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How to Act Big When You’re Small

How to Act Big When You’re Small

How to Act Big When You’re Small

Contents

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Introduction

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A: Room and Tax Report

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Chapter 1: Why Revenue Management is Important

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B: Shift Audit Report

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Chapter 2: Key Performance Indicators

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C: Departures Report

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Occupancy and RevPar

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D: Arrivals Report

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ADR and Other Important Metrics

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E: Housekeeping Report

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Chapter 3: How to Act Big When You’re Small

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F: Continuous Report

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A: Take a Long-Term Approach

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Chapter 5: Reports That Give Hotels a Competitive Advantage

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B: Use Market Intelligence

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A: Sell Strategy Report and Daily Pickup Report

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C: Write Critiques

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B: The Cloudbeds Solution

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Chapter 4: Reports You Should Run Every Night

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Conclusion

 

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We want hoteliers to make more money in less time. That’s why we made our

We want hoteliers to make more money in less time. That’s why we made our suite of hospitality management software.

Another way to achieve this is through education. That’s why we’ve made this ebook. We hope that this and our other free ebooks empower you with new insights you can use to improve your business.

you with new insights you can use to improve your business. If you find this ebook

If you find this ebook useful, subscribe to our blog. We’ll notify you when we publish something amazing.

Cheers,

Brandon Dennis VP of Marketing Cloudbeds

to our blog . We’ll notify you when we publish something amazing. Cheers, Brandon Dennis VP

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Introduction

Running a hotel property of any size is no easy feat. Small to medium-sized properties have unique challenges as they juggle everything from revenue management to housekeeping on a day-to-day basis. We’ve created a revenue management guide on how to act big when you’re small. Knowledge is power and your property can learn to use available information to effectively manage your revenue strategy.

Reporting is a necessary evil because it gives you a snapshot of how your property operates. We’ll begin by walking through the key performance indicators, then discuss what it takes to create an effective strategy. Then, we’ll show you the reports you need to succeed.

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Chapter 1 Why Revenue Management is Important Revenue management is what drives the success of

Chapter 1

Why Revenue Management is Important

Revenue management is what drives the success of hotels, hostels, bed and breakfasts, and inns. Effectively managing rates and availability while keeping an eye on all the different key performance indicators is an art. Large branded hotels have the luxury of knowledge and manpower. This results in a well-defined and well-executed revenue management strategy. But, for smaller properties, it’s easy to take a short-term approach to revenue management because time and resources are limited.

Reports become an invaluable resource because they can help property owners make decisions that will result in positive outcomes. In order to win time and time again, a careful look at revenue and reporting is necessary.

Chapter 2

Key Performance Indicators (KPIs)

You need to know the following numbers to manage the revenue of your property. We will define these on the next page:

Occupancy Rate

Average Daily Rate (ADR)

Revenue Per Available Room (RevPar)

Total Revenue/Rooms Sold

Occupancy Rate:

This is one of the simplest metrics you can run. It is the percentage of occupied rooms compared to total rooms

over a certain period of time.

Occupancy = Rooms Occupied / Rooms Available

This metric helps create the foundation of your revenue management strategy.

Revenue Per Available Room (RevPar):

RevPar is a performance metric which is calculated by multiplying a hotel’s average daily room rate by its occupancy rate. You can also calculate RevPar by dividing a hotel’s revenue by the number of rooms (or beds) it has over a desired period of time.

RevPar = Total Room Revenue / Rooms Available

RevPar only utilizes room revenue and excludes other revenue channels such as restaurant revenue, upgrades, etc. This metric can be used to compare performance to other properties, but it differs greatly by property type.

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Average Daily Rate (ADR):

ADR measures the average price paid per room and helps you allocate how much money was brought in per room. You calculate ADR by taking the Room Revenue and dividing it by the number of paid rooms occupied.

ADR = Room Revenue / Paid Rooms Occupied

But remember, ADR only takes into account rooms that were sold and does not include vacant rooms.

Other Important Metrics:

Other Important Metrics: There are other important metrics to take into account when you create reports
There are other important metrics to take into account when you create reports including total

There are other important metrics to take into account when you create reports including total rooms sold, total revenue, and revenue segmented by category (i.e. rooms. restaurant, bar, etc.)

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Chapter 3

How to Act Big When You’re Small

How to attack revenue management:

 

One of the major differences between large-branded hotels and small to medium- sized independent properties comes down to forecasting. Typically, a small to medium-sized property will look at the current month’s revenue and forecast to make

Take a Long-Term Approach

Use Market Intelligence

Critiques

   
 

decisions that will affect the entire year. In contrast, large hotels take a look at how the current day and month play into the season, quarter, and year. While small hotels and inns will never have the same resources as large hotels, here are few things they can do.

Take a Long-Term Approach

When you only look at your revenue strategy on a month-by-month basis, your property could be leaving money on the table. Bigger hotels, who generally have a lot more available information, look at revenue and rates by quarters and seasons, rather than by months. When you take a more long-term approach to rates and revenue, you can more accurately respond to current market conditions.

For example, if you’re in a historically busy season and demand is soft, you have an idea what you need to make up in the following months. Or, if next month’s demand is higher than anticipated, you can raise rates to make up for this month’s lost revenues.

If you handle your rates and revenue month-by-month, you are more likely to make knee-jerk reactions. This means you make unnecessary adjustments that could end up costing you more than your current situation.

For example, if your current demand is too soft, your first reaction might be to decrease rates to increase demand. But, have you checked last month’s performance? You may have had a great month and not need to worry about fewer bookings at regular prices. More guests in your property doesn’t always mean more revenue. And that is why your ADR is so important. You can lower your rates and generate more demand, but you have to make sure your revenues and profit are still greater.

Figuring out rates, revenues, and creating a yield management strategy warrants a series of eBooks in and of itself. But, the main point here is that your property should take a look at your rate and revenue targets by quarter or season instead of month-by- month. Every property is different, so there is no definitive forecast structure that makes sense for every property.

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Use Market Intelligence

Big branded hotels have the benefit of knowledge. They have the money to buy market reports availability, and projected demand. Market intelligence is most helpful when researching rates, revenue manager.

that include information about rates, according to our in-house former

While many of the market research reports are expensive, you can also check your local tourism websites and offices for up-to-date information. Tourism offices often publicly release information on demand forecasts, upcoming events, and other information that could be useful while planning out demand that influences rates.

Knowledge is power and you want to prepare yourself as much as possible. Make yourself aware of broad market trends as well as local travel trends to have the most success.

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Write Critiques

Large hotels write critiques every month that report on how rates and revenue fared. Our revenue expert knows that this takes a lot of time and suggests you start with the months that missed expectations. Months where you don’t meet your goals are important because it means that you did not accurately read the market. Detailed reports containing how and why you missed your goals can help you avoid mistakes in the future.

Critiques are particularly helpful for the same season next year when market trends mimic each other. Without a critique, you won’t know exactly what happened an entire year earlier.

If you have time, you should also create critiques for good months. If you make a decision and read the market accurately, you will likely want to remember what you did to replicate it in the future.

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Chapter 4:

Reports You Should Run Every Night

A healthy revenue management strategy requires daily maintenance. Many properties will conduct their reporting in the late evening when check-in and check-outs have calmed down and guests are asleep. Nightly reports help you close out the current day and prepare for the next.

Room and Tax Report

 

What is it: This report is fairly straightforward. The room and tax report lists all your room revenue and associated taxes for the day. Start by pulling all your revenue and taxes for that day. You want to conduct this report every day in order to know exactly how much money is coming into your property each day. Then, use this report to identify potential issues. For example, you can compare it to your departures, arrivals, and continuous reports to make sure that your revenue falls within a normal range for your current occupancy.

The Risks: If you decide not to do this report, you could run into several problems. For example, if someone forgot to check out, but their revenue posted, it will cause accounting problems later on. Instead of having to make an adjustment later, you can catch it immediately and reduce confusion later.

Cloudbeds Solution: You can complete this report in Cloudbeds’ PMS, myfrontdesk, within the transaction report section. For examples and more thorough directions on how to create a room and tax report, click here to read our helpdesk article.

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Shift Audit Report

 

What is it: Each cashier or user needs a shift audit report at the end of the day or their shift. The report includes a breakdown of every transaction sold by category and item. It also should include a breakdown of payment methods including cash, credit cards (mastercard, visa, AMEX, etc), other other means. The purpose of this report is to check and balance each revenue and cost source.

This should be used for each agent to balance their daily shift. When you create a shift audit report you need to include:

Cashier or User ID

Category/Department Breakdown

Payment Type Breakdown

See our example shift audit report on page 17. You will see that on top, the transactions are sorted by category and item. The first category is food and beverage, item Coca Cola, Corona, second category Serenity Spa and item Plumeria Facial, etc. After each item, there is a subtotal and under each category is a department grand total.

After the department grand totals, there is a payments section that lays out each form of accepted payments. When you have completed the grand totals for both departments and compare them to the payments grand total in make sure they match. Occasionally, the grand totals will not match. With these reports, you’ll be able to find where the payment discrepancy occurred.

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The Risk: If your staff does not complete daily audit reports, you may create accounting problems in the future. These reports allow you to see patterns, track them over time, and identify problems when they occur.

For example, if your gift shop usually sells a lot of ice cream and one day your inventory levels are zero with no associated payments, you know there’s a problem. But, if you don’t complete a daily audit, you won’t find out until the end of the month there was a power outage that melted all your ice cream.

It also helps keep your cashiers and other employees in check. A daily report will show discrepancies in the cash flow or inventory levels. If there is missing cash or missing inventory, you’ll know exactly who was in charge during that time period.

Daily audits will help you easily create monthly reports, which help quarterly reports, which then help yearly reports and beyond.

Cloudbeds Solution: You can create audit reports using the filters functionality on transaction reports. Although you will not be able to create a report exactly as shown on the next page, you will be able to get the data to create a dashboard on Excel or Google Sheets. Click here to learn about filters on the myfrontdesk helpdesk.

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Shift Audit Report Example www.cloudbeds.com 17

Shift Audit Report Example

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Departures Report

What it is: A departure report shows who was scheduled to leave your property today and who will be leaving the next day. Every night, your night manager or auditor should create two departure reports, one for the

present day and one for the next day. The present day departures will show everyone who was supposed to check-out that day. This will help identify any guests that didn’t check-out and identify other potential issues such as overbookings.

The next day departure report helps your staff prepare for the next day’s departures. Your front desk needs to know which rooms will be vacant and available for incoming reservations and cleaning staff will need to take the necessary steps to prepare the rooms.

Each report should include the following:

Room assignment

Reservation/Confirmation Number

Guest Name

Arrival Date

Departure Date

Room Status (in-house, checked-out)

Balance

You can see a sample departure report from Setup My Hotel on the following page.

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The Risks: If you do not complete nightly departure rates, you could put yourself at

The Risks: If you do not complete nightly departure rates, you could put yourself at risk for overbookings. For example, if someone does not check out of their room the day they were supposed to and someone has that room booked for tomorrow, you need to investigate what happened. Without nightly reports, you can’t audit your current occupancy situation.

Cloudbeds Solution: You can easily identify guests who are departing your property with the Daily Reports function in myfrontdesk. You can run these reports by following these directions on the myfrontdesk helpdesk.

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Arrivals Report

 

What it is: The night manager or auditor should also produce the arrivals report for the morning staff. This report includes the list of arrivals for the upcoming day

 

and includes basic information:

Reservation/confirmation number

Guest name

Arrival date

Departure date

Number of nights

Room type booked

Room assignment

The report helps you identify which guests have been assigned rooms and those who have not. You need to make sure that the assigned rooms will be open at check-in and identify where unassigned guests will stay. This is when having a departure report comes in handy. Use the departure report to ensure the arrivals list match up and make necessary changes.

The arrivals report also helps you keep track of no-shows. If a guest doesn’t check-in and subsequently cancels their reservation, your arrivals report will

catch it. Then, you can make the necessary changes in your property management system so that your daily audits and departure reports remain accurate.

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The Risks: If your property doesn’t create an arrivals report, your front desk staff will likely become flustered. Arrivals reports help prevent overbookings while enabling you to plan out the day’s logistics.

Cloudbeds Solution: You can easily identify guests who are arriving to your property with the Daily Reports function in myfrontdesk. You can run these reports by following these directions on the myfrontdesk

helpdesk.

Housekeeping Report:

on the myfrontdesk helpdesk. Housekeeping Report: What it is: The housekeeping report shows the property’s

What it is: The housekeeping report shows the property’s room number, front desk status, housekeeping status, departure dates, and unit type. This enables the front desk and the housekeeping staff to know which rooms have to be cleaned when. Housekeepers need to know which rooms are being checked out of so they can replace the sheets, towels, toiletries, etc. While this is not often applicable to b&bs and small inns, small independent hotels and motels need to run this report.

The Risks: Without this report, properties run the risk of not having clean rooms that cause check-in delays. Also, if guests have not checked-out by the designated time, housekeepers will know to contact the front desk and get the problem sorted out.

Cloudbeds Solution: Myfrontdesk has an entire housekeeping module that helps you keep track of your staff and your rooms. In order to understand how it works and see reports, you can click through our helpdesk article, here.

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Continuous Report

What it is: A continuous report helps you keep track of guests who have extended their stay. Often when a guest extends their stay, they have to create a new reservation. Often the new reservation is created through a different method than the original booking. For example, the guest originally booked on booking.com, but they extended their trip through direct reservations. These two reservations often can’t be combined, so you need to either make sure they are re-assigned to their same room or moved to a new one. Then, using your departure and arrivals reports, make sure that the room they are in was not supposed to be occupied by an incoming guest.

Also, continuous reservations often mean the rate per night is different. So, the correct room rate needs to be reported so your room and tax report is accurate.

Hopefully you can find instances of continuous bookings because the guest told you they were extending their trip. But, you can also check for continuous reservations by searching for duplicate names in reservations. For example, if a guest’s name appears on both your departures report and arrivals report, it’s likely a continuous reservation.

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The risk: If you don’t complete a continuous report, you run the risk of assigning arriving guests to occupied rooms. In order to report the correct room and tax report, you need to know which guests are extending their reservation and at what rate.

Cloudbeds Solution: You can use the arrival and departure reports to create your continuous reports. The daily reports function includes today’s reservations, arrivals, departures, and stay overs, so they will help you build continuous reports. Click here to learn more on the myfrontdesk helpdesk.

There are many reports your property needs to run on a continuous basis in order to operate smoothly. The six reports listed will help you keep better track of your daily revenue and effectively manage your reservations.

Cloudbeds property management system, called myfrontdesk, helps properties of all sizes easily create these reports. Managing a hotel includes a lot of moving parts, so having the tools to generate accurate reports is essential.

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Chapter 5:

Reports That Give Your Hotel a Competitive Advantage

Large hotels forecast their rates and revenues with sophisticated reports that take into account all the information from daily reports and elsewhere.

Sell Strategy Report:

The Sell Strategy Report includes monthly critiques, market research, customer segment performance, including ADR and RevPar. A large property will segment their guests by group in order to see who their most profitable segments are and target them accordingly. This report helps properties analyze how they’re doing on a large scale and respond strategically.

Daily Pickup Report:

This report shows the daily rates and ADR for any given day. This report is generally run every single day to keep prices dynamic. It helps the revenue management team analyze which rates are selling or not selling for the given day and how to proceed. If rates are meeting their goals and projections, they know they’re on the right track. But, if there is cause for concern, they can make corrections in real-time.

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The Cloudbeds Solution

 

As a small or medium sized hotelier, revenue and yield management is likely an overwhelming task. It’s

 

difficult to compete with large hotels and their vast resources. But, there are many things a hotelier can do to mimic the big, resource-rich properties. With a little effort, you too can harness all the information you collect on a daily basis to make better decisions.

In combination with the Cloudbeds reporting tools, you can use the following spreadsheet we created to mimic the in-depth reports large hotels create.

Here, you’ll be able to create a report that shows ADR, RevPar, and show total revenue based on any time frame you specify.

You can access the document with sample data here.

You can access the document with no data here.

To download the sheets for your own use, simply go to File in the top lefthand corner and scroll down to Download as and choose your document preference type. Boom, enjoy.

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Tutorial Video

Tutorial Video www.cloudbeds.com 27

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Conclusion   Effectively managing your revenue when you’re a small to medium-sized property can be

Conclusion

 

Effectively managing your revenue when you’re a small to medium-sized property can be difficult. But, with these tools you can act big while staying small.

Taking a long-term look at your revenue management strategy and use all the available information to your advantage. With the right tools and some time, you too can tackle revenue management.

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About the Author References
About the Author
References

Alex Gaggioli

Alex Gaggioli Alex is a Marketing Coordinator at Cloudbeds living in sunny

Alex is a Marketing Coordinator at Cloudbeds living in sunny San Diego. He is a social media addict with a passion for travel and technology. Find him on social media to connect about all things tech and travel.

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Cloudbeds creates browser-based hospitality management software that simplifies the working life of hoteliers. Cloudbeds' award-winning software is trusted by thousands of hotels, hostels, and groups in over 115 countries. With over 300 integrations, Cloudbeds connects to more marketplaces than any software in this industry.

Cloudbeds has offices in San Diego, São Paulo, and Dublin. Visit https://www.cloudbeds.com to learn more.

Dublin. Visit https://www.cloudbeds.com to learn more. www.cloudbeds.com Contact Sales: info@cloudbeds.com

Location 2655 4th Ave. San Diego, CA 92103

Contact Sales: info@cloudbeds.com Support: support@cloudbeds.com Location 2655 4th Ave. San Diego, CA 92103