Success story: It all started with a Revenue Audit

This case is about a small to medium hotel chain with three hotels in Costa Adeje (Tenerife), with 4 and 5 stars and excellent facilities and locations. This chain’s passion for hospitality is their forte, and its clients – many of whom are repeat customers – are especially appreciative of the professional and friendly service they receive from the moment they walk through the door of any of their hotels.

This chain, Adrián Hoteles, has never needed to hire the services of a consultant to receive training in customer service or protocol. Neither has it needed any training in gastronomy or entertainment. In all these areas it has always stood out, with its own special and unique personality.

Despite this, seven years ago they contacted us, requesting us to carry out an audit, a Revenue Management audit, and, in this way, to look for solutions to commercial problems or concerns. At the same time they asked us to train key members of their staff to face the new challenges of Online and Offline Distribution.

Thus began a story that still continues today and has evolved in such a way that it would be difficult to define it with just one word – a dynamic of auditing, training, and a constant monitoring of every area.

Transmit the culture of Revenue Management to a hotel chain located in an extremely touristy coastal area, and whose income depends to a very high degree on tour operators.

The chain doesn’t want to remove itself completely from its dependence on tour operators, but sees the need to improve the profitability of its main channel and, at the same time, explore other, more profitable, sales channels. When entering the area of dynamic rates and Online Distribution, it needs the right tools, first at a theoretical level, and then in practice.

  • Make a global and thorough diagnosis of the hotels’ marketing strategy, as well as the resources available in order to increase bookings and quality.
  • Introduce the culture of Revenue Management throughout the company, but especially in the key members of staff who would need new tools and knowledge.
  • Improve the Marketing Mix by deriving sales from the tour operator channels to direct sales or OTAs.
  • Improve the profitability, in particular on the hotels’ main sales channel.
  • Help the chain to take advantage of all the potential of modern Online Distribution.
  • After an audit and training phase, offer constant support in commercial decision making.

We always start with an audit in which we focus on a number of decisive factors in the business’s marketing :

  • Segmentation
  • Pricing
  • Product
  • Channels
  • Benchmarking
  • Technology

After thoroughly analysing each of these areas of action, we define a commercial strategy and make the relevant changes in all areas.

This is our way of working and the approach isn’t very different if we’re dealing with an urban hotel rather than a coastal hotel. However, it isn’t very long before the differences start to appear, and in this particular case we detected:

Segmentation: A significant share of sales was through traditional or offline tour operators

Pricing: Mostly static rates, agreed in a contract, well in advance of the clients’ arrival.

Product: Excellently valued by customers. Outside the scope of our collaboration.

Channels: An enormous potential for sales growth through OTAs and our own website.

Technology: An under-use of the technological tools available to hotel staff.

The audit showed that it was necessary to carry out a personalized training program for the key members of staff in the team at Adrián Hoteles. The Revenue Manager, Marketing Manager and Sales Director received guidelines on process implementation, learnt how to prepare revenue reports (forecasts, accumulated data, segments, etc) from the information they can extract from the PMS, and marketing reports from other sources (their own website, social networks, OTAs, etc).

After the training phase we moved on to the “accompaniment” phase. We held two monthly telephone meetings and three or four face-to-face meetings a year in which we advised on decision-making. We dealt with any commercial issues that the client requested, and, in particular, we helped them in how to develop a good strategy when negotiating contracts, and offered Revenue Management strategies and tactics for the online channels.

The contact we had with them became less and less frequent as the hotel team became more autonomous. From having initially “revolutionized” the marketing of the hotel by being a constant presence for a few months, we then became an external consultant offering regular support for specific issues or to establish annual objectives. They no longer need to consult us on a day-to-day basis.

The ability to create reports and all the other knowledge acquired by the key staff at Adrián Hoteles now allows them to obtain better results negotiating with tour operators, and, by streamlining rates and offers, this has increased the channel’s profitability. The promotions that only benefitted the travel agencies are now a thing of the past.

The share of the tour operator booking has fallen in all three hotels and average prices (and RevPar) have grown well above the market rate.

The chain has established working guidelines which they’ve already taken onboard – these will guide them towards a future in which dynamic rates will be increasingly important. They have also taken onboard the need to be aware of new ways of doing business and to discover new online resources to improve sales. They continue to look to us to advise them.

And do you want to know the best part?

Customers still value these hotels highly. You can raise prices, but when you have a high-quality product you don’t have to worry.