to load the rate. Ideally you want that they book the agreement through the hotels website. What can you include if they do?
6. Total Revenue - Do they spend extra money in your hotel? Do they use your restaurant, SPA or other facilitates. Look at the total revenue when you evaluate the contract.
The image illustrate guidelines when you can motivate low/high price for the contracts