Hospitality & Gaming - Case Study

Omni Hotels & Resorts Grows RevPAR & Market Share

Omni Hotels & Resorts (www.omnihotels.com) exists to give its guests an authentic feel for the local flavor in leading business gateways and leisure destinations across North America. From exceptional golf and spa retreats to dynamic business settings, each Omni property blends seamlessly into the local culture while featuring four-diamond services, signature restaurants and unique wellness options.

Established in 1958 and headquartered in Dallas, Texas, the Omni brand has 60 international luxury destination hotels in the United States, Canada and Mexico. The company manages approximately 21,000 rooms and has roughly 18,000 associates. Omni had been using ARMS, a legacy Rainmaker revenue management system, since 2002.

THE CHALLENGE: Significant systems change

Prior to 2008, Omni had utilized buckets of rates and would manage them the same, regardless of the price disparity between rate codes within the buckets.

Brenda Gordon, Corporate Director of Revenue Management for Omni Hotels & Resorts, joined Omni in February, 2008. She recalls it being a year of significant change. “When I joined Omni, we were in the midst of implementing a new central reservation system and moving from the Rainmaker legacy system to a new revenue management system (RMS) that could give us precision pricing and grow RevPAR,” said Gordon.

Against the 2008 backdrop, they evaluated four solutions before selecting Rainmaker’s guestrev solution. With guestrev they were able to introduce a new Best Available Rate (BAR) pricing concept in which the system would be tasked with:

  • Forecast demand in two methods to serve customer segments representing non-incented and incented demand
  • Setting hurdle rates
  • Ability to handle multiple types of revenue, including room revenue
  • Basing the BAR on arrival date and full pattern length of stay (FPLOS)
  • Enabling multiple non-overlapping segment events on a single day
  • Allow for different constraining fractions by customer segment, as well as lost business sub-type

“Our challenge and, by extension, our expectation was for the new revenue management system to be able to look at every single rate and tell us if we were satisfying the minimum requirement in the rate it recommended,” said Gordon. “Anyone can sell out a hotel when there’s excess demand for one day. Every day, our charge is to manage guest mix and stay pattern to achieve the highest RevPAR and maximize revenues.”

THE SOLUTION: Implement a Revenue Management Solution

With guestrev, Omni could now accurately forecast demand, delivers precision pricing and the flexibility to adjust market share growth to a changing and growing hotel portfolio.

A key driver in the selection process was guestrev's ability to forecast demand accurately and deliver precision pricing in a manner that would enable Omni to control the lengths of stay.

“We knew we wanted to do length of stay pricing,” said Jamie Pena, Omni’s Vice President of Revenue Strategy & Global Distribution. “guestrev is built to protect longer lengths of stay, which we believe is what drives RevPAR.”

Another important driver: Could the system dynamically change discounts during higher demand periods?

“Let’s say we’re anticipating a sellout next month, on a particular day, in a particular city,” Pena explains. “guestrev anticipates that sellout and sets hurdle values for each stay date to keep us from booking lower-rated discounts in the future. As BAR demand comes in – and a lot of the time BAR demand comes in after the discount demand – our Revenue Directors will look at stay dates and guestrev's hurdle recommendations, the goal of which is to ensure we’re saving room for our higher-rated business.”

“Recommendations can be overridden, but,” adds Pena, “we have all our hotels on autopilot every night and I think that says a lot about the quality of the system.”

THE RESULTS: Multiple Consecutive Years of Growth in RevPAR Index and Market Share

Since the implementation of guestrev, Omni Hotels no longer manages by buckets and now yields different rate plans with exact precision.

The international luxury hotel group has posted year over year RevPAR index growth consecutively since 2009, consistently outperforming competitors and has grown market share.

“Our revenue management system is one of the primary factors behind our multi-year run of successes,” said Pena. “There are other contributory factors, certainly, but the system clearly helps us support and execute on our strategies.”

Omni Hotels & Resorts brand continues to grow. What was true in 2008 when Ms. Gordon joined the company is still true today, Omni’s growth is driving change. It’s one of the reasons they leverage Rainmaker’s unique methodology of Total Guest Value, which is credited with boosting revenues from 5 to 15 percent since 1998 at numerous hotel properties.

Says Gordon: “Our portfolio has changed so much. We’ve gone from thirty to sixty hotels. We’ve added a lot of convention center hotels and resorts to our portfolio. When you look at the percentage of room revenue contribution to total contribution within our company, it’s changed dramatically over the last few years. We’re now looking to broaden our use of guestrev to assess total spend and manage customers spend behavior, rather than just relying on it for room revenue behavior.”