White Paper on Using Analytics for Group Pricing Developed by HSMAI and Rainmaker

  • Rainmaker Group (The Rainmaker Group)
  • 06.13.14
The Hospitality Sales and Marketing Association International (HSMAI) and the Rainmaker Group have developed a white paper titled “A New Age for Group Pricing.”

The white paper, written by Trevor Stuart-Hill, discusses one of the more difficult responsibilities sales managers and revenue managers have; that is, deciding what prices to quote a group. Stuart-Hill is the founder of Revenue Matters and co-author of the college textbook “An Intro to Revenue Management for the Hospitality Industry – Principles and Practices for the Real World.”

Currently, sales and revenue managers look at capacity, segmentation, staying patterns, alternative business, goals, market compression, displacement analysis and pricing to come up with a competitive response for meeting planners. In “A New Age for Group Pricing,” HSMAI and Rainmaker look at taking an enhanced approach to group pricing decision-making by using analytics and how it can increase conversion.

Pricing can be frustrating for everyone involved in the process. The sales manager develops a relationship with a key contact in a group, while the revenue manager works to maximize the financial performance of the property. In the absence of a scientific approach to group pricing, differing opinions, conflicts and mistakes can occur and have a negative effect on revenue and profit consequences for the property.

“Nearly 40 percent of hotel revenue comes from group business, and there’s an increasing need for meeting planners and groups to prove their return on investment,” said Robert A. Gilbert, CHME, CHBA, president and CEO of HSMAI. “That need to prove value is not changing anytime in the near future.”

Plus, there are an increasing number of group proposal requests coming in to properties, making it difficult to prioritize leads and come up with appropriate pricing in a timely manner. Factoring in the time, salaries and resources needed to respond to the proposals, hotel sales and revenue managers are finding there is no room for error in pricing.

With 15 years of revenue management experience with Hilton Worldwide and Millennium Hotels, the Rainmaker Group’s Erik Browning discussed taking a page out of traditional science and analytics, including accompanying technology, and applying it to group pricing.

“Key stakeholders will need to see the value and find technology useful in their day-to-day jobs to make the change,” said Browning. “Though that probably shouldn’t be a hard sell given the current economic environment and the time and money spent on responding to group business needs.” 

Technology products, like Rainmaker’s GroupREV®, provide an optimized group rate that alleviate time-consuming manual analysis and increase conversion, shorten response times and improve efficiencies for both properties and meeting planners.

The white paper also includes a link to a case study for Omni Hotels & Resorts, which has successfully used an analytics-based approach to responding to meeting proposals.

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