<B> Rev. Mgmt. Proliferates</B>
<I>Midprice, Limited Service Hotels Add Yield Systems</I>
By Maria P. Vallejo
More midprice and limited-service hotel chains are installing and enhancing their revenue management systems this year, but insiders said the information they provide suppliers will impact corporate customers less in this segment of the market.
Choice Hotels and La Quinta Inns Inc. are the two newest chains to embrace automated yield management, following competitors like Cendant, Hilton and Holiday Inn. Until recently, Choice and La Quinta properties calculated demand by hand.
Yet Hilton vice president of revenue management Greg Cross expects the improved information the systems deliver to only minimally affect buyers in the price-sensitive lower tiers. "In a midprice property, you have less variable pricing," he said.
Agreed analyst Ted Mandigo, president of T.R. Mandigo & Co. of Chicago, "I don't think yield management will achieve the same level of impact in the budget, economy and lower-end properties as in the upper-end properties. It takes a significant percentage discount or increase in yield to make a difference on rate--and it's not going to be a big number."
Yield management systems provide hotels with accurate data about advance bookings, allowing them to raise their rates as the number of empty rooms fall or to offer cheaper rates when too many remain.
Choice Hotels International is completing the rollout of its yield management system it began in May. The 165 hotels using the system last year credited it with increasing the revenue per available room by 7 percent, said director of project management Christopher Yellen.
Choice's revenue system works with its new property management system, but it takes three to six months of data collection before accurate forecasting can begin. Now 622 hotels are collecting data and another 262 already are using the data for forecasting. Choice plans to add group yield management forecasts by year-end.
Also launching a new revenue management system in conjunction with a new PMS is La Quinta Inns Inc., which expects to complete rollout by the first quarter of next year. Until now, it too figured demand based on manual calculations--a lengthy, time-consuming and inaccurate process, said senior vice president of marketing Tom Chevins. Hotel officials expect this technology to increase revenue by 3 to 4 percent within a year of full installation.
"We need to better understand how we price products," Chevins said. "Getting appropriate demand information may lead to lower prices in some markets. We haven't had a system to count demand information and create an appropriate price for each market. As we move forward and look to grow our business, a revenue management system makes sense."
Bass Hotels also is enhancing its Holiday Inn Reservation Optimizer system. Installed in August 1993, the system runs across all Bass brands except Inter-Continental, which eventually will receive its own yield management system, said Craig Eister, Holiday Inn's senior director of revenue management systems. Bass also plans to forecast optimum times for groups and meetings. "Most systems have focused on the transient side. We're looking at total revenue management, incorporating groups and other types of business and systems," Eister said.
Cendant Corp. also is continuing the revenue management system rollout it began last year. Eric Pfeffer, hotel division president and CEO, said it is being driven by midprice buyer awareness of varied pricing.