Using a Consulting Systemic Approach to Boost Revenue Management
Introduction: Enhancing Revenue Management in Portugal’s Hospitality Sector
Blueshift, acknowledged in the market for its expertise and proven track record in revenue management, was engaged by a distinguished group overseeing ten touristic apartment buildings in prime locations across the city of Lisbon, Portugal. Following their acquisition by an international investment firm, the client sought Blueshift’s support to refine their revenue management practices, aiming to boost its topline and overall profitability.
The project was meticulously organized into three distinct phases:
- Phase 1: Understanding the Business;
- Phase 2: Assessing the Current Situation;
- Phase 3: Defining the Target Model.
This case study delineates the structured journey undertaken by Blueshift, emphasizing each phase’s significance in the pursuit of heightened revenue management proficiency within Portugal’s dynamic hospitality landscape.
Phase 1: Understanding the Business
In this initial phase, Blueshift conducted a thorough analysis of the client’s operational situation. This involved a detailed examination of essential business aspects, such as apartment configurations, locations, décor styles, and available services.
Simultaneously, Blueshift delved into an in-depth analysis of the client’s revenue performance over the past three years. Metrics assessed included total revenue, rooms revenue, occupancy rates, Average Daily Rates (ADR), Revenue per Available Room (RevPAR), and critical operational indicators like market breakdown, market segments, distribution channels, length of stay, room occupancy rates, commission rates, and Gross Operating Profit (GOP).
This comprehensive understanding, obtained in Phase 1, served as the foundational knowledge for crafting a tailored revenue management strategy, ensuring that subsequent phases would be informed by precise insights.
Phase 2: Assessing the Current Situation
Building on the insights gathered in Phase 1, Blueshift shifted its focus to a detailed assessment of the client’s current revenue management practices. This involved a meticulous examination of the scope and organization of information, target variables, yielding strategies, forecasting methods, account management procedures, booking windows, and length-of-stay dynamics.
Simultaneously, Blueshift scrutinized the existing processes for analysis and decision-making, identifying critical interfaces with internal and external areas such as Sales, Marketing, Social Media, and Operations. This holistic approach ensured a comprehensive understanding of how revenue management interconnected with various facets of the client’s operations.
This phase also included a general evaluation of the adequacy of the tools employed for revenue management purposes. Blueshift assessed the effectiveness of the Revenue Management System (RMS), Channel Manager, Property Management System (PMS) and Customer Relationship Management (CRM) tools in place. Furthermore, the expertise and skills of the personnel responsible for revenue management were critically appraised.
Through a matrix framework structured into three revenue management sub-processes and 24 steps, Blueshift meticulously evaluated the starting situation, the target situation, and the corresponding gap for each of the 87 evaluation items. This detailed analysis provided a nuanced understanding of the client’s proficiency in revenue management and identified areas for enhancement.
Phase 2, therefore, set the stage for informed decision-making and laid the groundwork for the final project phase, ensuring that the evolving revenue management strategy would be anchored in a comprehensive assessment of the existing practices.
Phase 3: Defining the Target Model
With a robust understanding of the client’s current revenue management landscape established in Phase 2, Blueshift transitioned into the definition of the target model. This phase commenced with a comparative analysis of alternative revenue management models, tailored to the client’s unique operational context. This provided valuable insights into the operational intricacies, advantages, and disadvantages of each model, illustrated by a selection of case studies, to help identify best practices and potential synergies for implementation within the client’s framework.
After the target model was agreed with the client, Blueshift meticulously detailed a functional model for the team, outlining the organigram, tasks, responsibilities, autonomy levels, and mechanisms for peer interaction. A comprehensive Revenue Management Procedure was crafted to guide the team in their daily operations.
Team sizing was carefully considered, ensuring an optimal balance to effectively execute the revenue management strategy. Blueshift also provided insights into recruiting needs and outlined profiles suitable for the revenue management team. Additionally, alternative service providers were identified, offering the client flexibility in selecting external support as needed.
Finally, Blueshift presented a detailed vision of the recommended revenue management model’s operational aspects, expected staffing requirements, and an evaluation of the associated operating costs. A break-even analysis was conducted, offering a cost-benefit perspective to assist the client in making informed decisions about how much to invest in the proficiency of their revenue management practice.
From Advice to Action: When the Consultant Becomes the Operator
The success of Blueshift’s consulting assignment extended beyond strategic recommendations. Delighted with the effectiveness and approach employed by Blueshift throughout the consulting project, the client invited Blueshift to take on a more integral role as the managing operator for their newly optimized revenue management practice. This invitation went beyond revenue management, encompassing Blueshift’s involvement in overseeing the Marketing and Sales departments, in close articulation with the client’s Director of Operations. This operational integration marked a testament to the success of Blueshift’s consulting engagement, illustrating the level of trust and confidence our client placed in Blueshift’s ability to not only conceptualize effective strategies but to also execute and manage them seamlessly.
Conclusion: Navigating Revenue Management Success
Success in revenue management necessitates a structured approach. Begin by assessing your starting point, followed by understanding your target model based on your context and strategy. The gap analysis becomes your implementation guide—whether through internal teams, external providers, or a hybrid arrangement.
This case study underscores the vital journey from insight to execution. Navigating revenue management success requires a methodical approach, ensuring a seamless transition from assessment to implementation for sustained profitability. The right consulting partner can provide the specific experience and expertise needed—an invaluable investment to enhance success.
Written by Filipe Santiago
July, 2023
