Explicit Time/Implicit Space -Untraditional Hotel RM

Traditional Hotel Revenue Management
Revenue management is a key practice in optimizing the profit at hotel. Essentially, revenue management at a hotel maximizes the revenues from rooms by selling the right room to the right customer at the right time for the right price. Generally, revenue management is possible under the conditions of fixed capacity, advanced booking, segmented demand, perishable inventory, fluctuating demand, and high fixed costs and low variable costs. Revenue management at a hotel maximizes room revenues by examining these factors. Space is implicit as hotels define room types. Time is explicit as rooms are typically sold on a nightly basis.
A few resources on the hotel industry are below:

Torto Wheaton Research: CBRE http://www.hotelschool.cornell.edu/research/library/tools/databases/outlook/report.html?twr_id=1501
PKF Consulting
http://www.hotelschool.cornell.edu/research/library/tools/databases/trends/

Casino Hotel Revenue Management
Casino hotels are a completely different beast when it comes to revenue management. The same conditions for revenue management still exist such as fixed capacity and segmented customers, but casino hotels no longer maximize their revenues from hotel rooms, but rather, they maximize the revenues from total customer spend.

The total customer spend includes hotel revenues, but more importantly, gaming revenues. Therefore, "It's not about filling each room, it's about maxing out the profit from each room," explains David Norton, senior vice president of relationship marketing at Harrah's.Even though a guest may not pay for a room, this guest may yield much more money for that room through gaming revenues.

Customer segmentation at casino hotels is completely different from traditional hotels. Usually, customers are segmented according to their willingness to pay for a certain room at a given time and the most desirable customer is the one who is willing to pay the most. In contrast, the most desirable customer at a casino hotel probably pays nothing. These customers yield multiples more from gaming revenues than what they would pay for their room. Their rooms are comped (along with other services) to encourage gambling and to demonstrate that their business is highly valued.

The concept of space becomes even more implicit in casinos as casino hosts who look after high revenue generating individuals have the power to override revenue management systems. The casino hosts may manually reserve the VIP rooms and suites and have even more control over how rooms are sold, or in this case, dealt.

Check-In Time Flexibility
Hotels are the ideal industry to implement revenue management due to the high level of control on space and time. Rooms are defined by the hotel and customers understand the explicit way time is sold – usually on a nightly basis. Since time is explicit at hotels, most have a check-in and check-out time to control the use of the room. However, it is often difficult for guests to arrive precisely after 3pm in order to have a guaranteed room.

With the lack of control on flights and such, customers often arrive at hotels well before the check-in time wanting only one thing: a clean room to deposit their items and relax after their travels. Hence, the Beverly Hills Peninsula pioneered the 24-hour check-in/check-out time policy, that allows the guest to enjoy the room for a full 24-hour stay upon check-in. \Though this policy is very convenient for the guest, it makes it harder for the hotel to control their capacity because of the uncertainty of time arrival and departure.

Capsule Hotels
Revenue management in hotels is effective because of the control of implicit space and explicit time. Capsule hotels push the envelope in the way hotels define space. These rooms are extremely small to accommodate a large density of “rooms” in the hotel. Many are stacked units with absolutely no-frills while others feature flat-screen TVs, video games, wi-fi, and karaoke.
Capsule hotels have existed since the 1980’s in Japan and have only recently garnered acceptance elsewhere.



Yotel is a futuristic, up-scale hotel, whose rooms are 10m2 capsules. Weary travelers with long layovers and jetlag have embraced Yotel rooms at London’s Gatwick and Heathrow airports. These cabin-like rooms appeal to business travelers as they’re complete with mood lighting, showers, wi-fi, i-Pod connections, and flat-screen TVs. Yotel stretches the use of implicit space, but the capsule hotel is also innovative in the use of time. Capsules are still sold by explicit time periods like on a nightly basis, but many hotels like Yotel rent their rooms out on 4-hour time periods.

Love Hotels
Love Hotels are short-stay hotels that allow couples to use the room for whatever lovely purpose. The time a couple spends at a love hotel may or may not be explicit, but it is most certainly untraditional. Time can be explicit as patrons can book rooms in various increments; the room could be occupied for an hour, a period of 3 hours, and overnight.



However, time can also be implicit at Love Hotels as the room may be used for an indeterminate amount of time. Many Love Hotels are preferred for their privacy. Some are configured so that the couples do not interact with any staff. An electronic screen displays vacant rooms to which couples gain entrance with bank notes. A maid is summoned to the room after the couples leave via a trigger on the door lock.

Love Hotels drive significant revenues because they are capitalizing on the time the room is used. A survey revealed that 2.4 couples use a room per day creating a profit margin of 40-50%.