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London revenue managers expect big year
March 14 2012

London hoteliers have a lot to look forward to with a number of unique events taking place in the city this year—as long as sound revenue-management practices pay off.

Highlights
  • Hoteliers are holding on to higher rates; the general expectation is there most likely will be discounting at the last minute.
  • The London Organising Committee of the Olympic Games in April is scheduled to release back to hotels another round of unused rooms.
  • Mandarin Oriental Hotel Group’s brand-level revenue manager is encouraging the company’s property in London to adapt to guest-request trends it sees as the Games draw nearer.
By Jeff Higley
Editorial Director
jeff@hotelnewsnow.com

LONDON—London hoteliers are awaiting a confluence of events that could make 2012 among the most prosperous years in recent memory. Yet obstacles could suppress the opportunities presented by hosting Queen Elizabeth II’s Diamond Jubilee, the Olympic Games and the Paralympic Games.

Those once-in-a-lifetime events, coupled with the usual events such as Wimbledon and Ramadan that fill London hotels, provide plenty of promise if managed correctly, according to a panel of three hoteliers speaking during a roundtable session at the London offices of STR Global, a sister company to HotelNewsNow.com.

 

Neetu Ganesh, cluster revenue manager for Redefine International Hotels

“What I’m trying to understand is, we have all these market forecasts and insights, yet people don’t act on them,” said Neetu Ganesh, cluster revenue manager for Redefine International Hotels, who oversees revenue managers of eight properties in London. “I’ve got London properties that will be directly impacted by the Olympics, and you can see the clear strategy that you adopted from pre-Olympics, during Olympics, post-Olympics and during the Paralympics.”

 

Ganesh said there needs to be different rates set for the peaks and valleys that are experienced even during good times. “You don’t see that reflected in the competitors’ pricing behavior,” she said. “That makes me nervous, and I think that’s what makes the uncertainty come about because we all sort of see our own hotels and our own figures and we’re quietly confident and we think it’s going to be a good month or a good quarter or whatever it is, or a good year, but we don’t always see that reflected in the competitor’s behaviors all the time.”

Last minute discounting
So, in London, hoteliers are holding on to higher rates, and the general expectation is there most likely will be last minute discounting.

There have been some early adopters of an aggressive rate-management program, said Christian Boerger, Mandarin Oriental Hotel Group’s regional director of revenue management for Europe, Middle East and Africa. Those hoteliers have realized the Olympics will not guarantee a full sellout, especially between the opening and closing ceremonies, he added.

“People know the news that the Japanese, the Chinese have been warned not to travel to London near the Olympics,” Boerger said. “We’ve seen numerous of our global corporate accounts advised not to travel near the Olympics as well. So if we can’t fill it with leisure, there will be some serious challenges.”

The London Organising Committee of the Olympic Games in April is scheduled to release another round of unused rooms, and Boerger said that move could spur some activity among hotel revenue managers.

“By that time, people are going to be getting really concerned and opening up the floodgates whereas at the moment it’s full, prepayment, nonrefundable, minimum stay of 10 days or more,” he said.

Redefine Hotels’ Ganesh agreed. “In London … everyone sort of holds out, holds out, holds out, holds out and discounts (at the) last minute, and it’s just bizarre,” she said. “For example, I was looking up August last week, and everyone knows there’s that gap in the middle of the Olympics and Paralympics that’s going to be quiet, yet you still see the prices that are in June and July in that August period. But if everyone knows, why don’t they change that rate strategy?”

 

Christian Boerger, Mandarin Oriental Hotel Group’s regional director of revenue management for Europe

Boerger said his advice to the brand’s 198-room Mandarin Oriental Hyde Park property is straightforward: “If you don’t see the demand coming in, and it’s being very soft and you’re actually getting told that, ‘No I’m not interested in staying with you because I don’t want to prepay my seven days now, especially when I’m traveling on business,’ listen to the customers and adapt,” he said. “The longer they wait, the more difficult it will get because at some point everyone will dump everything.”

 

Janel Hoskins, director of revenue for the 331-room St. Ermin’s Hotel and formerly a revenue-management consultant with Revenue by Design, said the solution might be simple but getting to it isn’t always easy. That’s especially true if a hotel’s corporate headquarters is counting on the property to deliver big results.

“There is that pressure in a lot of hotels,” she said.

London and other European cities
In the meantime, the group’s frank discussion revealed a belief that it’s going to be a lucrative year for London hotels—even if there are obstacles to overcome.

“Even if I just look at this region, Europe as such, I agree that London—if I look at it from a luxury perspective—we will do really well this year,” Boerger said. “If I look outside of London to the other properties, it depends. We’ve got a new property in Paris obviously that’s still in ramp up, so that will take some time. Nevertheless, Paris, the luxury segment, will see some changes.”

He said the Geneva market faces challenges because of its expensive nature and currency-exchange issues, while Prague has problems with oversupply. The company’s Munich property should perform well, and its hotel in Barcelona is still in a ramp-up period.

Ganesh said there will be some problems outside of London.

“We’ve gotten to a stage where the supply is definitely outstripping the demand, and we’re seeing it, in terms of performance,” she said. “It’s been a tough first two months for the provinces. And no doubt that will continue. It might get a little bit better depending on how close you are to London, closer to the Olympics, but properties will probably struggle throughout this year until we see a comeback there. With London, it’s going to be a busy summer.”

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