The Taste of Revenue Management Success

By Laura Daquino, Business News Publications for ARMA

CONSISTENCY and dedication are the words on the lips of a leading Australian hotelier in food and beverage revenue management, who has a number of prized secrets to share with the ARMA (Australian & NZ Revenue Management Association).

Where room pricing is subject to more volatility – delivering maximum returns when nimble and reflective of the competitive marketplace – this publicly listed hotel chain thinks the opposite is true for the food and beverage space.

Mantra Group’s Scott Robertson, who is the Group Manager for Food & Beverage, says altering pricing regularly in food and beverage can be detrimental to the return customer base.

Furthermore, “trying to be everything for everyone” doesn’t necessarily increase patronage.

However, with the understanding that competition is heating up, Robertson says it’s not enough to sit on the same prices and hope for customers to return.

“Pricing for food and beverage needs to follow a more long term and stable strategy,” he says.

“The pricing should remain relatively consistent but value propositions could also be achieved through value ads, volume deals or discounts for return loyalty.

“Meal period discounts should also be offered to stimulate activity and demand during periods of low seat occupancy, as opposed to adjusting the menu on a daily basis.”

Robertson says food and beverage shouldn’t be viewed as separate from the main hotel, and rather the relevant strategy should be based on a concerted effort from all departments.

Mantra Group follows a clear and focused business plan where food and beverage revenue management is appropriately factored in all throughout, such as breakfast inclusion within room rates.

“From central services to the individual property management teams, they all play an important role to the success of the food and beverage department,” says Robertson.

“The revenue management process overall is a collaborative one between hotel operations, sales and marketing, and the dedicated revenue management teams.

“Food and beverage departments firstly need a quality set of financial data as defining the measurements provides knowledge of historical achievements and allows the setting of new targets.

“This data also allows us to regularly forecast the potential revenues against our plans and therefore identify the gaps.”

The question may remain how a company the size of Mantra Group can keep this collaborative culture intact.

Attributable to the success of all good business strategies, it’s a matter of systems and processes – and if a company with more than 3500 employees can achieve this – then so can yours.

“We have a centralised reporting functionality that delivers a snapshot of all food and beverage outlets performance across Mantra Group by 8am the following morning,” says Robertson.

“This allows greater exposure and input from all centralised teams on how they can assist and to formulate plans to further drive top line revenue numbers.”

Considering labour is the biggest cost within the business, Robertson says there is the looming challenge of deciding on the most viable number of staff at any which time.

“Some dining periods may be very profitable as a standalone proposition but if we don’t manage all periods effectively then we can quickly loose some profit potential,” Robertson says of failing to assign the correct number of staff.

He also believes one of trickiest parts of food and beverage revenue management is being able to accurately measure success.

Unlike room management – typically defined by clear periods of low and high season – he says there are “multiple wheels turning” in the food and beverage space.

“It’s difficult to create baseline data that can provide a reflection of your performance compared to your competitors, but there is still a need to create baseline measurements and create historical data to measure year on year performance against other properties within the group,” he says.

“Differences in meal period timing, definitions of ‘what is a cover’ and influences of the conference market are all factors that make competitive analysis a challenge.”

Mantra Group’s three top tips for food and beverage revenue management

  1. Start with a great baseline of historical data and have a uniformed definition of measurements. Review your forecast numbers regularly. Using the data will identify the need periods. Be flexible to apply new offers into the market. Make sure these dovetail into your hotel business strategies.
  2. Create a business plan that clearly defines your goals and the strategies needed to achieve these. Know your competitors by immersing yourself into the industry so you have a solid understanding of customer trends and wants.
  3. Use third party and online businesses to help sell your availability. Market your business with offers that are both traceable and measurable. Analyse the impact of each to the profitability of your business and document each to benchmark against previous and new offers.

Melissa Kalan, Managing Director of the Australian & NZ Revenue Management Association believes these are invaluable tips for industry looking at developing more of a revenue management approach on their perishable food & beverage inventory and it’s great to generate discussion on this topic.

“As Scott highlighted there are many dynamics to consider and many pieces to the puzzle in the food and beverage revenue management space. Measurement can also be a large challenge, however, collecting quality data, regular forecasting and adopting a long term strategic view will help build a strong foundation for food & beverage revenue management,” says Kalan.

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