There are numerous tools available to hotel asset managers to help improve overall positioning, market share, forecast accuracy and profitability.
How many times have hotel operators said they feel good about the next three months because they are ahead of pace, only to have their hotel end up losing revenue-per-available-room index when STR results are made public?
This article highlights ways in which asset managers can help hotel teams leverage forward-looking reports and external data to improve their overall positioning, market share, forecast accuracy and profit.
When analyzing the amount of business on the books (OTB), hotels look to their internal pace reports to understand how their occupancy, average daily rate and revenue compare to the same period last year. The below is an example of a summary pace table.
Hoteliers, however, often mistakenly believe that when their overall forward pace is ahead of same time last year (STLY), the hotel is positioned favorably. As an asset manager, it is important to challenge one’s hotels to leverage forward-looking external tools that measure forward market and comp set performance to ensure that the property is not just “rising with the market,” but rather maximizing performance.
For example, a hotel’s occupancy pace may be ahead STLY (+4%); however, when looking to the overall market, the competitive set actually is pacing even further ahead (+15%). This means that despite pacing ahead of STLY, the hotel is in fact losing forward occupancy index compared to last year for the month of November. This particular example focuses on occupancy index, but it is important to similarly monitor all three, key metrics—occupancy, ADR and RevPAR.
Competitive set forecasting
During budget season, asset managers evaluate a hotel’s internal RevPAR growth budget by comparing it with the expectations of next year’s competitive set RevPAR performance. Without considering the two metrics—internal RevPAR growth and expected external comp set RevPAR growth—the hotel may not be maximizing bottom-line results or budgeting to lose market share when that is not the right assumption.
There are numerous tools on the market that provide customized competitive set future occupancy, ADR and RevPAR growth expectations. Hotels should set monthly future RevPAR index goals and track their performance relative to the market performance.
Whether it is adjusting retail pricing to help improve occupancy penetration or redeploying sales resources based on the group pace outlook, asset managers always must remain focused on how their hotel’s performance is doing relative to itself, as well as how it is doing relative to the overall market.
Nina Kleiman is an executive vice president at hotelAVE, and leverages her 25 years of experience in lodging asset management, operations, acquisitions and consulting to develop and execute strategies to maximize owners’ investment objectives. Her asset management experience is based on success working with a wide array of hotels from luxury to midscale, both domestically as well as in the Caribbean and Mexico. Her prior experience encompasses a variety of lodging companies including LaSalle Hotel Properties, Westmont Hospitality Group and InterContinental Hotels Group, where she headed the company’s Investment Analysis team. At Lehman Brothers, she was a lead lodging and gaming analyst and at Coopers & Lybrand (now PwC), performed acquisition analyses, feasibility studies, and appraisals of individual hotels as well as portfolios in the United States, Caribbean, and Latin America. She also consulted for the Hudson Group, providing hotel due diligence for lenders acquiring or refinancing hotels.
Silvie Cohen is a director at hotelAVE, and is responsible for providing support to a portfolio of assets, which includes producing monthly reports, analyzing operational budgets and supporting revenue management analyses. She also focuses on improving hotel online presence and reputation, through implementing effective e-commerce strategies to maximize bookings. She is a graduate of Cornell University’s School of Hotel Administration, with a minor in real estate. She is also a Cornell Hotel Society member and a Merrill Presidential Scholar recipient.
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