- Difficulty forecasting
- Underperformance in RGI against competitive set
- Revenue team that lacked formal revenue management education and training
- Inefficient processes and reporting
- RevPAR Growth Index (RGI) outperforming the competitive set by 1.2% over a 12-month running-period
- Enhanced revenue management processes with special focus on becoming more strategic to optimise revenue opportunities
- Dynamic revenue management culture has been taught and accepted among all departments
The Vineyard Hotel Group, comprising The Vineyard Hotel & Spa and its two sister hotels, the Townhouse Hotel & Conference Centre and the d’Ouwe Werf, are award-winning South African hotels, located in Cape Town and Stellenbosch. The group is steeped in a rich history—the Vineyard Hotel & Spa was originally built in 1800 and has been a hotel since 1894, and the d’Ouwe Werf is South Africa’s oldest hotel, having been established in 1802. Although the historic hotels have defined hospitality in the region for centuries, the group needed to update and modernise its revenue management culture.
The need for effective processes
Effective revenue management culture is the key to driving consistent revenue performance within an organisation. Building this culture is a long-term process that requires momentum and expertise, which is often difficult for independent hotels to achieve without support. This is the situation that Vineyard and its sister hotels were facing, in particular due to the lack of a strong revenue management culture within the hospitality industry in Southern Africa as a whole.
The hotels lacked revenue management expertise—revenue managers had learned from ‘hands-on’ experience, without the benefit of formal education and access to global industry best practice. With the revenue management culture in South Africa still in its early stages, the group turned to IDeaS Consulting Services, which has delivered consistent results to over 2,000 customers for more than 30 years, in order to benefit from international revenue management best practices. “There has never been any hesitation on the part of our owners to invest in revenue management. We are a forward-thinking group and are encouraged to all work towards being leaders in our field,” said Theresa Prins, Group Revenue Manager.
“Overall, we lacked effective and efficient processes—for example, we would spend more time creating certain labour-intensive reports, than people actually spent reading them or acting on the information they contained,” Prins explained. Such practices meant the group’s revenue management team were insufficiently supported to make fully informed decisions. “We needed to develop our revenue management processes, and shift from a reactionary culture to a strategic one,” Prins added.
Sustainable revenue management culture
IDeaS Consulting Services was engaged by Vineyard in March 2011 for a six-month period, to support all three properties through IDeaS Revenue Mentor service. The IDeaS advisor took a hands-on approach to guiding the hotels through the revenue-enhancing recommendations generated from the Revenue Architect service.
Employing a collaborative, client-centric approach, and leveraging advanced analytics and statistical modeling, IDeaS Consulting Services provided support in phases to ensure the development of a sustainable and, eventually, self-sufficient revenue management culture within the Vineyard team.
The dedicated advisor provided both strategic support, including reviewing daily, weekly, and monthly revenue management tactics and processes, and provided input on immediate improvement opportunities. During the mentoring program, the focus was the development of a revenue management culture within the hotels, by implementing recommendations in key areas—processes, reporting, forecasting and budgeting, pricing, meetings, standard operating procedures, department structure, and job scopes.
“IDeaS not only considered the practices undertaken with the revenue management department but also how we related to other departments within the hotels. It looked at how we utilised the information we received from them, and how we fed back information to them,” said Prins.
From compiling data to analysing key opportunities
Since the review, revenue management across all three hotels has undergone a number of changes. Time that was once spent painstakingly compiling data and creating overly-detailed, high-level reports is now spent on optimising the IDeaS Revenue Management System (RMS) and using the analysis and reports it provides in a meaningful way to give a vital overview on key revenue opportunities. Departmental revenue management meetings are now fact driven, offering in-depth discussions on how to optimise demand based on forecasts and with clear action points generated.
By far the most radical change since the group engaged IDeaS Consulting Services has been the increased integration between the hotels’ various departments. “In the past, revenue management was a very isolated practice within the group. Now, we send a daily pick-up report to all departments, and have monthly calls to look at the forecasts. This means that everyone has the opportunity to give their input on how the system manages the decisions we make and discuss new opportunities, from the sales department, to the front of house,” Prins explained. By bringing others into the revenue management culture at Vineyard hotels, the net result is that all departments understand the value of sophisticated revenue management. This lends group-wide support to vital revenue decisions, and builds a more comprehensive and successful data-driven revenue management culture across the group, which will ultimately optimise revenue and profits.
We needed to develop our revenue management processes, and shift from a reactionary culture to a strategic one.
Jacqueline Williams, General Manager of Townhouse Hotel & Conference Centre, was keen to stress the new group-wide support and understanding of key revenue management concepts. “I now understand that effective revenue management is a symbiotic collaboration between people, processes and technology, which has furthered my confidence in the system and the decisions it suggests,” she said. “In my hotel, communication between the departments is vital. Since the IDeaS Consulting Services project, our reservations department have been co-ordinating much more effectively with our banqueting and conferencing departments on key revenue opportunities, which will serve to boost our groups’ overall revenue potential,” Williams added.
Turning around a negative trend
The consulting project came at a challenging, yet crucial, time for Vineyard. The 2010 FIFA World Cup had recently ended and market conditions were declining on a daily basis. Cape Town’s hospitality industry, as a whole, was suffering.
Due to the consultancy project, the group has experienced tangible business growth. “For instance, there has definitely been a strong growth from previously weak patterns on shoulder-days. Furthermore, our STR Competitive Performance reports have tangibly validated the benefits we have felt—our RevPAR Growth Index (RGI) performance has been strong, with the hotel outperforming the competitive set by 1.2% over a 12-month running-period,” said Prins.
This growth over a 12 month period was a first and showed a turning point—validating the transformation of business approach for the Vineyard Hotel Group as it ended a three-year downward trend against the market and the competitive set. A clear road of recovery was set.
“The project has refined our revenue management processes and has helped us optimise revenue by further leveraging our existing IDeaS RMS. It was a highly worthwhile investment, benefiting all of us in the group, and I would thoroughly recommend it,” concluded Williams.