Automated Revenue Management Yields Profit for Loews Hotels & Resorts
ONE OF THE BIGGEST challenges during opening or refl agging a property is revenue management. It is imperative to optimize revenue streams from day one, but often past pricing and demand data may not exist, or it may not be relevant to the repositioning. Loews Hotels & Resorts (www.loewshotels.com) was experiencing this challenge fi rsthand with strategic growth initiatives to add hotels to its portfolio over the next several years in gateway cities and resort destinations.
To address this, Loews leveraged a Revenue Management System (RMS) from IDeaS Revenue Solutions (www.ideas.com) across all properties to integrate past pricing and demand data from previous systems in order to best-optimize revenue opportunities at newly acquired hotels.
Strategic pricing analysis starts well before renovations
Through its expansion efforts, Loews evaluates opportunities, pricing, segments and more to formulate a revenue strategy for new hotels. By the time a deal is inked for a new project, the revenue targets (and how they can be achieved) are well established and built into the takeover plan.
With an automated system, Loews is able to save money, time and resources by not having to manually analyze research or price rooms. The system can also identify relevant data from previous systems and generate forecasts and rates that can instantly be distributed throughout all of the new property’s distribution channels. In the case of a renovation, IDeaS RMS identifi es optimized timeframes for a renovation so there is the lowest amount of displaced business and guest impact.
Management then forecasts and yields the reduced supply of rooms to maximize revenue during the renovation period. A common occurrence when refl agging a property is that historical room pricing and demand data is often unavailable or is no longer relevant. A strong revenue management strategy is even more important in this scenario. Since Loews has hotel properties in dozens of markets across several segments, and the RMS is able to take data from a property in a similar segment, that feed can be manipulated and repurposed as new historical data. As refl agged hotels receive upgrades and potentially change to a new segment, the RMS and strategy provide the data necessary to optimize pricing from the very beginning.
Reputation chatter matters.
What guests say on social media and online travel review sites can have an impact on how rooms are priced. One of the biggest revenue challenges for a refl agged property is to shift perceptions, especially during the early stages of a refl ag when demand might be lower than average.
Reputation management software features have helped Loews not only see and hear how guests are rating hotels, but also empower the sales and marketing team to better engage with guests on social platforms. Loews uses IDeaS Reputation Pricing module to help revenue managers adjust pricing based on social media and online reviews. As Loews’ portfolio expands, it’s even more important to measure systems and processes to ensure success. The fi rst two refl agged properties, Loews Boston and Loews Madison in Washington DC, implemented the same revenue management strategy and technology and are experiencing growth. Loews Boston was able to increase overall realized ADR by double digit percentage growth for nine out of 12 months in 2014. This was done through a combination of yielding out lower rated business and capitalizing on strong market demand by increasing overall rates. Discounted business was reduced by over 25 percent.
In a more challenged market, Loews Madison was able to grow the Best Available rate segment by nearly three percent in revenue. Over strong citywide periods, the hotel was able to choose better group business and minimize discounted rates. Both hotels realized over fi ve percent in market share growth for 2014 and are poised for further growth in 2015.
To address this, Loews leveraged a Revenue Management System (RMS) from IDeaS Revenue Solutions (www.ideas.com) across all properties to integrate past pricing and demand data from previous systems in order to best-optimize revenue opportunities at newly acquired hotels.
Strategic pricing analysis starts well before renovations
Through its expansion efforts, Loews evaluates opportunities, pricing, segments and more to formulate a revenue strategy for new hotels. By the time a deal is inked for a new project, the revenue targets (and how they can be achieved) are well established and built into the takeover plan.
With an automated system, Loews is able to save money, time and resources by not having to manually analyze research or price rooms. The system can also identify relevant data from previous systems and generate forecasts and rates that can instantly be distributed throughout all of the new property’s distribution channels. In the case of a renovation, IDeaS RMS identifi es optimized timeframes for a renovation so there is the lowest amount of displaced business and guest impact.
Management then forecasts and yields the reduced supply of rooms to maximize revenue during the renovation period. A common occurrence when refl agging a property is that historical room pricing and demand data is often unavailable or is no longer relevant. A strong revenue management strategy is even more important in this scenario. Since Loews has hotel properties in dozens of markets across several segments, and the RMS is able to take data from a property in a similar segment, that feed can be manipulated and repurposed as new historical data. As refl agged hotels receive upgrades and potentially change to a new segment, the RMS and strategy provide the data necessary to optimize pricing from the very beginning.
Reputation chatter matters.
What guests say on social media and online travel review sites can have an impact on how rooms are priced. One of the biggest revenue challenges for a refl agged property is to shift perceptions, especially during the early stages of a refl ag when demand might be lower than average.
Reputation management software features have helped Loews not only see and hear how guests are rating hotels, but also empower the sales and marketing team to better engage with guests on social platforms. Loews uses IDeaS Reputation Pricing module to help revenue managers adjust pricing based on social media and online reviews. As Loews’ portfolio expands, it’s even more important to measure systems and processes to ensure success. The fi rst two refl agged properties, Loews Boston and Loews Madison in Washington DC, implemented the same revenue management strategy and technology and are experiencing growth. Loews Boston was able to increase overall realized ADR by double digit percentage growth for nine out of 12 months in 2014. This was done through a combination of yielding out lower rated business and capitalizing on strong market demand by increasing overall rates. Discounted business was reduced by over 25 percent.
In a more challenged market, Loews Madison was able to grow the Best Available rate segment by nearly three percent in revenue. Over strong citywide periods, the hotel was able to choose better group business and minimize discounted rates. Both hotels realized over fi ve percent in market share growth for 2014 and are poised for further growth in 2015.