PDR201: Decision Making and Revenue Management for William Blue Hotel

This report analyzes the revenue management strategies of the William Blue Hotel in Melbourne, focusing on data from the STR report. It examines key performance indicators (KPIs) such as occupancy rates, Average Daily Rate (ADR), and Revenue per Available Room (RevPAR), comparing the hotel's performance against its competitors. The analysis reveals strengths and weaknesses, including occupancy variations across different days of the week and the impact of market events. The report proposes various revenue management tactics, including a demand calendar, hotel booking curve development, and price positioning matrix, to improve the hotel's competitive position and maximize revenue. Implementation strategies include staff training, reservation software development, and demand prediction based on yearly events. References to academic articles and industry reports are also included.

Revenue Management Techniques.
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William Blue Hotel Melbourne
William Blue Hotel is located in Melbourne city near the federation square. It was started
in the year 2000 and it has been rated as one of the best 5-star hotels in the city in the last 5
years. Smith travel research or the STR report is a benchmarking technique that compares a
hotel’s performance with a group of similar hotels (Green & Lomanno 2012). The STR report for
the year indicates that the performance this hotel has been decreasing in the last few months and
therefore we need to come up with some strategies that will improve our performance. We shall
use this year’s report to summarize the current occupancy, average daily rate and the revenue per
available room.
The occupancy shows the number of rooms sold in a given night in a hotel. In order to
determine the occupancy rate, you get the total number of rooms occupied divided by the total
number of rooms available and multiply the result by 100 in order to create a percentage. For the
William hotel, the occupancy rate was best on Saturdays with a 96.3% and the least occupancy
was on Sunday’s with a rate of 66.1%. The market performance index for the occupancy rate
indicates that the performance was at 104 and 92.4 respectively. When our MPI was high at 108,
we ranked first in the market and when our MPI dropped to 92.4, we ranked the last in the
market. At average we scored an MPI of 100.
The average daily rate or the ADR is the average rental income per paid occupied room
in a given period of time. It is calculated by simply taking the average revenue earned from all
the rooms and dived by the number of rooms that sold out in that period (Chattopadhyay & Mitra
2019). In this year, William hotel ADR was high on Tuesday’s which are the days with an
average occupancy of 96.7 and lowest on Sundays, the period with an occupancy rate of 77.4.
During this period, our competitors were far much ahead of us and we ranked the last in terms of
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William Blue Hotel Melbourne
overall income generated during this period. This report also indicates that were performing
poorly in terms of profitability compared to our competition.
Revenue per available room or the RevPar trend is a technique used in hotel industry to
access a hotel’s ability to fill its available rooms at an average rate. William hotel ability to fill
the rooms was best on total Tuesdays which are the days with the highest daily rate of 93.5. The
days that were not able to fill the rooms are total Sundays because these are the days that we had
the lowest occupancy rate of 71.5.
The hotel market of the Melbourne city is promising because the research conducted by
the Australian bureau of statistics on tourism indicated the number of visitors who came to
Australia has continuously increased since the year 2013 to date. Australia was also named as the
world’s seventh largest tourism market ( Ruhanen & Whitford 2017) . Australia has various
yearly festivals and events like the Melbourne international festival which was scheduled to take
place from 24th March 2020- 18th April 20202, which see visitors flocking into the country and
more so Melbourne city like the This indicates that the demand for hotel rooms shall continue to
increase in the country.
In Melbourne city various 5-star hotels that are coming up and with new modern and up
to date facilities who are competing with William hotel like the Peppers Docklands which has a
pool, residential apartments and is adjacent to Etihad stadium. The Tune hotel is a low cost hotel
and has a competitive edge because they own an airline by the name Air Asia and they have been
receiving a lot of customers since they offer free towels and TV for travellers and has a ‘pay-as-
you-use ‘model. Adelphi hotel is another competitor which has a unique glass swimming pool
projecting over Flinders Lane. It also has a special wake up service and offer wedding services.
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William Blue Hotel Melbourne
This has given them a competitive edge especially when they host weddings because they
receive guests’ up to a full capacity.
Focusing on the Market Performance Index, Average rate Index, and the Revenue
Generation Index of Williams hotel, it is clear that we only lead on the occupancy on four days
which are Tuesdays, Wednesdays, Thursdays and Saturdays where we rank at the first position.
These are the days that we offer free wine to the first 500 occupants and a special breakfast to all
the couples. The report indicates that our competitors are ahead of us in the average daily rates
because they have more rooms than we have and also they also have partnered with corporates
who hold their meetings in the hotels. The Pepper Docklands hotel always receives guests
whenever there are events and games in the Etihad stadium. The Tune hotel has a partnership
with its sister airline which helps them to receive more guests especially on weekends. Focusing
on the RevPar, the competitors are leading because they all charge higher room rates compared
to the William hotel.
William hotel requires rate management tactics that will support the improvement of the
hotel’s competitive position and maximize revenue. Firstly, we shall employ a demand calendar
which is a technique that show various demand indicators to suitably analyze market conditions.
This technique contains information such as groups or events last year, exceptional demand
indicators this year and school or bank holidays. In order to determine how the schools or bank
holidays affect the hotel, we shall track arrival statistics of the previous year per feeder market
against their holidays. The second tactic that will enable us to maximize the hotels revenue is
developing a hotel booking curve which consolidates the data pick-up reports and a graph is
developed. In this curve, all the cancellations that happened during this period are recorded and
the reason for cancellation in order to determine if there is something that can be done to reduce
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William Blue Hotel Melbourne
the cancellations. The last approach we shall take is establishing the price positioning matrix.
This technique seeks to establish the price positioning that the hotel employs as compared to
competition in a price or value matrix grid. The pricing technique can penetration pricing
strategy, surrounding pricing, equal pricing or skimming strategy (Kireyev, Kumar & Ofek
2017).
The strategies that enable us to execute the proposed tactics includes the training of all
the staff so as to develop a revenue culture in the hotel. The first technique is to develop
reservation software that will enable customers to book their rooms online and in case of
cancellation, they can also be done online. This will give us enough data to come up with a
booking calendar and revenue curve for our analysis. Secondly, all the staff especially in booking
and reservation department shall be trained on how to use the software in order to ensure
accurate data is corrected before we make our reviews. Lastly we shall predict the demand
depending on the yearly events in Melbourne town to allow early bookings and then raise the
rates as the availability of our rooms’ drops and the demand is rising. We shall also market the
other products that we have like branded towels and branded utensils which will only be
available in our superior room. This will position our superior rooms as the cheapest in the
market.
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William Blue Hotel Melbourne
References
Green, C. E., & Lomanno, M. V. (2012). Distribution channel analysis: A guide for hotels.
McLean: HSMAI foundation.
Chattopadhyay, M., & Mitra, S. K. (2019). Determinants of revenue per available room:
Influential roles of average daily rate, demand, seasonality and yearly trend. International
Journal of Hospitality Management, 77, 573-582.
Ruhanen, L., & Whitford, M. (2017). Indigenous tourism in Australia: History, trends and future
directions. Indigenous Tourism: Cases from Australia & New Zealand. Edited by
Michelle Whitford, Lisa Ruhanen and Anna Carr. Oxford: Goodfellow, chp, 2, 9-23.
Kireyev, P., Kumar, V., & Ofek, E. (2017). Match your own price? Self-matching as a retailer’s
multichannel pricing strategy. Marketing Science, 36(6), 908-930.
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