FEATURE ARTICLE
A Flexible Approach
Utilising market share provides an option to budget in a flexible way that takes into consideration a flexible market and truly challenges hotel teams to outperform the competition . RGI Forecasting starts with a goal RGI and works backwards from there . For example , a property may presently have an RGI of 1.02 and they would like to grow their RGI to 1.05 . This may be formulated by understanding what a point in RGI represents in dollars or it may be a goal of believed market share provided a range of strengths and weaknesses to the market or competition .
An example
To show how RGI forecasting is flexible and challenges the team to outperform under either positive or negative market conditions an example is best .
Hotel ABC has an RGI of 1.02 , RevPAR equals $ 100 . Competitive set RevPAR then is equal to $ 98 . Hotel ABC management believe that the competitive set and market will grow 4 %. Therefore , this will mean that the competitive set forecast year RevPAR will be $ 101.92 ($ 98 x 1.04 ). If hotel ABC was to maintain current market share or the status quo of improving in line with the market it would be $ 104 and 1.02 RGI . The management at ABC hotel have decided that they would like to see RGI at 1.05 . That is their fixed target .
To achieve 1.05 RGI ($ 101.92 x 1.05 ) the hotel would have to grow 7 % and RevPAR would be $ 107.02 .
ABOUT STR GLOBAL
STR Global provides client – including hotel operators , developers , financiers , analysts and suppliers to the hotel industry – access to hotel research with regular and custom reports covering Europe , Middle East , Africa , Asia Pacific and South America . STR Global provides a single source of global hotel data covering daily and monthly performance data , segmentation data , forecasts , annual profitability , pipeline and census information . Hotel operators can join the surveys on a complimentary basis and benefit from free industry data . STR Global is part of the STR family of companies and is proudly associated with STR , STR Analytics and Hotel News Now .
For more information , please visit www . strglobal . com .
But what happens if the market doesn ’ t grow 4 %. What if it grows 2 % or 7 %. The revenue target may be met or not met but it doesn ’ t articulate hotel ABC ’ s efforts to protect or grow market share . Through the RGI forecasting model RGI 1.05 can still be achieved and market share can be gained through the team ’ s focus on this as the fixed number and outperforming the market whether it is moving north or south .
Now this model may see budget revenue ’ s missed but it drives the hotel team forward to protect market share in a retracting market illustrating the value of the hotel management team ’ s efforts . Conversely , in a more positive market it pushes the hotel team further forward and not allowing the market to do all the work .
If you have a question or would like to know more about benchmarking and STR Global you can contact Matthew Burke at mburke @ strglobal . com or alternatively on ( 02 ) 8091 2009 . Matthew will be a guest speaker at each of the road show events and looks forward to helping each and every property to create a successful tourism industry . www . revenuemanagement . com . au
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