Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008 - PowerPoint PPT Presentation

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Enter your question in the Q&A box found by hovering over the menu at the top of your screen. You can submit a question any time during the webinar. Any problems - use the chat function and message “Questex Webinar Producer” Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Stowe Shoemaker, Ph.D Dean College of Hotel Administration at University of Nevada, Las Vegas Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Mike Medsker Director, Revenue Analytics & Technology Destination Hotels Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Lyra Hynie, CRME Director of Revenue The New Tropicana Las Vegas Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Stowe Shoemaker, Ph.D Dean College of Hotel Administration at University of Nevada, Las Vegas Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

College of Hotel Administration at UNLV • UNLV works with industries to provide our students with practical knowledge combined with the theory of the art, science and business of hospitality. • This way our students can make an immediate impact on their first job, but also have the knowledge to progress to their third job. This is called the “practice understood by theory.” Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

What Webinar Will Cover • Reservation price and price sensitivity • Introduce concept of price and ways to think about pricing • Steps to better pricing • Behavioral economics and influence on pricing • Value pricing versus cost based pricing Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Les Miserables The duty of the innkeeper is to: • Sell to the first comer, food, rest, light, fire, dirty linen, servants, fleas, and smiles; • Charge for the open window, the closed window, the chimney corner, the sofa, the chair, the stool, the bench, the feather bed, the mattress, and the straw bed; • Know how much the mirror is worn and to tax that; • And, by five hundred thousand devils, to make the traveler pay for everything, even the fleas that its dog eats. Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Steps to Better Pricing – Blueprint for Webinar 1. Assess what value your customers place on a product or service  How to create value  What is the economic value of this product or service to customers Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

The Value- Pricing “Thermometer” Measure of the Objective benefits that the Value product delivers to the Marketing Efforts consumer Perceived Value Consumer’s incentive to Components of Value purchase (PV – Price) Product Price Firm’s incentive to sell (Price – COGS) Cost of Goods Sold From Principles of Pricing by Robert Dolan and John Gourville Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Steps to Better Pricing – Blueprint for Webinar 2. Look for variation in the way customers value the product  Do customers vary in their intensity of use  Do customers use the product differently  Does product performance matter more to some customers, even if the application is the same  How can members of different segments be identified prior to purchase Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Steps to Better Pricing – Blueprint for Webinar 3. Assess customers’ price sensitivity  How to influence the customers’ willingness to pay  Behavioral aspects of pricing 4. Identify an optimal pricing structure  Bundle pricing Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Steps to Better Pricing – Blueprint for Webinar 5. Consider competitors’ reactions  Who are key current and potential competitors  If competitors are currently in this market, what actual transactional prices do they charge  Given competitors’ past behavior, personalities, and organization structures, what is their goal in pricing  What are their strengths and weaknesses Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Example of Measuring Competitors Ownership Financial Who is RM and Promotions Response Rates and Structure Goals what is their Run in Past to our business by background/ promotions channel characteristics A B C D Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Price Response Market Your Competitor Competitor Market Why pricing Value or cost Segment pricing A response B response Segment action taken base. Evidence action/ Response reaction A B C D Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Steps to Better Pricing – Blueprint for Webinar 6. Monitor prices realized at the transaction level Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Percentage of % of revenue Average Spend Guests in Median Room Average Room Cost of Channel hotel gets (100% not including Hotel Given Rate Rate Channel/room ideal) room rate Night Brand Web Site Our Call Center Brand Call Center Call Hotel Direct Walk-in Loyalty Club Members Off Line TA Off Line TA-1 Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Steps to Better Pricing – Blueprint for Webinar 7. Assess customers’ emotional response  Behavioral economics Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Steps to Better Pricing – Blueprint for Webinar 8. Analyze whether the returns are worth the cost to serve  Group pricing  Analysis of whether or not to take group and at what price Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Steps to Better Pricing – Blueprint for Webinar 9. Understand costs  What is the incremental variable cost of sales  At what levels of output will additional expenditures on semi-fixed costs be required, and how much will they be  What are the avoidable (not yet sunk) fixed costs involved to offer this product at the proposed price Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Steps to Better Pricing – Blueprint for Webinar 10. Understand Supply  Cost structure  Capacity utilization  Product perishability  Extent of product differentiation  Number and diversity of competitors  Impact of sales volume on cost Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Steps to Better Pricing – Blueprint for Webinar 11. Understand Demand  Price sensitivity of selective demand  Efficiency of price shopping  Degree of brand loyalty  Industry growth rate  Buyer concentration  Complementary product Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Steps to Better Pricing – Blueprint for Webinar 12. Understand Distribution Channel  Customers that use the different channels Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

The Evolution of Pricing Strategies in Hotels Bundling and other Profitability techniques to change perception of value Strategic Tactic Yield Revenue Pricing based upon Rates vary by Pricing based on Management Management; look value received, not cost season, some customer Systems; much at the total value to produce; Measurement, knowledge DF of the customer consider loyalty Some DF Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Positive Value Value Function Station A ($2.30 – 0.10) 1.0 Losses Gains 1.6 Reference Point (state of well being) Station B: ($2.20 +.10) Negative Value Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Thank You! Stowe Shoemaker, Ph.D Dean College of Hotel Administration at University of Nevada, Las Vegas E-mail – stowe.shoemaker@unlv.edu Phone – 702-895-3308 Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Mike Medsker Director, Revenue Analytics & Technology Destination Hotels Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

We are true to our place, diverse by design. Authentically Immersed Service With A Story Unscripted Discoveries Individually Empowered Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

All channels were not created equal… • Rate efficiency: % of paid room rate captured by hotel • Channel costs: transactional costs paid by hotel • Profit efficiency: margin remaining after backing out variable channel costs Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Rate Efficiency by Channel $0 $100 $60-75 $75-90 $100 Opaque OTA Merchant IBE Wholesale Direct Voice $90 3 rd Party Voice Consortia GDS OTA Hotel Collect Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008

Variable Channel Costs $0 $100 $10-18 $19-25 $3-6 3 rd Party GDS IBE Voice Consortia Opaque Wholesale $13-31 $6-18 OTA Merch Direct Voice OTA Hotel Collect Sponsored by Call-In #: 1-650-479-3207 | Access Code: 668 656 008