Training Your Staff In Using Revenue Management Techniques At The Front Desk

Aug 24, 04 | 1:50 am

By: Doug Kennedy   Hotel & Motel Management

How To Help The Foot Soldiers In The Trenches Hold The Line In The Price War.

With the ever-increasing proliferation of distribution channels that today’s Revenue Managers have to keep track of, the last thing they need is to have the job of “trainer” added to their to-do list. Yet investing a little energy in training your front desk and reservations to better understand the principles and concepts of Revenue Management will help ensure that their actions will be supportive of the overall plan.  Best of all, your training efforts will save your hotel literally thousands of dollars in revenue shrinkage that – unless you’ve already addressed this through training - is undoubtedly happening everyday in your hotel.

Let’s first acknowledge how challenging it must be for an hourly associate – who likely has little if any experience in sales coming in – to explain to customers how your hotel’s pricing policy makes logical sense and is providing fair and equitable “value” for their particular visit.  This task would is already enough if it is in fact true that the hotel pricing policy appears to make logical sense! 

However, the harsh reality is that the multitude of distribution channels hotels have to participate in these days does sometimes create seemingly unfair circumstances to individual guests according to who and when they booked.  In other words, it seems unfair to the guy who booked way in advance at a higher rate when he meets another guy at the bar who booked at the last minute and got a 50% off deal through a website where the hotel dumped distressed inventory at the last minute.

So if we acknowledge how challenging this task is for our front desk and reservations associates in the trenches, then carving out some time to conduct a little training certainly makes sense doesn’t it?  Yet while most hotels invest countless thousands of dollars each year in revenue management technology systems, not to mention scarce payroll dollars on the analysts and specialists to input the data and interpret the results, few spend have any formal plan for training those in the trenches of today’s frontline battles with guests who have been well-trained by the media to negotiate effectively from their side of the desk. 

The first step in setting-up this type of training is to look at what your frontline staffers are likely doing right now at the front desk if you have not provided them with the training tools they need:

Changing rates upon the slightest objection at registration, even when guests already hold confirmed reservations.

Overriding rate restrictions in PMS and CRS systems for callers who complain about the limited availability lower options.

Providing  special “favors” in terms of no-cost room upgrades, often in the spirit of hospitality, to repeat guests.

Routinely apologizing and make excuses when quoting higher rates, thus positioning them in a negative way. (“Unfortunately, all I have left is our $X rate.”)

The next, let’s look at some goals and objectives for your training outcomes, such as preparing your reservations and front desk staff for:

Holding the line on price whenever possible at registration or check-out.

Quoting higher rates with confidence whether over the phone or in person, as opposed to apologizing for rates during periods of peak demand.

Resisting what is becoming a routine guest negotiating tactic of simply asking for a discount just to check the reaction of our staff.  Doing so in a polite yet firm manner at avoids additional questions from the guest. 

Positioning higher rated rooms and rates in a positive way, and creating a sense of urgency for booking now.  (“Fortunately, I still have some rooms left during that time and the rate is $X.)

Next, to build support for the training at your hotel, run through some sample revenue models of what the net effect on revenue would be, if, for example, your front desk associates were each able to stop just 1 guest per shift from getting their rate lowered by $10 per night.  (Just multiply the $10 per room-night that each staffer would save each day, times the average length of stay, times  the number of workdays per year. This tells you how much each frontline associate can save from your existing “revenue shrinkage.”   The final calculation is to multiply this times the number of employees on your team.)  Consider that whatever number you end up with is for the most part going straight to the bottom-line!

Having set objectives for your training outcomes and calculated the potential ROI, you are now ready to schedule your training meeting or in-house workshop. 

But before taking the group through the “how to” part of the training meeting, your first mission is to convince them of the value your hotel offers.  All too often we have front desk associates trying to convince a guest that a rate for a high demand period is a good value, when they don’t fully believe it themselves!  When you think about it, without being exposed to the concepts of yield management, it might even seem deceitful to some starry-eyed desk clerks, who got into the business in the first place because they “love people,” to charge $75 for a room one day and then $275 the very next.  It is even harder for our front desk and reservations staff to quote high-demand rates, which can at times approach the equivalent of a full week’s salary for a single night at the hotel! 

Besides convincing your staff that the hotel offers a good value, the next step is to cover some of the very fundamental concepts behind revenue management such as:

Our “finite” supply of hotel rooms requires us to maximize rate during periods of high demand.   If we sell all our rooms at lower rates and there is high demand for lodging, then we have left money on the table. 

The nightly “perishability” of our hotel “product” requires that we offer lower rates during periods of low demand.  Like the old saying goes, “There is nothing more useless than an empty hotel room in the middle of the night.”

We must work both ends of the spectrum during periods of medium demand, offering higher rated options via distribution channels that are not rate sensitive, and offering lower rates via separate channels targeted for rate sensitive markets

A favorite analogy of revenue management trainers is how a box of hotel rooms is different from a rack of dresses.  If new dresses on the rack start moving, the store manager can simply order more from the manufacturer.  Or, if no one is buying, the manager can at least move the dresses to the sale rack and eventually someone will buy them for something, even if it is 75% off.  (And with the mark-ups in retail, perhaps even still make some profit.)

Yet a hotel revenue manager has no such choices.  If our box of hotel rooms for any given night sells out too quickly, we cannot of course build-on more rooms.  So it is therefore important to make sure we sell that box of rooms at the highest rates.  Alternatively, if our box of rooms for any given night doesn’t sell due to us being too aggressive, once the night passes, the inventory is worthless.  (Ask the group if they can imagine saying to a guest “Sir, I have an incredible rate for you.  For just $75, I can rent you the entire Presidential Suite for last night!)

Once they understand the value of your hotel and the strategic concepts of revenue management, you’ll then want to train your frontline troops on tactics for upholding the hotel’s overall revenue and distribution strategies when interacting one-on-one with guests such as:

Positioning higher-rated rooms in a positive way.  “Fortunately we still have some options for you during that time,” or “ what I still have available is...”

Referencing higher rates to position lower rates as being “already discounted.”  “Normally, Sir, these rooms go for $125, but due to (special circumstances) we are able to extend a rate of $100 for the dates you are looking at.  (Note: This helps prevent the guest from even asking about the $75 rate.)

Explaining why lower rates cannot be extended.  “Sir, the $75 rate is sold out at that time.”  (This works far better than saying “that rate is not available,” which implies that it exists, but the guest can’t get it.)

Simple as they may seem, training on these fundamental revenue management concepts for the foot soldiers in the trenches not only gives them the tools they need to hold the line on the price war, but also to feel more confident and less stressed when having to explain our sometimes-whacky hotel pricing directly to our guests.  


About the author:

Douglas Kennedy

Douglas Kennedy is the former co-founder and President of HSA International.  In addition to pursuing his own conference speaking, consulting and writing interests with The Douglas Kennedy Company, he also serves as the Vice President of Sales for Quality Track International, a hotel industry mystery shopping assessment company, and is the Special Project Director for HSMAI’s Revenue Management Advisory Board.

E-mail: Douglas@douglaskennedy.com

Websites: www.douglaskennedy.com   and  www.revmanagement.org