It has been a few years since Xotels is operating in Italy now. And we wanted to share some of our successes in terms of hotel revenue management strategies with you.
Before entering into the market we were faced with the same hurdles as always. Owners and managers were concerned we did not know the market, and did not have first hand local experience.
Of course as a strategist these concerns are not valid to us, as we analyze demand patterns, performance KPI and and other statistics to optimize a business. And regardless of where it is located, the methodology and best practices of Revenue Management do not change.
So how did we do? Let me share some case studies of our hotel performance in Italy with you.
Hotel Turnaround Case Studies
Below you will find 3 case studies of our turnaround strategies of hotels and resorts in Italy.
Case Study 1
Property Type:
- 5* Luxury Resort Hotel in a historical building (monastery)
- Part of Leading Hotels of the World
- 102 rooms, located in Taormina, Sicily
We started managing this project in 2017, with the mission to turnaround the financial performance, right after the acquisition by a new investor.
Action Plan:
To drive a mixture of both occupancy and ADR increase Xotels implemented the following action steps and strategic adjustments:
- Implementation of Dynamic pricing structure for resorts
- Public rate structure review and repositioning
- Room type structure review, changes applied (new room types distributed in all channels, room type supplements changes)
- Inventory management review and new implementations (overbooking by room type when needed, ensuring stay through), groups on option, etc
- Business mix review, new structure applied
- Direct Sales stimulation activities implemented
- Review of all FIT contracts T&Cs
- Control of FIT availability offered to FIT partners
- Online content review and improvement in all distribution partners
- CRS content and rate structure review
- Reinforcement of Luxury travel agency partnerships
- Digital hotel market positioning review
- Stronger focus Online reputation review
- Groups strategy review and new definition according to new business mix defined
- Rate parity violation monitoring and correction
- Creation of new packages creation (Beach club, Gourmet activities, etc)
Results:
The hotel managed to increase RevPar year over year by 39%, as a result of occupancy increasing from 66.19% to 74.33% and ADR growing from €307.67 to €381.16.
So the hotel room revenue increased by 655K year on year (2017 vs 2016) (even though we were open 62 days less in 2017 then in 2016).
Case Study 2
Property Type:
- 5* Luxury Grand Hotel in a Palace type building
- 102 rooms
- Located in Palermo, Sicily
We started managing this project in 2018, with the mission to turnaround the financial performance right after the acquisition by a new investor.
Action Plan:
At this hotel we implemented our revenue management methodology, distribution techniques and best practices in hotel management strategies. Below an overview of some of the key action steps:
- Implementation of Dynamic pricing structure
- Public rate structure review and correction
- Room type structure review, changes applied (new room types distributed in all channels, room type supplements changes)
- Inventory management review and new implementations (overbooking by room type when needed, ensuring stay through), groups on option, etc
- Business mix review, new structure applied
- Control of FIT availability offered to FIT partners
- Online content review and improvement in all distribution partners
- Hotel market positioning review
- Online reputation review and focus (recommendations on activities and structure)
- Groups strategy review and new definition according to new business mix defined
- New packages creation (Special Suites, Gourmet activities, etc)
Results:
The hotel had a Room Revenue increase of 23% year on year, which equals €1.3mln. This is mainly coming from an increase in ADR, which grew from €213.33 in 2017 to €257,71 in 2018.
Case Study 3
Property Type:
- 4* business hotel
- 84 rooms
- Located in the Piemonte region
We took on this property staring March 2018.
Action Plan:
The successful room revenue results achieved in Agora Palace Hotel have been possible thanks to the implementation of the following new strategies:
- Business mix review and new actions implemented (online distribution specially)
- Rate structure review and new implementations
- Corporate contracts review and changes made (dynamic rate structure implementation)
- Rate structure review and corrections made
- Inventory management new standards implementation
- Group strategy implemented (quotes, procedures, T&Cs, etc)
- Hotel team training provided in Groups management
- Hotel team training provided in Direct Sales stimulation
Results:
The hotel had been trailing in REVPAR performance year over year by about 11%. So it was more of a long term effort to turn this property around. We went from a negative REVPAR Index at the beginning of the year to a year over year REVPAR increase of average 24% from August till the end of the year. By being more aggressive in the transient / public rate strategy, we managed to increase occupancy by 27 points.
In 2019, from January to June, we are up 23% in REVPAR year over year, surpassing 2017 results by 12%.
The Final Word
Implementing best practices in Revenue Management strategies, and training the onsite teams in industry to work methodically works in any market as we can see. It is all about a structured approach and analysing data.
Since the beginning of Xotels, I still compare Revenue Management to playing PacMan. You know the flow of the game after a while. They can change the colors of the screen, throw more cherries out there or have the ghosts speed up. Just keep calm and play your game as you always do, and you will harvest the results.
We have now recently picked up a 5 star luxury boutique hotel in Rome, where we start seeing the first results already. And I hope we will be able to assist more hotels in the near future in Italy with turning their financial performance around.
