What's the Secret to Omni's 10-Year, Record-High RevPAR?

| February 23, 2011

Faced with the expanding number of online travel providers and channels in the marketplace, hoteliers must develop and implement increasingly sophisticated revenue management strategies to manage rates and availability. Omni Hotels & Resorts has created and implemented unique approaches and processes that are highly responsive to this rapidly changing online environment, and, most importantly, it is seeing conclusive, positive results.
In early 2009, when Omni noticed a reduction in business travel, it offered more competitive rates to maintain occupancy and market share. But when demand returned in 2010, the company gradually reduced its mix of discounted segments to maximize overall ADR. Omni relied on the revolution revenue management system from The Rainmaker Group to implement its strategy and achieved a record RevPAR index. “As a company last year, Omni achieved the highest RevPAR index it has achieved in 10 years,” says Lesli Reynolds, VP of distribution systems and revenue strategy for Omni Hotels & Resorts, which includes 50 luxury properties in North America. “When the numbers indicated demand was returning, we changed our mix of discounted business to increase ADR without jeopardizing occupancy,” says Reynolds. “We worked with revolution to reduce non-qualified discounts by establishing prepay, advanced booking, and other requirements that aided our RevPAR index.”
Reynolds notes that Rainmaker’s revolution solution supports both occupancy- and ADR-focused strategies. “There is a real advantage in having more accurate demand forecasts based on commitments, historic data, and seasonality by segment. We use revolution to rationally set segment rates in all markets and across the highest yielding channels. This strategy leverages our most effective channels and prices rooms so guests who stay with us pay the most appropriate rate for our hotels.”
Omni found that other systems utilize a broader price-setting process to recommend the most competitive rates, but Rainmaker’s solution is more micro-focused. “revolution looks at every rate,” says Reynolds. “That is a significant advantage for a company with properties in markets as varied as San Francisco, New York and Tucson. It gives us greater confidence in our strategies and rate setting when we have all the data available.”
Increased revenue from data-based rather than gut-based decisions
Omni installed a new brand-wide property management platform with a centralized database in 2008. “The central reservation system interfaces with revolution to provide data for our demand forecasts and rate setting calculations,” Reynolds says. “revolution generates bid price recommendations for all segments of our hotels. The success we have had with increased RevPAR is based on the analytics that let us make data-based decisions rather than gut-based.”
Prior to its implementation of revolution, Omni utilized corporate and leisure rate segmentations. “Now we have seven best-available rates by day-of-week and demand restrictions by length of stay along with hurdles to help us maximize rates and occupancy throughout the week,” Reynolds says.
Maximized RevPAR every day of the week
Reynolds cites the Omni Berkshire Place in the high-density NYC market. “We used revolution to measure the growing strength in the New York market based on many variables including history and seasonality. The system enabled us to protect our peak weekdays and still maximize occupancy and rate throughout the week.”
“Omni has on-site property revenue managers who work with the revolution system on a daily basis,” Reynolds notes. “They are familiar with their markets and review revolution’s optimized segment price recommendations and fine-tune them, with our input, to implement strategies that maximize both RevPAR and occupancy.”

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