Step
5: Summarize, Validate, and Recommend
After completing the sections on Evaluating
the LOS Tiers for an Extended Stay hotel and Setting Benchmark Rates,
the next step is to summarize your findings and determine the following:
- Adjustments:
Should your hotel’s LOS tier structure or benchmark rates (across room
pools and seasons) be adjusted?
- Validation and Recommendation: Validate your decision and provide a clear
recommendation.
This step is essential even if no
changes are recommended, as it shows that thorough evaluation has been carried
out. Remember, any decision on adjusting LOS tier structure and rates should
not rely on a single analysis or tool.
1)
Summarize
- Findings:
Document and summarize your conclusions from the previous sections:
- LOS Tier Structure Evaluation
- Benchmark Rate Setting
- Decisions:
Based on your findings, decide if changes to the LOS tier structure or
seasonal benchmark rates are necessary.
2)
Validate
- LOS Tier Evaluation Test:
- Will the new tier structure increase revenue by:
- Attracting new customers?
- Raising rates for existing
customers without losing them?
- Criteria for Change:
- Market factors (competition,
customer segments)
- Price sensitivity within the
LOS
- Adequate volume in the
relevant LOS tiers
- Blended pricing structure
- Benchmark Rate Evaluation Test: Ensure that proposed benchmark rates pass the
following tests:
- Are transient customers willing to pay these rates?
- Do customers perceive good value compared to
competitors?
- Will these rates maintain customer loyalty?
- Growth Strategy Alignment: Evaluate your LOS tier structure and benchmark rates
in light of your property’s growth strategy. For example, will changes
help increase extended stay occupancy or raise average rates?
- Group vs. Benchmark Rate Comparison: Ensure the proposed transient benchmark rates align
with group rates and are consistent with other Marriott properties in the
cluster. This will help avoid internal competition and focus on stealing
market share from competitors.
- Alternative Strategies: Rather than raising benchmark rates immediately,
consider other methods to increase ADR, such as:
- Tightening restrictions on lower rates
- Eliminating underperforming Special Corporate accounts
- Raising prices on discounted rates during peak periods
3)
Recommend and Implement
- Complete the Tier Assessment Form
- Present your Recommendation: Share your recommendations with your local revenue
management team, which includes key stakeholders like the GM, Sales,
Revenue Management, and Finance.
- Managed Properties: Discuss with the Regional Vice President for Market
Strategy (RVPMS) and obtain necessary approvals.
- Franchised Properties: Consult with your above-property revenue management
team.
- Implementation:
- If changes are recommended, proceed to update the LOS
tier structure and rates.
- If no changes are made, proceed to monitor hotel
performance.
Seasonality:
Determining a Hotel’s Seasons
When setting benchmark rates,
identifying your hotel’s seasons is essential. Seasonality is driven by demand
rather than occupancy. Correctly defining your property’s seasons helps you
optimize pricing and avoid missed revenue opportunities.
Key
Steps for Identifying Seasonality:
- Occupancy Trends:
- Use your Market Share Report to review Occupancy,
Average Room Rate, and RevPAR trends over the past 18 months.
- Identify and assess logical seasonal breaks.
- Demand Trends:
- Compare occupancy trends with demand (non-price)
turndowns using available tools like the LOA Demand Eye Chart or MRDW
reports.
Important
Considerations:
- Weekday and weekend seasonality may differ based on
market dynamics and customer mix.
- Season dates should be contiguous, and many properties operate with four distinct seasons (Low, Shoulder, High, Shoulder).