Yield Management is now one of the most important management tasks in a hotel. Not too long ago, this process was mostly based on experience and instinct. Today, highly efficient technologies are available to help hoteliers with the distribution at the right price. Automated external solutions are widely available, however, the SIHOT product suite offers integrated modules for rate optimization. Today, we’d like to talk about open pricing and derived rates together with an introduction of SIHOT.Rates+. Have a look at how we can help you achieve optimum rates at all times.
Have you ever wondered, who’s that friendly voice on the phone? I invite you to check out our new section in the newsletter where we will introduce you to the team behind SIHOT.
My team and I are always available if you’d like to talk to us. We hope you enjoy reading this newsletter and we wish you a successful finish of this business year.
Jörg P. Berger
Put a face to the name! In this new section of our newsletter, we’d like to introduce our team, starting with project manager Dr. Michael Wernet. Despite his full schedule, he patiently answered our questions and even offered some personal information.
How long have you been working at GUBSE and what are your responsibilities?
Actually, I grew up with GUBSE, but I officially started working here on 1 February 2017. I studied at the local University where I received my degree. I then worked as a senior business consultant at Senacor AG and gained some valuable experience in project management there.
At GUBSE I deal with a number of certification projects but I also look after “my” clients, i.e. Derag Livinghotels, Sunstar Hotels, Event Hotels, the Lufthansa Conference Center, Meininger Hotels and Arborea.
What is your motivation for working in the GUBSE team?
My main motivation is the variety of challenging tasks with a dynamic, interdepartmental and interdisciplinary team. At the end of the day, I am happy when I can make sure my clients are happy.
To stay on a project from the beginning to end is demanding and motivating at the same time when you see how an idea is finally implemented in a productive way. I have a simple motto in life which always helps me to stay positive: With the right attitude, nothing is impossible.
What do you do when you’re not at work and involved in projects?
I love sports, especially handball, snowboarding, climbing, hiking – any sport, really. I also like reading books and I enjoy cooking and barbequing in summer. In this part of Germany, we have a special kind of barbeque: a grille hanging from a tripod, so the meat swings over the fire in constant motion.
Do you ever get irritated?
Yes, when people tell me “You didn’t think this through…”.
Big city life or country side – where do you find your balance?
Anywhere where there are sports involved – preferably out in the fresh air, weather permitting. Rafting or canyoning in the Alps are favourites, but I also travel to the Mediterranean for snorkelling and diving.
Dr. Michael A. Wernet
Phone +49 (6821) 96 46-0
What are the advantages of open pricing and derived rates?
Open pricing in this context means that any rate can be sold on any day. That is the basic difference to the predefined, fixed BAR levels, which do not permit marginal rate adjustments. The derived rates in turn, allow for the creation of new rates by adding to, subtracting from or changing a percentage of a base rate.
Flexible Rate Structures for Your Rate Management
The mantra of revenue management has always been to sell “the right product at the right price and the right time”. We have then added another dimension with “through the right channel”. The result being that these days, trying to obtain the highest possible revenue has become harder than ever. Customers immediately see the room rates of all competitors in a staggering number of channels, making it difficult to always offer the optimum rate in all of them. Add to that the diversity of the market segments and you have even more factors to consider in your pricing strategy.
Our new module SIHOT.Rates+ is the continuation of our BAR level development. It was designed specifically to build complex rate systems which give you the possibility to quickly adapt rates according to market changes by using a variety of different components. SIHOT.Rates+ gives you flexible rate structures for maximum revenue.
How do you keep track of all your different rates? Easily – by using derived rates! Derived rates reduce the manual rate maintenance to a minimum, as any change to the base rate changes the price of the derived rates at the same time.
Reacting quickly to market changes has become more and more important for the distribution across online platforms. Hoteliers must therefore, establish rate structures that are flexible, yet simple and easy to manage.
Base Rate: BAR Level or Open Pricing?
The starting point of this fast revenue system is a base rate. This may be a regular BAR level or a substantially more dynamic open price. Both are possible – the combination is the key!
The well-known BAR offers an effective way to maximise revenues. The individual BAR levels contain set rates applicable for days with high or low demand and any in between. In the BAR production dialog, you simply specify which BAR level will be applied on which day. Accordingly, bookings show this pre-determined rate.
The open pricing function in SIHOT, however, is a completely open structure, where any price at all is possible. This allows for fluid rate values with small nuances, which may generate valuable extra income for your property.
How to benefit from Derived Rates!
The open pricing function in SIHOT, however, is a completely open structure with fluid prices.
In addition, you can use derived rates in multiple tiers! This is how it works: your base rate consists of a floating price for accommodation only. From this, you derive a rate per room, whereby each category is given a separate price by adding a fixed amount or a percentage. These category supplements, in turn, may vary according to different seasons or specific defined periods. The next tiers may consist of different boards, for example breakfast and half board. Now apply a discount on the rate for half board for arrivals on a Friday or Saturday with a minimum 2 nights stay – and there’s your “Weekend Special”.
Derived rates are very convenient for diversified packages that target specific markets and for special promotions. They are especially useful for corporate business, together with advance purchase and non-refundable rates that are becoming increasingly popular for online booking platforms.
Reservations with Derived Rates
In reservations, SIHOT always shows the final total. No matter if guests reserve online or if your staff take bookings via phone – you only need to enter the chosen package with the rate that SIHOT has already calculated accordingly.
- Practically unlimited possibilities in setting up rates
- Complex rate structures for all selling needs
- Easy to handle and administer internally
- Targeted and market-oriented rates differentiation
- Excellent for use in online distribution
Everyone is talking about the GDPR
Lars Dünker, CIO and member of the board of directors, and Lorenz ter Veen, COO, both of DERAG Livinghotels:
“The EU has set up complex regulations on data protection that provide a basis, especially for corporations. But that’s also the problem, because a regulation is not sufficient to manage the huge amount of different interactions between clients, suppliers and employees in a legally correct way. The result: in many companies, valuable resources are now tied up by bureaucracy. Also, many aspects of the GDPR are ambiguous and arguable, so that each company has to decide for themselves just how much they are willing to risk legally (keywords: image copyrights for photos, Facebook Fan Pages, etc.). It’s up to the individual to decide whether we really need GDPR as it is. A factual added value, however, can only be achieved if checked by officials throughout the EU, which is not feasible given the present staffing situation of the authorities.”