Revenue Management Report

SOFITEL MUNICH BAYERPOST

Team Members
Eva KAPOOR - B00807788
Ngoc NGUYEN - B00802277
Eugénie FOUCHER - B00802110
Camille MARSAN - B00801883
Luc LOMBARD - B00792145
Table of Contents
THE HOTEL ENVIRONMENT ................................................................................................................ 2
Location .................................................................................................................................................. 2
Access ..................................................................................................................................................... 3
INVENTORY ANALYSIS ........................................................................................................................ 3
Food & Beverage Offers ......................................................................................................................... 5
Recreational Activities ............................................................................................................................ 6
Additional information about the hotel ................................................................................................... 7
Loyalty Program ..................................................................................................................................... 7
New Stakes.............................................................................................................................................. 7
Ranking in Destination/Note ................................................................................................................... 8
DISTRIBUTION CHANNELS .................................................................................................................. 8
MARKET & COMPETITORS REVIEWS ................................................................................................ 8
Market Review ........................................................................................................................................ 8
Competitors Review................................................................................................................................ 9
CLIENTELE REVIEW ............................................................................................................................ 10
Current Segmentation Mix .................................................................................................................... 10
STRATEGY & POSITIONING ............................................................................................................... 11
Price Evolution...................................................................................................................................... 12
Differential Pricing ............................................................................................................................... 13
Rate Parity............................................................................................................................................. 14
Revenue Management Principles .......................................................................................................... 15
Room Type Rate Strategy ..................................................................................................................... 16
CONCLUSION ......................................................................................................................................... 17
Customer Feedback ............................................................................................................................... 17
SWOT Analysis .................................................................................................................................... 18
Strategies & Revenue Management Rules ............................................................................................ 18
Best Practices ........................................................................................................................................ 18
Recommendations ................................................................................................................................. 19

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THE HOTEL ENVIRONMENT

Location

Sofitel Munich Bayerpost is located near the historical center of Munich. Munich is the capital of
Bavaria, the largest region out of the other sixteen in Germany. This region also has the lowest
unemployment rate of the country and the second highest GDP in value. It welcomes large
companies headquarters such as BMW, Siemens, Audi, Allianz, Puma and Adidas.

Munich is considered to have the strongest economy in Germany: The Bavarian capital holds the
highest position out of the 30 biggest German companies. Munich also has more than 100 000
students and its two main universities rank among the best in Germany.
The city is also a prime destination for leisure tourism in Germany: not only is the city known for
its annual “Oktoberfest”, but it also features spectacular monuments such as the Marienplatz with
its old and new town hall and the Maximilianeum with its adjacent luxury shopping street.

The Messe München exhibition center, located in the east of the city center, features 18 exhibition
halls, 50 meeting rooms, with a total surface of 200,000 m² of indoor space and 414,000 m² of
exterior space. With more than two million visitors annually, the exhibition halls also serve for
leisure events. Integrated into the exhibition center is the International Congress Center Munich
(ICM) which can accommodate in its 7,000 m² exhibition space events for up to 6,000 people. The
ICM has 20 conference rooms including a 1,300 m² auditorium with a scene orchestra space for
concerts.

In 2018, Munich outperformed its historical performances by welcoming nearly 8.3 million visitors.
Those arrivals generated 17.1 million overnights. Foreign overnights represented 48.9% of total
overnight stays. The USA is the first international tourist market (13.9%) followed by the UK and
Italy (both representing 7.0%).

In 2018, Munich counted 450 accommodation facilities (including hotels, hostels, inns, and hotel
garnis), representing a total supply of 79 746 beds. In all this supply, we have counted 11 luxurious
hotels in 2018 among which Sofitel Munich Bayerpost.

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Access

Sofitel Munich Bayerpost is located in a prime

location near the historical center of Munich.
It also offers direct access to the München
Hauptbahnhof (300 m/2 min of driving time).

This implementation is really useful for

passing travelers, the hotel being really close
to the arriving and departing trains.
Just as the city center, the hotel is surrounded
by the 2R road (1.2 km / 9 min of driving
time), a road that offers a connection with
every highway nearby : A8, A9, A94, A95,
A96 & A99 are directly connecting Munich to
different locations such as Nuremberg,
Stuttgart in Germany, but also to Lichtenstein,
Austria and Switzerland.

The Munchen Flughafen is the international airport of Munich. Located outside Munich suburb
(37,7 km/41 min. of driving time), it is the second largest airport in Germany welcoming 46.2
million passengers in 2018.

INVENTORY ANALYSIS

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4
 Meeting Rooms

Maximum total meeting space: 1,800 m2

Food & Beverage Offers

Category Specificities Max Capacity

Modern French cuisine Restaurant
Délice La Brasserie 'Open show' kitchen
Dinner only 52

Schwarz & Weiz

Breakfast buffet only
Restaurant
2 floors 270

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 Collection of spirits, wines and beers
IsarBar from around the world
Lounge Named after the Isar River which flows
into Munich from the Alps 40
TOTAL 362

+ Room Service available 24 hours

Parking Information

Parking 45€ for 25 hours

Valet service available
Shuttle service from airport at 99€

Recreational Activities

Wellness & Spa

a. Sofitel Spa

• Heated spiral pool, steam bath, sauna, infrared cabin, Kneipp basin, etc
• Massage & treatments using Cinq Mondes & SOTHYS products, the union of Paris and
Munich

b. Swimming pool

c. So FIT Gym Facilities

Family Offers

• Babysitting service
• “Magnifique Family package“: discount of children's room, complimentary
breakfast, late check-out

More

• Bicycle stand

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 • Ingolstadt Village luxury shopping center: Sofitel’s guests benefit as being VIP status with
10% discount on their purchases

Additional information about the hotel

• Built between 1896 to 1900, purposely designed as the Royal Bavarian Main Post Office.
In 2004, Accor operated it as a luxury hotel
• Last refurbishment: New standards in hotel design since 2009 were contemporary themed
suites by German interior architect Harald Klein. Inventions, structures, creations, and
designs are done by Klein and his team.

Loyalty Program
The hotel benefits from ALL - Accor Live Limitless, the Accor’s loyalty program which offers
numerous advantages for card holders, some of them are:
• 5 status levels
• Redeem points: for accommodation, Accor's partner, charities, etc
• Collecting points: from accommodation, restaurants, shopping, ALL Mobility, excursion,
partners, etc

New Stakes
1. Actions Post COVID
• ADR increased for online prices instead of selling the hotel on full capacity (Due to lack of
manpower, not selling full capacity)
• Focus on driving private sales with Accor to drive volume in Summer & December of
2022 and Q1 of 2023
• Focusing on the best flexible offers on the basis of market requirement
• Revising the price point grid to increase gap between standard room and suites
• Using travel advertisements to sell the hotel through packages, that would target specific
countries
2. Digital Investments
• Using metasearch to improve the online ranking of the hotel
• Using visibility boosters on booking.com to increase online visibility
3. Sustainable Development
• Signed the UNESCO Sustainable Travel Pledge

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 • PLANET 21 Platinum Hotel

Ranking in Destination/Note
1. TripAdvisor: 4.5/5, #6 in the rating of destination (Munich city)
2. Google: 4.5/5
3. Booking: 5/5
4. Expedia: 9/10

DISTRIBUTION CHANNELS

● Direct channels
- Accor website
- Sofitel website
● OTA
- Booking.com
- Hotels.com
- Agoda
● MICE
- HRS

MARKET & COMPETITORS REVIEWS

Market Review
Munich Airport is the 2nd largest airport in Germany. In 2019, for the 12th time in the last
14 years, it was named the best airport in Europe and worldwide by Skytrax. It is the most
important business hub in Southern Germany, also is the place that hosts one of the top-selling
trade fairs worldwide including Bau, the world’s leading trade fair for architecture, materials and
systems and Bauma, another world-leading fair that is held every two years for construction and
machinery.
It can be seen that post COVID, there is a rise in the market of Munich. The RevPAR
index of Munich as compared to 2019 is steadily growing and can be seen recovering from 2020.
Although there has been a decrease in the ADR by a mere 0.5%, we can see a steady increase in
RevPAR (By 15% in 2021) and Occupancy Rate (By 15.6% in 2021) and is still growing.
Moreover, it was also seen that travelers are now willing to spend 39% more than they were in
2019.
Source: German hotel market report, May 2022

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Competitors Review

We have identified a couple of competitors located close to the hotel, both five stars. Roomers
Munich, part of the Autograph collection of Marriott - and Kempinski Munich. For pricing, we
wanted to identify rooms that are comparable in terms of size and features.

In comparison to Roomers Munich, pricing was quite similar for the night of February 7th.
However, Sofitel had a lower price positioning compared to Kempinski, which can be a competitive
advantage. It might be because the occupancy rate was very different and higher at Kempinski,
perhaps due to an event or groups coming to the hotel, justifying that they have very few remaining
rooms.

Other competitors include:

• The Westin Grand Munich
• Le Meridien Munich
• Vier Jahreszeiten Kempinski Munchen
• Andaz Munich Schwabing Tor (Hyatt)
• Louis Hotel
• Hotel Bayerischer Hof
• DO&CO hotel München
• Rocco Forte The Charles Hotel

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 • Hotel Muenchen Palace
• Mandarin Oriental Munich

CLIENTELE REVIEW

Sofitel has 2 main client targets: leisure individuals & business individuals and groups

• Leisure individuals
This target comes mostly from German speaking countries (Germany, Switzerland,
Austria), Europe, Middle East, US, UK, Southeast Asia.
They go to Munich because of traveling, using health services, and cultural and sports
events such as Oktoberfest, Champion League, Bundesliga, etc
• Business individuals & groups
This clientele includes mostly businessmen and politicians who are from German speaking
countries, Europe, US, UK.
They go to Munich because of diplomatic fairs, Security Conference, Construction fair,
and other business purposes.
It is noticeable that the German domestic segment has decreased in recent years.

Current Segmentation Mix

Wholesale includes corporate clients, crew members, etc who have long stays with
negotiated contracts.
Transient is short-stayed guests. On weekdays, they mainly come for business purposes.
On the contrary, guests who come for leisure and health services purposes usually come in
summer.

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STRATEGY & POSITIONING

Booking Minimum
Rate Rate Advantages Indexation Other Conditions
Limit LOS
Free Cancellation till
Flexible No Pre-payment Required D BAR None 5:59PM the Previous
Day
Free Cancellation till
No Pre-Payment Required &
Flexible BB D BAR + €30 None 5:59PM the Previous
Breakfast Included
Day
Saver Rate BAR D-5 BAR - 8% None Non-Refundable
BAR - 8% +
Saver Rate BB Breakfast Included D-5 None Non-Refundable
€30
Advanced Saver
BAR D-15 BAR - 14% None Non-Refundable
Rate
Advanced Saver BAR - 14%
Breakfast Included D-15 None Non-Refundable
Rate BB + €30
Rejuvenate, The
Breakfast, Bath & Spa Included D-4 BAR + 13% None Non-Refundable
French Way
No Pre-Payment Required, In- Free Cancellation till
Romance, The
Room Breakfast & Champagne D-1 BAR + 26% None 5:59PM the Previous
French Way
Included Day
Member Rate 5% Off on All Rates D BAR - 5% None

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Price Evolution

• As the date was for a time much far from the current date, there was not much rate fluctuation to be
seen for this particular date.
• However, the dates seemed over the average possibly due to the crowd expected for the Champions
League football game.

• Rule of Minimum Length of Stay applied. Rooms were only available for a minimum stay of 2
days onwards.
• A price drop seen on Sundays for the rest of the week.
• Prices are fairly higher on weekdays. Could be targeting the leisure clientele who are visiting to
attend the concert.

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 • Prices for Oktoberfest were more than double of the regular rates seen, although it is months before
the event.
• Unavailability of many room types to fill the suites and room categories with higher room rates for
8th February, 2023 for last minute bookings.

Differential Pricing

From the grid above, it can be seen that the hotel sells rooms on the basis of segmented micro-
markets and not to mass markets as the rooms are priced differently on the basis of the day of the
week, the occasion, the season and more. From G1-G3 the pricing is low as it is low season when
there is not enough demand in the market. Moreover, it can be seen that on weekends (Thursday to
Saturday) the pricing is lower than that of weekdays (Monday to Wednesday). This could be due to
Munich being a Business Hub and that the clientele is majorly corporate, leading to majority of the
bookings coming from weekdays over weekends as the corporate clientele prefer to book during
weekdays.

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Similarly, G7 onwards we see a drastic increase in the price of rooms. This is in April during which
the trade fair ‘Bau’ is held. As there is more demand for those dates, the prices are higher. At the
same time, there is still weekday-weekend pricing in place.

For G10, the prices are the highest and this is during Oktoberfest, the biggest German festival held
in September when the demand is at its peak and it can be seen that there is a drastic difference
between the low season prices or any other regular day prices as compared to the Oktoberfest prices
of the rooms.

Rate Parity

There is Rate Parity maintained between the Sofitel Website, Booking.com and Expedia. All the
rates of the base category rooms are the same while the differentiation starts at the second category
of rooms. If any promotional discounts or offers have to be applied, it is done on the second room
category and onwards to ensure that rate discrepancy is avoided. Moreover, it can be seen that the
two of the highest room categories (Imperial Junior Suite and Magnificent Apartment) are not
available on any OTA and can only be booked directly from Sofitel’s website.

There was an exception of the Rate Parity on 3 days for the rates of 8th March, 2023 where the rates
of the room were lower on Booking.com than the Sofitel website. This was done as a one-time
experiment to be able to check if volume can be maximized for a low period through Booking.com.
Although a successful experiment, it was not continued to ensure that the visibility of the website
was maintained.

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Lastly, it can be seen that although there is parity between the website, Booking.com and Expedia,
there is disparity between the other OTA websites which offer lower rates and with more flexibility.
This may affect the volume of direct bookings and also the visibility on partners like booking.com
for the hotel. It could be curbed by making dummy bookings and comparing it to rates provided to
other travel agents to ensure overall parity.

Revenue Management Principles

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The first RM principle that applies to our hotel mentions the importance of focusing on price and
not actually pay attention to cost in the strategy. This is clearly shown in the way the price of Sofitel
varies from time to time. Second, is the fact that the hotel sets its prices based on the market. What
is important here is that the hotel must have the best price positioning in order to maximize the
demand and in the end to maximize revenue. To do so, the hotel adapts its prices based on the
competition, on market trends and demand.
Also, the hotel applies the rule to save products for most valuable customers. For instance, the
Classic Room Category is protected and not available online as it is actually kept for potential
corporate or group segments.
In addition, the hotel sells to segmented micro markets. The hotel has in fact different prices to offer
to different segments of customers, which enables a better consideration of client needs in order to
offer them the most suitable price.

Finally, making decisions based on knowledge applies as the hotel has an efficient specific Revenue
Management department which is able to forecast the demand accurately and to forecast consumer
behavior as well.

Room Type Rate Strategy

The hotel follows the degression and

comprehensibility rules when it comes to
pricing.

Room types have fixed differentials between

them. This is an important rule to respect for the
customers to understand as there is consistency
between each room category.

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CONCLUSION

Customer Feedback

The customer satisfaction is high on average, since the hotel offer high quality products and services.
Nonetheless, it is interesting to see that among every high graded criterias, the quality/price ratio is
one of the less good graded. When we are looking through the comment about pricing and customer
expenses, it is interesting to see that among more than 2000 comments only really few are talking
about the room prices compared to the quality, but are more talking about the additional services
prices. They are judged as too expensive, especially the breakfast, costing between 29 and 39 euros
depending on the comments, and it is a shame since the hotel are letting the client go with a bad
taste for some minor services that are not really counting in the business global revenue.

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SWOT Analysis

STRENGTHS WEAKNESSES
• Good positioning among • Limit banquet capacity to host
competitors group catering
• Ideal location for both leisure and • Lack of efficiency of using
business purpose inventories available
• Having a dedicate RM team • Limit offers for kids & family
segment

OPPORTUNITIES
• Tourism in Munich has been back
after the pandemic
• Benefit from Accor ALL, the
loyalty program which can attract a
certain amount of target clients
• Benefit from cultural and sports
events
THREATS
• A dynamic market of 5* hotels in
Munich
• Inappropriate perception for
customers in case the saving of
Standard rooms causes rate
fluctuation.

Strategies & Revenue Management Rules

• Nesting: As there is a hidden category of rooms (Classic rooms) dedicated to a specific segment,
we can understand that Nesting is being followed to allocate rooms to different market segments.
• Competitive Positioning: The rates of the rooms as compared to the competitors is changed as
per the season and demand which helps them utilize both the penetration and skimming strategies.
• Sealing Rule: There are different conditions and flexibilities for different rates, ensuring that the
sealing rule is being applied.
• Comprehensibility Rule: As per the market demand, the rates are adjusted and made
comprehensible.
• Flexibility Rule: It can be seen being applied due to the flexible room rates available.

Best Practices

In term of best practices regarding the market and the competitors, we have noticed several
aspects:
• First of all, the Sofitel offer is aligned with the competition in terms of product and brand
type: most of the competitors are also high-end products from an international group.

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 • Since the hotel is a 5-star hotel, it focuses on excellence with a high quality and a variety
of services. Segmentations important since Munich is a market composed of a lot of
clientele segmentation. This offer quality and diversity is also important to challenge the
competitors and not letting them have a competitive advantage.
• As a result, the hotel can propose a wide choice of offers for a wide clientele ; this ability
give the opportunity to the Sofitel to be seen from the customer as an hotel that can
provides “à la carte” experiences, not only in term of room but in term of overall
experience, for any type of stay, at any price.
• But with all the offer strength, the hotel is also differentiating from its competitor ant the
market practices by using a penetration strategy. This strategy is well balanced since it
does not affect the quality and brand image of the hotel, but is enough to have a true
competitive advantage.The hotel is also not positioning too much on ultraluxury since
there is not gastronomic restaurant, but the same amenities and bet on higher room and
high meeting rooms capacity compare to the compset.

Recommendations

Overall, the Sofitel Munich Bayerpost hotel has a good RM strategy, in cohesion with the
product, the market and its competitor, but some key elements can be improved. Thanks to
all this report, we have determined 3 recommendations that the hotel can apply to improve
the revenue management strategy and reach high objectives:
Closed Member Deals over Reducing Room Rates, Similar to Deals offered to Loyalty
Members, only for periods where occupancy is low
• Overbooking base category room for need periods and allocating 'Hidden Room' or
Classic Room category to maximize occupancy
• Optimally utilizing restaurant spaces for Banquet/Meeting Spaces: Schwarz & Weiz
currently ONLY serves Breakfast

These 3 recommendations are key points for the hotel to improve and are coherent to be applied
together since there is a synergy between them.

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