- Understanding the value of revenue management
- Establishing optimum rates
- 7.5% increase in RevPAR Index
25hours Hotel Number One
- 2.7% increase in RevPAR Index
Gastwerk is situated in the uniquely stunning surroundings of an 1896 former gasworks building. Situated in the west of Hamburg, this brick house has 141 rooms, lofts and suites in addition to 200-person capacity conference facilities and a restaurant, bar and spa for guests to enjoy.
Neighboring Gastwerk, and under the same management team, the 25hours Hotel Hamburg Number One is a contemporary, design-led boutique property with 128 rooms. In Germany and further afield, the 25hours Hotel Group has gained a reputation for offbeat creative brand voice and affordability.
A new culture of revenue optimization
“As we were facing several challenges, such as the economic downturn and increased competition in Hamburg from the addition of 6,000 beds per year from new hotels, calling IDeaS Consulting Services was the right decision, at the right time,” explained Kristin Seel, general manager of Gastwerk and 25hours.
In order to meet the challenging market conditions, the hotels elected to invest in developing a best practice revenue management culture across the organisations while also enhancing its systems by utilising the IDeaS Revenue Management System (RMS).
The main challenge that prompted Gastwerk and 25hours to partner with IDeaS Consulting Services was the issue of pricing transparency. “For example, prospective guests asking for prices on the phone were, on occasion, given rates that differed significantly from the rates quoted online,” Seel explained. This was, in part, due to a lack of an integrated pricing structure within the organisation and the increasing ability of customers to view multiple prices and products as a result of growing strength of on-line channels and hotel review sites.
In addition, when it came to the optimisation of shoulder periods of traditionally high demand days, the management felt there was room for improvement. “While we were happy with our performance on periods of high-demand, we were still struggling to optimise demand on shoulder periods in order to optimise revenue consistently. And actually, the marked difference in occupancy levels throughout the period was making our strategic business planning difficult and causing us human resource issues in that we were never sure how much support staff we would need in the hotel,” said Seel.
Overhauling revenue management across our business was exciting, but it was also an intense project that required commitment and concentration.
The process was started with a comprehensive review of current revenue management practices and opportunities, and the creation of a detailed revenue roadmap as to how the hotels could best develop a revenue management strategy to improve performance. Based on this roadmap, the IDeaS advisor provided personalised support and assistance to Gastwerk and 25hours in distinct project phases, over the period of a year. Each phase had specific products and activities customised to the individual hotel’s requirements.
One of the key recommendations delivered by the IDeaS’ advisor was for Gastwerk and 25hours to create a dedicated revenue management role. As part of the roadmap, the hotels also implemented a new process for the determination of rates, and adjusted their group pricing structures and market segmentation, according to industry-wide best practices.
In order to maintain the revenue management momentum and ongoing business performance, within the Revenue Mentor service, the IDeaS advisor also delivered daily tactical revenue management support to Gastwerk and 25hours in the form of virtual revenue management services.
Once a dedicated revenue manager was established, the IDeaS advisor implemented a mentoring program in order to ensure that the newly-developed revenue management culture would be self-sufficient and sustainable. This involved training sessions on revenue management principles and guidance on how to fully optimise the IDeaS RMS, in the form of weekly calls and daily support when required.
This series of phases has enabled Gastwerk and 25hours to grow a sophisticated revenue management culture across the organisation, resulting in optimised pricing, distribution and forecasting processes.
A committed partnership in revenue transformation
IDeaS Consulting Services has assisted Gastwerk and 25hours in building a successful revenue management structure, utilising the right people, processes and technology.
“Overhauling revenue management across our business was exciting, but it was also an intense project that required commitment and concentration. Apart from being very satisfied with the genuine commitment to our business shown by IDeaS, as a result, we are now also able to expertly employ advanced revenue management techniques and processes, delivering recognisable business benefits,” said Seel.
Since the consulting project ended, the two hotels have been doing exceptionally well against their competitive set—in August, Gastwerk showed a 7.5% increase in RevPAR, while 25hours showed a 2.7% RevPAR Index increase.
Following revenue management processes standardised by Consulting Services, Gastwerk and 25hours were able to forecast demand more accurately, allowing Seel to manage resources more effectively in the hotels. Accompanied by a newly instilled awareness of pricing and occupancy optimisation strategies, this also meant that the hotels were able to successfully optimise peak and shoulder periods, stabilising demand and pricing dynamically to drive revenue performance at the hotel.
There is enhanced internal communication concerning revenue management across key revenue stakeholders at Gastwerk and 25hours, leading to a deep understanding of this important hospitality field and driving the hotels to retain a competitive advantage and achieve long-term revenue management goals.
Finally, now that Gastwerk and 25hours are optimising rates and practicing dynamic pricing, the advantages are not only seen in increased revenue for the hotels; hotel guests also benefit from transparent pricing structures as well as competitively optimised rates in periods of low demand
We are now also able to expertly employadvanced revenue management techniques and processes, delivering recognisable business benefits.