Interview with a hotelier

Today we meet Mr X, hotelier, who is considering a consulting with the FrancoGrasso RevenueTeam.

X: Hello Mr Grasso…So you want to convince me to do a consulting with you … let’s see if you manage so.

FG: I’ll tryMr X. But please let me kindly remind you first that yours is a very specific hotel, different from others, that revenue management applications don’t work in your case, that too low rates would disqualify your hotel while too high rates would not be adequate to the value of the rooms.

X: Mr Grasso you’re pulling the rug from under my feet… Then explain me what would be the benefits from a consulting with you.

FG: Well to be very concise and pragmatic I would say an increase of at least 15/20% of rooms turnover on an annual basis… Sorry, the answer is a bit blunt but I prefer to go to the point.

X: It means we are talking about around €200.000.

FG: Exactly, we are talking about around €200.000.

X: What about the costs: how much will they increase?

FG: According to our statistics relating to over 1000 hotels followed, we are talking about a 30/35% to be deducted from the increase of €200,000 … sometimes even less.

X: What kind of costs will increase?

FG: Definitely all variable costs in consequence of the increased occupancy; surely the total of OTA’ commissions; finally, our compensation which is linked, as you know, to the expected increase in your results. Consider, however, that often these costs are partly offset by higher sales of additional services generated by the increase in occupancy and since you have restaurant, bar and spa, it could be very profitable.

X: What remains from the rooms?

FG: A net amount of around €130 / 140,000 more … do you think it’s not enough?

X: Any other advantage I could expect?

FG: Consider that the turnover will go increasing again during the second and third years. From the fourth year onwards, it will depend a bit on the circumstances but keeping the turnover at such a high level will be a success that will last several years. Also consider that from the second year, however, the costs will begin to decrease with the disintermediation, consequently the total margin will increase from year to year.

X: Oh, my word! This consulting sounds like a wedding … but how long will it last?

FG: Consulting lasts one year which is the time that we consider useful for both of us to have profitable work and results. Afterwards, it is renewed only if you decide so.

X: Will this affect the value of my structure?

FG: Of course! We all know now that the hotel’s value is related to the production rooms so increasing the revenue per room will also increase the value of the hotel by an amount that will be more or less 5 times the increase estimated on an annual basis … This is therefore a double advantage for both the production and the market value of the hotel.

X: But if, instead of increasing, revenues were to decrease, who would help me?

FG: Mr X we are linked to the increase we estimate and, after 12 years of consulting for hotels, we know how to recognize hotels that can give margins. In this regard, we have developed our own internal index, the result of decades of statistical analysis, the “Revenue Penetration Index”, which gives us a precise data on the possible increase in turnover depending on the management of the structure which will then adopt our techniques. We have no interest in considering consulting with structures with low potential for Revenue Penetration Index. You can also inform yourself: we have on our website an endless list of hotels that we follow, which you can contact whenever you want. Believe me, it never happened to anyone.

X: But technically how does it work?  Should we invest internal resources?

FG: Not only you do not have to invest resources but we also relieve the reception team of a great deal of work and we train it through a daily dialogue with the forecast manager who will be assigned and who will be at his disposal, like the other 30 members of the Revenue Team, 24 hours a day.

X: Mr. Grasso tell me something negative, otherwise I cannot believe all this beautiful fairy tale.

FG: The most important is the price of change. This is the only price you really need to worry about, as we will be implementing new strategies that will cause discomfort and perhaps concerns, that will disappear as soon as the results will be there.

Moreover, even though we have always increased the turnover and the profits of the hotels, not all hoteliers were satisfied because some of them, struggling with mortgages and overly burdensome management costs, could not compensate for financial losses. Unfortunately, there’s not much we can do about this, except mitigate losses.

I cannot think of another negative point.

X: In operational terms, how does it work?

FG: The first step is collecting your historical data that we deal with. Then we proceed to the interface of our software REVOLUTION PLUS with your PMS. We set up a departure rate that will be communicated, we insert rates for each day of the year by typology, deciding on appropriate allotment for OTA and cancellation policy according to the periods. Our analyses are detailed and on a day-to-day basis.

Then we start monitoring daily, and even several times a day, the incoming reservations and we change rates. You will always have the updated daily rate situation so that you and your employees are able to respond with the exact rate and accurate quotes on different dates in case of telephone or email inquiries or in case of walk in.  This start-up will last only a few days.

X: Let me think about it and discuss it with my colleagues and I let you know. Anything else you should tell me?

FG: Yes: do not listen to your pride but to your reason. Our model has proven itself efficient and gave results in all the hotels where we have applied it. There’s zero possibility that it may not work with your hotel. I hope you will soon become another hotelier who will say “IF ONLY I ‘D DONE IT BEFORE! ”

X: You’ve definitely given me positive vibes!

FG: So, let’s do it?