Until recently, the meeting and event industry was playing a game of catch-up when it came to revenue management. But thanks to new available industry-specific tools, developing a well-executed revenue management strategy is a lot more attainable than it once was.
Many in the industry would agree that there’s been a paradigm shift underway in the meeting and event space in recent years. Forward-thinking hoteliers, event-center managers, and other hospitality leaders have seen the light and are finally exploring dynamic pricing strategies and analytics technology to optimize the profitability of their function space.
Revenue management practices have proven successful for travel and hospitality segments like airline ticketing and hotel rooms. Fortunately, such practices have recently been refined and tailored for the meeting and event industry. Here, we look at revenue management tips and tools that meeting and event businesses can use.
The Scientific Art of Revenue Management
Peter Drucker, recognized worldwide as the founder of modern management, famously said, “If you can’t measure it, you can’t improve it.” So, how do you measure the value of an event space? If you’re in the hotel business, for instance, you’re likely laser-focused on your guest-room performance –– but your meeting and event rooms shouldn’t be disregarded. What percentage of your total revenue comes from your function rooms? With the right processes in place, some hotels have managed to maximize their meeting and event performance to generate 40, 50, or even 60 percent, making it their largest revenue stream.
The main barrier to reaching these high levels of profitability often comes from an inability to accurately and efficiently measure meeting and event performance and make better-informed choices. Hence, we fall back on making event-booking and pricing decisions based on gut feelings and guesstimates –– or even worse, a first-come, first-served basis.
Take it from revenue management leader and the president and founder of IDeaS Revenue Solutions, Dr. Ravi Mehrotra, who said, “To have confidence in your forecast, you must start with a scientific understanding of available true demand. You must evolve beyond a culture that largely depends on trial and error to a culture that is much more objective by combining the power of data, advanced mathematics, and technology.”
Smart revenue management starts with replacing instinct with facts and supplanting guesswork with well-informed predictions. Track demand and capture all inquiries, day by day, including turned-down and lost business. Set minimum occupancy thresholds, and on your high-demand days, hold out for higher delegate numbers. Then measure your performance. Did you reach your goals? Were your forecasts accurate? Did you miss out on any high-value opportunities?
These measurements will help drive the success of your future meeting and event business, but you won’t be able to go at it alone. Change is hard, and leading an organization-wide change-management initiative isn’t possible without a well thought-out approach. Holistic alignment begins with a unified leadership team. Convincing your company’s stakeholders to agree to a new meeting and event strategy that can help increase total revenue performance is the first step.
Once there’s executive buy-in, the next step is to enlist leadership’s help in driving cross-collaboration between departments such as sales, marketing, catering, revenue management, and more. Key performance indicators, such as as revenue per square foot, attendee density, and revenue per attendee should be established, and educational materials and training sessions should be created to help employees learn to manage function-space inventory in a scientific and methodological way.
Too Much Data, Too Little Time
Data begets knowledge which incites smart strategy. But as the name “big data” implies, there’s a lot of it. Fortunately, automated revenue-management technology has vastly changed revenue operations, one industry at a time, and the meeting and event space is ready for its close-up.
Revenue-optimization technology for meetings and events allows users to quickly and easily track inquiry trends, forecast demand, set optimized rates, measure performance, report findings, and identify new opportunities for business, all in one place –– and at a far more detailed and scientific level than even the smartest revenue manager with a color-coded spreadsheet could ever achieve alone.
The Radisson Hotel Group implemented a first-of-its-kind, cloud-based application called Smart Space by IDeaS to drive their meeting and event strategy at a number of European properties. “Smart Space makes it a lot easier for us to study our booked and lost business and better prioritize sales-team efforts,” said Christine Wassell, director of revenue optimization for Radisson. “It enables a variety of people at different levels to study upcoming business in an easy and visual way. With the push of a button, we can see our pace year over year, understand the business mix we want, and know exactly what we need to achieve it.”
Heather Hart, creator and director of Smart Space by IDeaS, knows the trials and tribulations of the meeting and event industry. She worked in the hotel and conference industry for over three decades and noticed a persistent shortsightedness of hoteliers when it came to function space. Despite its significant revenue potential, it seemed to be believed that the space was only there to fill guest rooms. She was also alarmed by the lack of good data available for tracking meeting and event business trends, so she took matters into her own hands and dove into a world of analytics and software development to invent a solution.
“Access to data that was previously difficult to get to will revolutionize the understanding of business opportunities and allow for a much more sophisticated selling strategy, raising the focus on meetings management and enabling smarter decision-making,” said Hart. “Meeting and event strategy will awaken a new dimension in driving total revenue and profit in the hospitality industry.”
The meeting and event industry in hotels and beyond is undergoing a powerful metamorphosis. It’s time to change your mind — and your organizational culture — to think outside the guest room with deep machine learning and a well-executed revenue-management strategy.