Improving Performance by Developing Revenue Management Culture

As a special economic zone adjacent to Hong Kong and Macao, Shenzhen has a fast-growing hospitality industry. More and more famous hotel management organizations from China and abroad come to Shenzhen. Together with the city’s booming economy hotels, competition in the hospitality market is intense. In 2013, after the Chinese government adopted a policy of restricting official receptions, vehicles and spending on overseas trips, competition became white-hot. In the context of a weak global economy and online travel agency competition, profitability in the Shenzhen hospitality industry hit a historic low.

Facing fierce competition, Shenzhenair Hotel Management has been searching for more scientific, detailed management solutions to elevate its core competitiveness in aspects of personnel, tools and processes. In 2013, the company entered a partnership with IDeaS Revenue Solutions, the leading provider of pricing and revenue management software, services and advisory services. Shenzhenair International Hotel, the company’s flagship hotel, was the first to implement IDeaS’ revenue management consulting service.

After analysing the current status of Shenzhenair International Hotel, IDeaS provided the hotel with an audit service, internal revenue management training and a one-year Virtual Revenue Management Service (VRMS). This helped the hotel build a revenue management culture among its people, with the goal of increasing revenue.

In less than a year, the hotel has significantly boosted its revenue in the face of fierce competition. Occupancy rate, ADR and RevPar have all increased compared with the same period last year, the growth rate is much higher than competitors, and RGI is higher than average market share. More importantly, Shenzhenair International Hotel has built a revenue management culture which is based on data analysis and guided by detailed management, and has improved its core competitiveness in all key areas.

Statistics show the occupancy rate at Shenzhenair International Hotel has increased 3.2 percent; RevPar has increased 5.9 percent; and ADR has increased 2.7 percent at a time when the market as a whole was declining. Compared with the same period last year, MPI has increased 1.4 percent; ARI has increased 3.2 percent; while RGI has increased 4.7 percent, much higher than average market share.

“IDeaS’ VRMS is a unique revenue management consulting service for the hospitality industry. It meets our need for fast change and development. We are glad to see the overall improvement that VRMS brought to us. In both management processes and in revenue optimization, VRMS has helped us perform better in spite of fierce competition.” said Mr Xiao Qiang, deputy general manager of Shenzhenair Hotel Management Co Ltd.

Shenzhenair Hotel Management Co Ltd, which is owned by Shenzhen Airlines, specializes in the development of hotels, with properties located in more than 20 large and medium-sized cities. Since its establishment in 2004, it has won numerous awards including China Top Ten Brand Hotel Management Company, Excellent National Brand of China Hotel Industry, Most Investable Hotel Management Company in China, and Top 30 Largest Domestic Hotel Groups in China, 2009-2011.