Using Spa Management Systems to Enhance Profitability

SpaMantra India

www.spamantra.in

November 2011

The spa industry, like all business sectors, is continually monitoring performance to ensure they’re meeting revenue and profit targets.  Software tools have been available for more than a decade to assist directors in managing and enhancing the way they do business. 

The spa software market has matured, and some developers are providing leading-edge solutions that provide significant benefits -- from how the spa’s services are marketed to local clients and tourists, to how staff and transactions are tracked.  Some of the more recent software advances also involve significant reduction in up-front investment through adoption of cloud-based computing. 

A description of a few of the many potential benefits follows.  This is far from being a complete list.

Improved Customer Relationship Management (CRM)

“Technology in a spa provides a conduit for good customer feedback which, in turn, provides a clear synopsis of guest needs and preferences.  This vital data allows you to tailor spa treatments and marketing activities to focus attention on making your spa a more profitable enterprise.”  Warren Kok, Director of Marketing, China National Spa Association.

Perhaps one of the key benefits to employing advanced software is the depth of data they’re able to collect about their guests.  Utilizing software tools, the spa is able to enhance the ways in which they interact with their guests.   They’re able to:

• Build and maintain an extensive database of information on the spa’s guests.  This includes profiles, contacts, treatment history, retail purchases, inquiries and complaints.  The system should ensure that the spa captures and stores data on every interaction between the spa and the guest through all communications including email, telephone, fax, website and personal visits.

• Massage the data into usable, accessible management and marketing information. Ensure the data is up-to-date, allowing you to analyze historical data to identify trends.  Make the data accessible to management and marketing teams on a timely basis, allowing for corrections to stay in-line with preset CRM strategy.  Use the software to develop response and contact strategies that improve customer relationships, team productivity and profitability. 

• Share data across with proper management and marketing personnel to provide staff with a 360-degree view of the guest. This enables your team to provide a better service to the customer, and gives them the tools to identify sales opportunities based on the customer's history and preferences.  This access should be available at any time, 24/7.

A useful spa management system will allow you to improve the frequency and quality of customer contact by automating and personalize customer communications.  Use personal dates that are important to your clients.   There are important dates in every person’s life, such as his or her birthday, anniversary, child’s birth, graduation or job promotion.  Each of these events provide an opportunity to promote the spa’s services and products at a meaningful time to the client.

A personalized email wishing the client a happy birthday, or a special his & her service on their anniversary provides a much greater return on marketing initiatives.  Since these events are significant to the client, the spa has an opportunity to strengthen their relationship and increase future business. 

The spa can also send automatic confirmations for upcoming appointments, which provides yet another opportunity to highlight products and services in a message the client is more likely to open.  These event-based, outbound messages are seen as being less intrusive since they are based on recent interactions.  Some have estimated that event-driven marketing efforts produce response rates five times greater than traditional outbound campaigns.

Consider enhancing your guest relationships further though the use of social media. Gartner Research addresses the growth in the use of social media to enhance customer service, forecasting that 30 percent of leading companies will increase use of this tactic by 2013.  Data from social communities can be used to enhance customer profiles, improving service and guest satisfaction.

Maximize Yield Per Treatment

A significant benefit of maintaining historical data within the system is the ability to use statistics to maximize yield per customer.   Most spa directors will recognize that the demand for treatments greatly exceeds the supply during certain parts of the week, or even certain parts of the day. Using historical transaction data the manager can recognize when demand is strong, when it is moderate and when it is weak.

Using this data, management can set pricing strategies to manage demand at each level.  In times when demand is strong, prices could be increased to bring demand more in-line with supply. For times when demand is weak, enticing local guests with lower priced treatments may be an effective measure to increase demand and boost profitability.

Analyzing demand and setting pricing models is difficult when maintained by pencil & paper, or on a standard spreadsheet.   Effective review of demand, and setting pricing structures, becomes a much simpler task when using an effective management system. 

Employee Productivity

Employee productivity can be positively affected by the installation of an integrated Spa Management System.  By electronically integrating the booking agenda with client profiles and sales data, spa managers can receive daily and monthly statistical reports at the press of a button. 

Of particular value is the ability to know when therapists may have down-time, or time not booked into treatments.  These staff can then be assigned to other tasks, such training for new treatments or cleaning and maintaining another part of the spa.   Analytic tools will inform management that the scheduled staff are working toward making the spa a better place to be.

Reduce Inventory Costs and Out-of-Stocks

Knowing more about the historical sales pattern at the spa’s retail shop, and keeping track of minimum stock levels will assist in lowering the cost of both retail and professional stock.

When inventory and sales records were kept manually, the only way a spa would be able to keep retail items in the boutique and professional items in the treatment rooms would be to maintain a very high level of stock.  Managing inventory turn times and restocking times is a very difficult task when manually maintained.

With a properly implemented retail and point-of-sale system, lower levels of inventory can be stored in both the boutique and treatment rooms.   Each item is given a value that alerts management when these low-inventory levels are met.  Further, the system provides re-stock levels to ensure spa management places an appropriate order with suppliers.

Reducing the Cost of Technology

 ”One of our goals in adopting a corporate standard IT solution is to keep up-front costs as low as possible, and to reduce our carbon footprint while saving on power costs.”  Christine Hays, Vice President, Spa Operations, Oberoi Group.

Historically, spas implementing management software required an up-front purchase of hardware, software and training .. to the tune of US$ 30,000 to US$ 50,000 or more.   This would be for each spa -- a very pricy option for both startups and multi-property organizations.

Economic factors have been pushing spas and small businesses toward cloud computing, an alternative to the costly client-server model.  In broad terms cloud computing is the use of software, platforms or infrastructure offered by web-based service providers.  By eliminating the need for costly servers, locally hosted software and extensive training, a site can realize a significant cost-savings.

Cloud computing service providers focus their operational expenses on IT at a higher level than a business with a dedicated IT department. Because of a sharing of infrastructure, cloud providers can achieve better economies of scale, particularly as their client base grows.   These savings are passed on to the end-users .. the spa. 

An added benefit to adopting cloud computing is the ease of access to the spa’s vital data -- anywhere, anytime.  Spa Directors are a very mobile group.  One day they’re at the Indian Spa & Wellness Association’s Summit in Mumbai, another day in Delhi and then off to Shanghai, Bali, Phuket, New York or elsewhere.  

Placing spa data on the cloud allows managers to access corporate data from their iPhone, iPad or other mobile device.  The manager may be in Paris, but have a need (or simple curiosity) to see how the spa in Delhi is performing.  Cloud computing allows them the simple ability to query spa performance from anywhere.  An interesting bit about the cloud solutions – it can make initial investment much lower while providing easier access to data from anywhere, 24/7.

After a decade or more of various spa software options, the industry has matured and now provides a very robust and reliable set of tools to make a spa more profitable.   Following general market advancements, utilization of spa software has also allowed broader access to vital data allowing the spa to enhance customer service, increase revenues and minimize up-front investment.

Kokopo Village Resorts, Papua New Guinea Addressing IT Challenges in the Developing World

From Gaming & Leisure Magazine

Fall 2011, 10th Anniversary Issue

www.gamingandleisuremagazine.com

Lying just south of the equator, 160km (100 miles) north of Australia, Papua New Guinea (PNG) is part of a great arc of mountains stretching from Asia, through Indonesia and into the South Pacific.   With more than 600 islands, 860 languages and a population of less than 7 million, PNG’s indigenous population is one of the most diverse in the world.

PNG has several thousand separate communities, most with only a few hundred people. Divided by language, customs, and tradition, some of these communities, until recently, were unaware of the existence of neighboring groups only a few kilometers away. The diversity, reflected in a folk saying, "For each village, a different culture," is perhaps best shown in the local languages.

With per capita annual income level at US$ 1180, and an “Ease of Doing Business” ranking of 103 (out of 183 countries) it can be difficult for local businesses, hotels and resorts to find suitable technology partners.   With a smaller pool of technology professionals to draw from, a successful systems implementation can be a significantly greater challenge than we’re used to in the west.

The following is a study of how the Kokopo Village Resort in Papua New Guinea was able to address these challenges and was empowered to achieve their full potential:

Doing business better

Hospitality enterprises often deal with multiple vendors to address varied technology requirements throughout their properties. The result: lack of a centralized, unified, information management system; multiple vendor coordination issues and disjointed processes and views.

When Kokopo Village Resorts decided to adopt a technology solution to keep their business agile and growing, they found a simple answer to this challenge: IDS FortuneNEXT Enterprise. This single, comprehensive offering catered to their multiple functional and departmental needs, helped usher in smarter processes, and improve productivity.

Changing with the times

Kokopo Village Resorts is a beautiful holiday destination in the idyllic settings of Papua New Guinea’s East Britain Province. This holiday home, known for excellent service and customer-friendly practices, was a popular choice with tourists.

However, once Kokopo Town began to emerge prominently on the tourism map, it saw a sharp increase in the number of hospitality ventures. Suddenly, there were more hotels, resorts, cafes and eateries. Kokopo Village Resorts had to rethink their competitive advantage. They decided to automate processes to enhance efficiency and dramatically impact customer experience.

Meeting operational challenges with smart technology

“The competition was increasing in our town and we needed more information then just financial data,” says Douglas Pidi, Kokopo Resort. There were a host of other similar, operational challenges, including:

·        Tracking inventory and tracing material costs;

·        Finding business details such as precise occupancy rates and customer spending;

·        Tracking room availability along with room revenue;

·        Reducing manual efforts and time taken to do the above.

The Resort decided to embrace smart technology to make a difference. While there were many vendors who took a piece-meal approach to solving these challenges, few had a holistic view of the business and technology requirements. Few could provide a seamless solution, which not just countered these issues, but also empowered the business to grow.

A single solution for multiple issues

IDS FortuneNEXT Enterprise emerged as the right-fit solution, with its unique ability to cover all aspects and functions of the Resort’s operations. From managing reservations to tracking inventory, this comprehensive property management solution became a centralized, efficient way of keeping the Resort’s personnel and customers happy.

Additional features that helped the Resort stay future-ready included:

·   Strong reporting and control functions

·   Compliance with local regulatory requirements

·   Plug-and-play interfaces for third-party products to enable seamless hotel automation

·   An easy-to-maintain technical build, which supports faster updates, and greater security

·   100% application uptime and complete scalability

·   No unique hardware investments

·   24x7, live, multi-lingual support, and free user training

Gains, gains, and more gains

Kokopo Village Resort realized the benefits of having a single vendor deploy a comprehensive solution to cover all their requirements. With IDS FortuneNEXT Enterprise, they gained from:

·        Improved profitability. Greater control over everyday operations, which has led to enhanced profitability. Drag-and-drop check-in and check-out, multi-window bill split option, revenue management tools, enhanced audit modules including a night audit feature, and other such intelligent features have also boosted enterprise productivity by an overall 18%. Food and Beverage gross margins have increased by 18.5%.

·        A single, unified view of data for gathering business intelligence. They can now access relevant information based on criteria such as market segments and business sources with a mouse-click, to make critical decisions quickly.

·        Simplified, integrated processes and operations across departments. A single, central solution has resulted in standardized practices across all departments, and a smoother information sharing experience. It has eliminated data redundancies, stand-alone processes, and subsequent confusions. 

·        Better customer acquisition and retention, with more nuanced view of guest profiles and behavior. The Resort can easily see who is a repeat guest, know how much a customer has spent, and go the extra mile to make the stay a memorable one.  Faster processes and ready access to data also means quick responses to queries and requests.

·        Reduced time and increased accuracy in completing essential tasks. An easy-to-use interface, customizable parameters, SMS alerts engine to remind staff of bills and room activities, and other such features has made it simple to navigate through modules and optimize the solution. 

Kokopo Village Resort was able to overcome the obstacles facing a remote resort based in a developing country.  The resort was successful in finding a solution capable of providing for their needs while overcoming technical support issues typically addressing similar markets.

We would like to thank Kokopo Village Resort for their participation in this review.

Kokopo Village Resort website:  www.kokoporesort.com.pg
IDS Softwares website: www.idsnext.com

IDS FortuneNEXT Enterprise: helping hotels smile their way to profitability

For hotels and hospitality enterprises that work around the clock, on-call tech support is as important as the business automation/ technology solution.

Airways Hotel discovered the advantages of a 24x7 support service with their new property management solution. And now they smile all the way to the bank!

Picture perfect… almost

The Airways Hotel, a 25 year-old hotel in Papua New Guinea is part of a reputed hospitality chain in the Pacific; and a business leader in industry trends. A winner of accolades at the World Travel Awards 2010, its uniqueness has made it Papua New Guinea’s leading hotel and the World’s leading Airport Hotel for the year 2010. Located near Jacksons International Airport in Port Moresby, it overlooks the Bootless Bay and the Owen Stanley Range.

The hotel successfully deployed a technology solution to automate their operations, soon began to see glitches in their solution, which started to impact the seamless operations at the hotel.

The management faced problems with the service provider as they had limited access to technology support since they were not a large subscriber at the time. The Airways hotel also grappled with issues like the vendor interface problems and stalled night audits affecting their operational efficiency.

Serving it on a platter/ A more comprehensive note

The Hotel evaluated alternative solutions and implemented IDS FortuneNEXT Enterprise.

The solution integrated all the hospitality functions – from front office to payroll – creating a single, centralised system of operations. It even simplified front desk management, and payroll, and inventory management.

This meant:

·        No lost interfaces, and therefore, no operational delays;

·        Inventory and payroll linked to finance and accounting, for better financial 

      calculations;

·        Smart features, such as the ialert, to allow efficient communication with guests;

·        Informative financial reports to aid decision-making.

The solution’s key modules included: Front Office Management • Point of Sale • Accounts Receivable • Sales and Marketing • Banquets • Telephone Management • Materials Management • Food and Beverages Costing • Financial Management • HR and Payroll • Maintenance Management • Quality Management • SMS Alerts

Additional features helped the Hotel stay future-ready:

·        Strong reporting and control functions;

·        Compliance with local regulatory requirements;

·        Plug-and-play interfaces for third-party products to enable seamless hotel

      automation;

·        An easy-to-maintain technical build, supporting faster updates, and greater security;

·        100% application uptime and complete scalability;

·        No unique hardware investments;

·        24x7, live, multi-lingual support, and free user training.

“The most commendable part is that IDS is open to modification should users request a feature which will enhance efficiency,” said Kevin Yaxley, Executive Director at Airways Hotel.

It all adds up to profits

The Hotel has begun to see the positive impact on key operational areas.

·       Easy and efficient handling of guest queries, quick access to guest history (such as number of visits) for relevant details, expedited check out processes, and efficient guest messaging have enhanced guest management.

·       Improved monitoring (and control) of costs with weekly F&B cost tracking, informative reports and tools to guide revenue management, and data to support financial plans have resulted in an average increase of 15% in the room rates. Revenue and cost management have never been this easy.

·    Reports on market and enterprise productivity measures, insights into the Hotel’s performance in different sectors, data to support assessments linked to critical decisions, and business intelligence to guide strategy – all these have boosted sales and marketing efforts. 

·       A document centre to give front-desk personnel easy access to information, an SMS alert engine, and a drag-and-drop check-in and check-out tool, have all enabled smart work. Implications: reduced time taken to complete tasks and gains in operational efficiency.

·    User-friendly features, touch screen versions at point of sales to post guest orders, easy communication  of guest requirements to bars and restaurants, and reports to aid menu engineering. All these have reduced errors and set the productivity curve soaring. 

IDS Softwares:   www.idsnext.com

Airways Hotel, Papua New Guinea:   www.airways.com.pg

Golf & Spa .. using Business Intelligence in Client Segmentation

 

From Gaming & Leisure Magazine - Summer 2011

gamingandleisuremagazine.com

Golf & Spa, viewed as required leisure divisions by many resorts, have traditionally been marginal contributors to the bottom line.  These departments have often required significant financial and labor commitments with a rather low rate of return on investment.  Savvy leisure managers must consistently monitor activities to ensure they’re doing what is necessary to materially enhance the resort’s revenue stream to be considered viable.  As it is with other departments at the resort, their profitability is essential.

Several Golf & Spa Management systems have been offering Business Intelligence tools (BI) that provide valuable data to assist managers in making appropriate decisions to ensure positive trends are enhanced and negative trends are corrected.  

These BI tools are designed to indicate if revenues are falling or expenses are not in-line with anticipated revenues or budgeted amounts.  The proactive manager will be able to make appropriate decisions to make corrections if enterprise data is provided in a consistent and understandable manner.  BI is of little value if the data is inaccurate or becomes available too late for action to be taken.

Along with the providing revenue statistics specific to the leisure facility, BI systems will provide information on how Golf & Spa activities drive room rates, enhance low season demand, impact F&B revenues, capture new market segments and extend a guest’s length of stay at the resort.

Successful marketing strategies driving a leisure facility’s profitability will often depend on their ability to truly understand their clients and group them according to likely behaviors and potential value.  Segmentation will be most valuable with clients are grouped according to a variety of data including behavior, lifestyle, past golf & spa treatment history, profitability, demographics, etc.

The lifetime spending of a leisure client is a valuable measure for the resort. Clients are categorized into different sets or segments based on this measure. The resort may have different strategies to keep guests happy based on their segment. The strategy would vary between a high-value client that has been a member for years and is on site several times each week versus a guest that hasn't been seen in months. Free guest passes may be a good perk for the high-value client, but free personal training sessions or golf lessons may re-engage a client who hasn't been around in a while.

The impact of BI can be traced throughout the business lifecycle, from converting guests into members, to deciding on a marketing campaign, to identifying which divisions are performing up to expectations, and to the number of spa therapists and golf caddies to be scheduled on a given day. With the reliable BI data, each leisure facility can analyze vital date for each of their fundamental key performance indicators such as Member Sales, Retail Product Sales, Greens Fees and Spa Treatment Sessions Sold.

A summary of some of the client-segmentation issues with BI include:

• Creating manageable segments with targeted activities, such as marketing campaigns.
• Identifying attributes with key requirements of each client group through integrated modeling.  Setting attributes, needs and wants of each member group based on demographic, geographic, attitudinal and behavioral data.
• Establishing triggers to track and assess a client’s migration between segments to understand how marketing strategies have affected behavior.
• Determining segment-specific actions and differentiate the characteristics between the segments.
• Gaining a unified, integrated view of clients by pulling together data from all touch points and channels into a central database.
• Generate more accurate segments by using techniques and predictive modeling analysis to fine-tune corporate metrics.
• Gauge the impact of marketing activities by monitoring member response at all points, analyzing changes in behavior.

An important feature in implementing BI among different departments and locations is the ability to develop consistency in enterprise metrics.  Inefficient business operations had commonly been ineffective in defining these metrics. Different business units had relied on different sources and methods to identify the metrics. In other cases, there would significant manual effort to derive the metrics. Yet another issue was the timeliness of data; the leisure director was not able to extract the relevant information in time to make appropriate decisions.

The ultimate goal in implementing BI effectively is to establish one universal source of current, accurate, and available information. Better information based on uniform data translates to better strategic and operational decisions, which in turn translates to a better bottom-line.

Hotel Security, Data Security & PCI Compliance

As printed in Hotelier Indonesia Magazine, June 2011

www.hotelier-indonesia.com

www.hicmagazine.com

For more than a decade, assaults on the hotel industry have spanned the globe and have ranged from physical attacks to breaches in data security.

Aesthetically designed for a guest’s comfort, most properties were not designed with high security in mind.  In normal times, they didn’t need to be.  However, the industry’s open doors provided an easy target for physical assaults.  Covered by the press ad nauseam, a short list of attacks highlight why the industry had increased security measures for guests entering the facilities:

November 2002 – Kenya. Paradise Resort.  15 people died in a suicide bombing at this costal resort in Mombasa.

January 2005 – Spain. Hotel Port Denia.  A bomb contained in a backpack and detonated in a courtyard of the Hotel Port Denia. 

November 2005 -  Jordan. Grand Hyatt Hotel, Radisson SAS Hotel Days Inn Hotel.  Three bombs exploded within minutes at the three hotels killing 57 people and wounding 110.

March 2008 – Thailand. CS Pattani Hotel.  Among the injured was a Thai senator and local politicians, in what was considered one of the safest hotels in the region.

September 2008 -  Pakistan. Islamabad Marriott Hotel.  A truck filled with explosives detonated in front of the Marriott Hotel in the Pakistani capital Islamabad, killing at least 54 and injuring at least 266.

November 2008 – India. Oberoi & Taj Mahal Palace Hotels.  Indian troops stormed Mumbai's luxury hotels after coordinated terrorist attacks left 78 people dead and more than 200 injured.

July 2009 – Indonesia. Jakarta’s Ritz-Carlton Hotel and the Marriott.  Twin blasts took place at the Ritz-Carlton Hotel and the Marriott, which was also the scene of a bombing in 2003. At least nine people were killed and 50 injured.

August 2010 – Brazil. Rio’s Intercontinental Hotel.  A woman was killed after a group of armed men took 35 people hostage in this upscale hotel in Rio.

The industry has taken significant steps in improving physical security to its guests, ensuring that their entire stay will be peaceful and problem free. To achieve this goal, hotels have deployed robust and professional security policies ensuring safety of its guests, staff and the facility.

DATA SECURITY:  How well is your hotel coping with the challenge of data security?

Data security company Trustwave has reported that 38% of all data attacks in 2009 were against hotels and resorts, making the hospitality industry the #1 target for data breaches.  Ninety-eight percent of data these breaches involved credit card numbers.

Cybercriminals have targeted the industry due to:  a) their large pool of credit card data, and b) their failure to implement basic data security precautions such as changing passwords or ensuring software is up-to-date.

The assault on hotel data systems has reached into leading hotels around the world:

November 2008 – USA & Canada.  Radisson Hotels.  A breach in the hotel's credit-card security system allowed outside parties to gain access to customer credit-card information.  Reports indicate the security system was breached for half-a-year, between November 2008 and May 2009.

November 2009 – USA.  Westin Bonaventure Hotel & Suites.  The Los Angeles-based properties disclose a data breach of its POS Systems dating back to several months in 2009.

March 2010 – USA.  HEI Hotels & Resorts.   Investigations at HEI indicate that guest credit cards had been compromised after the electronic Point-of-Sale systems were breached at multiple hotels owned by HEI Hospitality.  The stolen information included credit card type, number, expiration date, security code and the data contained on the magnetic stripe.

June 2010 – USA.  Destination Hotels & Resorts.  More than 700 guests at 21 Destination Hotel’s US properties were victims of credit card theft when the firm’s IT system was hacked.

It’s of little surprise that hotels are particularly vulnerable to today’s savvy cybercriminal when you consider the number of payment channels used by hotels: internet, telephone, in-person and mail order.

Further consider the number of reasons hoteliers need to store cardholder data for guests’ convenience (reservation hold, incidental expenses, loyalty programs and charge-backs). If the cardholder data is not protected within all applications and databases, data breaches will continue to occur at an alarming rate. 

The industry has been addressing the issue of data security through PCI compliance (PCI = Payment Card Industry). Being PCI compliant essentially means the property has taken appropriate steps to make sure that any credit card data received is safe and secure within the system. If the system is up to standards, then you’ve met what’s called the Payment Card Industry’s Payment Application Data Security Standard (PA-DSS).  

As a guideline, the PCI has issued a comprehensive set of requirements for enhancing payment account data security:

·         Install and maintain a firewall configuration to protect cardholder data.

·         Do not use vendor-supplied defaults for system passwords and other security parameters.

·         Protect stored cardholder data.

·         Encrypt transmission of cardholder data across open, public networks.

·         Use and regularly update anti-virus software.

·         Develop and maintain secure systems and applications.

·         Restrict access to cardholder data by business need-to-know.

·         Assign a unique ID to each person with computer access.

·         Restrict physical access to cardholder data.

·         Track and monitor all access to network resources and cardholder data.

·         Regularly test security systems and processes.

·         Maintain a policy that addresses information security.

Experienced market executives say that education is the first point of interaction and interdiction against payment card fraud. The more educated your employees are about proper handling of payment card data, the more secure your organization becomes.

Whether it is your quality security assessor, your internal IT staff or your everyday employee, each should be trained on the importance of practicing security through PCI standards to ensure ongoing security and help the hotel protect guest’s vital data.

Using Technology to Manage Greens Fee Revenue

from Asian Golf Monthly Magazine

March 2010 issue

www.asiangolfmonthly.com

Revenue Management is a business tool that enables a golf facility to maximize its profitability by managing the price of its fixed and perishable tee time inventory.  It’s a business practice developed in the 1980s by the international airline industry in an effort to maintain profitability in the face of growing low-cost competition and raising operational costs. Later been adopted by the lodging and car rental industries, RM can be successfully applied through technology for managing and improving greens fee revenue.

In short, the use of RM in golf is the selling of the right tee times, to the right golfers, at the right prices, and at the right time.  It provides the ability to match tee times with the golfer’s ability or willingness to pay.  RM also provides the opportunity to mitigate the effects of bad pricing decisions or unexpected downturns in golf course utilization.

Integrating tee times to external systems can also significantly enhance revenues.  Sites such as travel websites (airlines, tourist boards), social networking (Twitter and Facebook), and sms/text messaging portals allow the course to cost effectively notify golfers of tee time availability. 

Most golf facilities will recognize that the demand for tee times vary during the course of a week.  During some periods, demand for tee times greatly exceeds the supply, while other times demand can be moderate or even excessively low.

Using proper data on course demand, golf management can set pricing strategies to manage demand at each level. In times when demand is strong, prices would be increased to bring demand more in-line with supply. Most commonly that would involve tee times on weekends and in the mornings.  In time-slots where demand is relatively low, management can set pricing a bit lower, to encourage golfers to utilize the course on weekdays and in afternoons. Using these two strategies will allow the facility to maintain the higher yield during peak periods, while increasing play during weaker demand periods.

Sample RM Pricing Model:

In this sample case, certain data will be scaled back to simply the presentation.  These however, are the assumptions to be used:

ž            Golfer Classifications

Member

Resort Guest

Local Guest

ž            Date Seasons

Peak Season 1 May – 30 September

Off Season  1 October – 30 April

ž            Time Periods

Weekend Mornings (Peak Season)

Weekend Afternoons (Peak Season)

Weekday Mornings (Peak Season)

Weekday Afternoons (Peak Season)

Weekend Mornings (Off Season)

Weekend Afternoons (Off Season)

Weekday Mornings (Off Season)

Weekday Afternoons (Off Season)

For many golf facilities, the pricing of greens fees for members is either at no cost, or fixed at a relatively low cost without limitations on when they can play.  In most cases, the application of Revenue Management will need to work around the current privileges provided to club members.  Their simple pricing table will commonly look like this:

Golfer Type:  Member
Date Periods	Time Periods	Pricing	Advanced Booking Period
No Restrictions	No Restrictions	No Cost	90 days advance booking

Other than Members, Resort Guests are generally allowed the largest advance booking period in which to reserve tee times.  This is because their golf normally coincides with corporate or personal travel requiring many months of advance planning.

Resort Guests are also the golfers most able or willing to pay higher greens fee rates for premium tee times.  For that reason, greens fees can be structured to charge higher rates during the facility’s peak season and peak time periods, such as weekend morning and holidays.

Generally speaking, the traveling golfer will likely plan their travel to a resort facility when weather and conditions are at their best.  Therefore, golf management can expect to charge the Resort Guest more on Weekend Mornings during Peak Season than at other playing times.

In the table that follows, a Resort Golfer will be expected to pay $180 for a Peak Season Weekend Morning, but only $65 for an Off Season Weekday Morning.   This may encourage some budget conscious travelers to modify their plans to travel during the Off-Season.  The facility’s profitability will increase as the pricing discrimination allows the course to remain at full capacity with higher prices during the Peak Season, while maintaining a sustainable rate and capacity during the Off Season.

Golfer Type:  Resort Guest
Date Periods	Time Periods	Pricing	Advanced Booking Period
Peak Season	Weekend Morning	$180	9 months
Peak Season	Weekend Afternoon	$150	9 months
Peak Season	Weekday Morning	$120	9 months
Peak Season	Weekday Afternoon	$90	9 months
Off Season	Weekend Morning	$110	9 months
Off Season	Weekend Afternoon	$75	9 months
Off Season	Weekday Morning	$65	9 months
Off Season	Weekday Afternoon	$50	9 months

A restriction usually placed on the Resort Guest is that they must have a verifiable hotel reservation at the facility’s lodge.  A cancellation at the lodge could result in a cancellation of the reserved tee time.

Yet another Golfer Classification is the Local Guest, a group that can be used to fill last-minute course vacancies.  They generally will not be willing to pay as much for greens fees, nor will they be providing the facility with hotel occupancy or the higher food and beverage sales associated with Resort Guests.  The Local Guest however, can be encouraged to pay a reduced greens fee (filling last minute vacancies) to enhance the course’s profitability.

In the table below, the Local Guest can reserve a tee time three weeks in advance for the same greens fee rate given to the Resort Guest.  For instance, both the Resort Guest and the Local Guest can pay $180 for a Weekend Morning during Peak Season.  The Resort Guest is given a nine-month advance booking period, while the Local Guest is given only a three-week advance booking period.  The difference is that the Resort Guest has also confirmed a room at the Lodge.  (The Local Guest can upgrade their classification to Resort Guest by reserving a room at the lodge).

In this sample, there is a price-break given to the Local Guest if they book their tee time less than two days in advance.  This discount is offered to fill any open slots on the facility’s short-term tee sheet.

To book and confirm a Weekend Morning tee time during Peak Season, the Local Guest has three options:

•  Book the full list price ($180) up to nine months in advance as a Resort Guest (with hotel room),
•  Book the full list price ($180) up to three weeks in advance (no need for lodging commitment),
•  Book the discounted rate ($120) up to two days in advance.  With this the Local Guest takes the chance that no time slots will remain open.

Golfer Type:  Local Guest
Date Periods	Time Periods	Pricing	Advanced Booking Period
Peak Season	Weekend Morning	$180	3 weeks
Peak Season	Weekend Morning	$120	2 days
Peak Season	Weekend Afternoon	$150	3 weeks
Peak Season	Weekend Afternoon	$95	2 days
Peak Season	Weekday Morning	$120	3 weeks
Peak Season	Weekday Morning	$75	2 days
Peak Season	Weekday Afternoon	$90	3 weeks
Peak Season	Weekday Afternoon	$70	2 days
Off Season	Weekend Morning	$110	3 weeks
Off Season	Weekend Morning	$70	2 days
Off Season	Weekend Afternoon	$75	3 weeks
Off Season	Weekend Afternoon	$65	2 days
Off Season	Weekday Morning	$65	3 weeks
Off Season	Weekday Morning	$50	2 days
Off Season	Weekday Afternoon	$50	3 weeks
Off Season	Weekday Afternoon	$40	2 days

Off Load Last Minute Tee Times.  Loyal local golfers provide the best opportunity for the golf course to sell tee times left open later in the day or for the coming day or two.  Filling the day’s remaining vacant tee times further allows the course to maximize the club to maximize revenues.   This can be achieved through an email blast or sms to registered golfers to notify them of a reduced greens fee for the last minute tee time.  Use of social networking sites such as Twitter or Facebook provide yet another outlet to notify golfers of the special pricing for last minute times.

Other Revenue Management options can also be considered when building the facility’s greens fee pricing structure.  For instance,

ž            Pricing discounts for groups of two, three or four players.  Using the example of a full rate at $180, the course may offer the second, third and fourth golfers rates of $170, $150, $120 if they make the booking together.  A single golfer would remain at $180, two golfers at $350, three golfers at $500 and four golfers at $620.  This would encourage a group of golfers to make a commitment all at one time.

ž            Cancellation fees can be another way to increase profitability while opening the tee time to a new reservation.  This could be structured to provide multiple levels of cancellation fees.  Once example would be:

ž           30% cancellation fee if within four weeks of the tee time,

ž           50% cancellation fee if within two weeks,

ž           100% cancellation fee if not cancelled more than two weeks out.

The purpose of the cancellation fee is to protect the facility’s profitability from a golfer’s changing schedule or the whim’s of their changing desires.   The facility has provided them with the convenience of booking and confirming tee times in advance, and as the tee time approaches it becomes more difficult for the course to fill the time slot with a higher paying client.

The preceding examples are a simplified version of what a golf club goes though to develop a full working RM model.  There will likely be more than three golfer classifications and more than one discount rate for several of those classifications.

Revenue Management does increase the level of complexity in creating greens fee rates, and requires significant research and planning prior to implementation.  Industry studies however, indicate that well-planned RM models provide at least a 2% increase in corporate revenue.