HMSthailand.com

New Year , a new start, where will we go in the Hotel Business? Forecasting is much more difficult nowadays. Lowering demands will drive hoteliers to sell lower then they intend to do.  Revpar Guru believes that 2010 will show some recovery which is mainly driver by innovators willing to change their market perspective. We have to find more efficient ways to create the results we are looking for.

Looking at the results in the last quarter is not a real prediction of what will come ahead of us. The Phuket market of hotels experiencing the High and peak season in these months, and the battle starts after April when the low season is there again. We have to be cautious about our projections of this challenging year.

The return will happen slowly, we cannot expect that a market is only and purely driven by price, it is also the location. Many locations in the world nowadays are boosting their marketing budget to create awareness, which can result in less tourism for this year in Thailand.  Therefore we have to be careful with what we have and try get the most out of the market we have. Repeating clients are very important for your survival, once more.  This also counts for the faces of the resort, try to maintain those who have created recognition to your company and for which people will return.

Lowering the staffing costs, it will create room for efficient systems to do their job. The hotel industry is a mainly service orientated and people orientated business.  Specific adjustments in your system needs, or software upgrades, makes your business run far more efficient and hence, improve your revpar on short term and long term. Automation in order to push your revpar seems to be far most interesting then investing in advanced cash register system which doesn’t contribute to your revpar.

In the 2009 we have sliced the rates in half and offered tremendous discounts in order to maintain a healthy occupancy. Most businesses sliced their revpar with double digit numbers. In 2010 we need to preserve a healthy Revpar growth while the occupancies seems to get back in return.

As said earlier investments must be made which contribute on Revpar in order to justify future investments of the Capex budgetplan. The life line to success is to listen to your customers needs. Improvements need to be made in a cautious way while will creates incremental revenue in 2 to 5 years time.

With  an overwhelming growth factor in 2008 and early 2009, Phuket has seen a rapid increase of hotel rooms. This supply, or rather over supply, creates a disturbed market situation, where arrivals haven’t climbed that steep.  This trend will slow down in 2010 as many projects facing financial stress to complete their projects in their proposed time frame.  The competition will be in 2010 still fierce and hard to tackle as every property has their investors to please.

These effects as mentioned above creates a fierce market situation with continuous rate changes due to the OTA market presence. Changing the rates to too low rates can end up leaving money on the table. Intelligent systems which monitor the market and its supply, as well as your own supply, can manage this for you.  In real time, this system can adjust  allotments and prices to optimize your occupancy and Revpar levels. To survive nowadays market in 2010, technology is the way to control your revenue.

The economic downfall has caused a reduction in RevPAR in the hotel industry.  Smith Travel research (STR) indicated that 2010 will be slightly better, not without more reductions in the key metrics. Occupancies are forecasted with a 0.6% decrease, ADR with 3.4% decrease and RevPAR is expected to shrink with 4.0%.

Your business can turn this around, the key is to understand the new economic situation and its impact on your business. Demands will be fluctuating and showing an irregular pattern, which makes forecasting more challenging. The key is to look at your product mix and the change in demand for each specific product.

To start with evaluating the trend line in the current market, leisure or corporate travel, what is the main market trend. As Phuket is a main leisure environment, corporate business are not of interest. Bangkok however, might look closer in to the days of the week which represent the highest and lowest occupancy. Also look at the location of origin, domestic or international and are there specific markets within those groups. The more information the better to determine your strategy.

The historical data gives you a good insight in what has been sold, to whom at what rate and for which duration. Overlay this with seasonality and or special events and you can determine if these have had effect on your business results.

In next step is to look in to your plan, where are we standing now in the market and where are we willing to be in the market. A firm look at your competition and what is their offer, and what is yours. It is important in a plan that you have a target, a goal, where you want to end up. Your strategic plan should live up to this, not to short term changes.

By starting to create a budget, it will help to determine where you want to end. (the result) Breakdown you yearly budget into monthly, weekly and daily budget and you able to anticipate any moment of the day to achieve your goal. The budget should also incorporate the market segments, and the average price of this segment. Analyzing the highs and lows of certain market segments, creates a good impression of what we can expect of their contribution and how other related department can anticipate on to this.

Create your objective short term and long term. They both will contribute to your plan, your goal. Each objective should be stated for each market segment. As clearly each segment is having a different set of needs.

Be realistic, do not use the wide approach, but approach your targets carefully and precise. Not every market segment is interesting to approach as it takes too much time, take the one who are easy to approach and which you understand their behavior and needs. This way you can use your resources wisely and create the best ROI for your company.

In order to maximize your rates, you have to apply a strong revenue management. The airlines are strong in it, but also the hotel business is more and more applying the same approach, fill base load with lower rates and sell the remaining at high rates when the demand is high. Use this approach in any given market to obtain the highest yield but maintain rate parity at all time.

Create a plan in which you will study the demand for your product. With the knowledge of the behavior of your market you can tackle their needs and apply rate management to obtain the highest yield in each segment. Also it helps to focus on the Social media and website optimization as these are nowadays key elements in which the market is informed about your product.

The current crisis will not be over soon and as the financial market also the hotel market is hit hard. By wise business planning and get market information creates strength and confidence to overcome this current situation.