As the rebound in the hospitality industry continues, most hotel companies - and certainly the top tier of first-class and luxury hotels and resorts - are experiencing a problem every business should face: customer demand that exceeds supply.

Omni Hotels is a case in point. “Here we are with 40 upscale hotels and more reservation requests than we have rooms for,” says Brad Anderson, Corporate Director of Revenue Management for the Irving, Texas-based chain, whose typical property is an upscale hotel with 350-500 rooms. “Obviously if we have a product that can command the rates we want, we should try to maximize revenue and profitability by making the most prudent decisions in terms of our rates and lengths of stay.”

To that end, Omni Hotels implemented an automated revenue management solution based on technology from Manugistics and The Rainmaker Group. Called OmniCHARM (Centralized Hotel Automated Revenue Management), the system enables revenue managers and sales directors at each Omni property to work together to capitalize on the most profitable and loyal guests among all of their markets.

The result: “We’ve seen about a 3% increase in capture of the total available revenue opportunity, defined as what we would have booked anyway plus what we could have potentially turned away. Through better and more strategic decision-making, and through the suggestions made by the system, we are able to capture significantly more of that revenue,” says Anderson. “As a business asset, our revenue management system has clearly demonstrated its value -- we have achieved a complete return-on-investment in two years, a very aggressive timeframe in our opinion.”

Omni Hotels teamed with The Rainmaker Group in 2003 to facilitate implementation, ongoing product development and support of its Manugistics’ Revenue Management Solution. Today the hotel company has a robust production solution for forecasting future demand and allocating capacity to ensure that rooms are available for the most valuable business. In some cases, this means the customers who are willing to pay the highest room rates or stay the longest; in other cases, it means customers who will spend the most on available amenities in conjunction with a room rate. The system recognizes all of these circumstances and forecasts the optimal result.

Specifically, for each of Omni Hotels’ distinct customer segments, the system calculates how much demand is being generated by each of those customer ‘buckets’ and enables a revenue manager to filter out the undesired lengths of stay for each bucket, based on its rate. For example, it may not be prudent for a revenue manager to take a one-night stay at the hotel’s highest rate versus a three-night stay at a government rate.

Says Anderson, “For any reservation request, the system crunches numbers not just for the day of arrival, our local revenue managers were previously doing that anyway, but it also takes into consideration the entire length-of-stay requested. It goes out into the future and displays reservation data for rolling 13-calendar-month stretches.

“This is something that is clearly impossible for our revenue managers to do manually. The system is constantly processing hundreds of thousands of data points: every four hours for the coming seven days, and every 24 hours from day eight to 90. This kind of analysis makes it a truly powerful real-time revenue management tool.”

A highly sophisticated capability of the OmniCHARM system is the application of an “extra spend” component, based on historical data. The system estimates ‘customer spend’ for in-room movies, mini-bar, telephone, and in the gift shop, restaurant and bar. Having established a total revenue value for each customer, the system then employs filters or restrictions based on that, to suggest that taking a reservation for a lower room rate may be preferable because that customer typically spends more on-property. The resulting estimate of total customer value is then incorporated into the model, allowing Omni to more accurately match customer demand to supply, and reward their valued guests.

Integrates data from disparate sources

According to Anderson, the system has dramatically improved the productivity and decision-making of Omni Hotels’ revenue managers by integrating information from disparate sources. Previously, the revenue managers were tied to their manually generated Excel spreadsheets based largely on output from their reservation and property management systems. Today, having worked with The Rainmaker Group to tie these processes together and make them available in Excel format for easy comprehension, Omni Hotels has a highly flexible solution for generating customized reports that enable revenue managers to constantly take market fluctuations into account in allocating rooms.

“Beyond the dollars-and-cents benefits of our revenue management system, it is providing value by giving us a consistent and cohesive revenue management structure across our organization,” says Anderson. “By integrating and automating what were once fragmented processes, we have dramatically reduced the time our revenue managers spend gathering and inputting data, and increased the time they have for analyzing it. The result: we have made the scope of the revenue manager’s position more forward-thinking and strategic, and that is the greatest productivity benefit of all.”