Recession & Recovery

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1 Revenue Management Series The Revenue Management in This Environment webinar will begin shortly. If you need technical assistance with the webcast, contact us at and we will assist you immediately. Revenue Management in Recession & Recovery Tuesday, March 19 th, :00 3:00 PM EDT Hospitality Sales and Marketing Association International (HSMAI( HSMAI) 2

2 Overview of Format and Topic Moderator Bob Gilbert, CHME, CHA President & CEO HSMAI 3 HSMAI University Alliance Partners 4

3 POLL QUESTION #1 How many people are participating in this webinar at your location today? 5 Today s s Speaker Bill Carroll School of Hotel Administration Cornell University 6

Program Goals Economics The Dismal Science Describe the

recovery Redefine the role of revenue management What to

Economic Environment Credit Market Crisis - U.S.

4 Program Goals Economics The Dismal Science Describe the economic environment Understand the path of recession & recovery Redefine the role of revenue management What to do in recession What to do in recovery Thomas Malthus 7 Economic Environment Credit Market Crisis - U.S. export to ROW Recession Recovery Rebound Pessimism Confidence Exuberance 8

5 Economic Environment: Consequences U.S. versus ROW Segment: Group versus transient Leisure versus business Value consciousness Hospitality supply adjustment 9 The Path of Recession Labor market - immediate response long term recovery Lag in business failures with knock on effects Fiscal policy stimulus lag with knock on effects Hospitality supply adjustment 10

The Path of Recovery Resolution of the credit crisis Fiscal policy stimulus Equity market recovery Broad based economic recovery Labor market recovery 11 The Path of Recovery.

6 The Path of Recovery Resolution of the credit crisis Fiscal policy stimulus Equity market recovery Broad based economic recovery Labor market recovery 11 The Path of Recovery... In Hospitality Resolution of the credit crisis Fiscal policy stimulus Equity market recovery Broad based economic recovery Labor market recovery Business Demand Leisure Demand Group Demand Low interest rates Equity available A period of time when demand exceeds supply! 12

7 Role of Revenue Management Immediate vs. long run (survival) Demand management vs. yield management 13 What To Do During Recession 1. Don t discount; cost manage 14

8 Does Discounting Pay? Ε = Percent change in occupancy Percent change in price You can t! 15 What To Do During Recession 1. Don t discount; cost manage 2. If you do, minimize dilution & maximize response 16

Minimize Dilution & Maximize Response Segment Leisure Direct Sales Chain/ Rep Channel Travel Agent Online Inter Mercenary Loyal 56 Business Corporate Less Managed Unmanaged Wholesale

9 Minimize Dilution & Maximize Response Segment Leisure Direct Sales Chain/ Rep Channel Travel Agent Online Inter Mercenary Loyal 56 Business Corporate Less Managed Unmanaged Wholesale Group Large Small Online Direct CVB/ NTO 17 What To Do During Recession 1. Don t discount; cost manage 2. If you do, minimize dilution & maximize response 3. Value ad instead of discount 18

10 What To Do During Recession 1. Don t discount; cost manage 2. If you do, minimize dilution & maximize response 3. Value add instead of discount 4. Negotiate shorter deals or phased deals 5. Shift rejected demand 19 Shift Rejected Demand 20

11 What To Do During Recession 6. Reward the loyal customer 21 What To Do During Recession 6. Reward the loyal customer 7. Convert the mercenaries 8. Make the most of what you get Total Hotel RM March 26,

Practice game theory Are you the predator or the prey? 23 What To Do For The Recovery 1.

12 What To Do During Recession 6. Reward the loyal customer 7. Convert the mercenaries 8. Make the most of what you get 9. Link & measure promotion 10. Practice game theory Are you the predator or the prey? 23 What To Do For The Recovery 1. Predict when it will occur for you 2. Recognize the supply side effects 3. Act early & decisively: Corporate Group Peak period 4. Tune the YMS 24

13 Questions? Bill Carroll School of Hotel Administration Cornell University 25 Upcoming HSMAI/HSMAI University Programs 3 rd rd Annual Hotel Sales Strategy Conference March 31 st - Swissotel Chicago HSMAI Affordable Meetings Mid-America Chicago, IL - April th Annual Resort Conference May PGA National Resort & Spa, Palm Beach Gardens, FL Revenue Management & Internet Strategy Conference June 25 th - Anaheim, CA Revenue Management Series Thursday, March 26th Bill Carroll, Senior Lecturer, Cornell University Session 2 Total Hotel RM Panelists: Greg Moon, Director of Revenue Management, Wilshire Grand Los Angeles Angie Belknap, Director of Revenue Management, Aramark Parks and Destinations Jennifer Jodoin,, Director of Revenue Management, The Breakers, Palm Beach All webinars are 2:00 3:00 p.m. EDT 26

14 Evaluation Please take a moment now to click on the Evaluation link in the LINKS box and complete the evaluation. Be sure to click on Submit when you have completed the evaluation to send us your responses. Your comments & suggestions are very important to us, and they help us to provide you with quality programming. Today s s webinar is copyright 2009 by the Hospitality Sales & Marketing Association International with All Rights Reserved. 27

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Digital Marketing Webinar Series The Hotelier's Action Plan to Meet 2013 Digital Marketing Challenges November 7, 2012 If you need technical assistance with the webcast, contact us at hsmai@commpartners.com