Royal Plaza on Scotts, Singapore: Harnessing five-star intelligence makes a big difference on the bottom line

Mohamed Yusof Hamzah is a man with a positive outlook on life. He sees every new development in travel technology as an exciting opportunity. As Director of Yield Management and Business Development at the Royal Plaza on Scotts in Singapore, he is using state of the art RMS technology to improve booking quality and boost profitability. In the year to date, room revenue has grown by 20%.

The Royal Plaza on Scotts has been a Singapore landmark for over three decades. 2006 is a very special year for the hotel as it upgrades from four to five-star status.

The hotel is closing for three months to undergo radical refurbishment. Every one of the 495 guest rooms will receive the five-star treatment. Public areas like the lobbies, bars and restaurants will also be refurbished to create a must-stay destination.

Workmen went on site in October. For Mohamed Yusof Hamzah, however, the work to reposition the hotel started three years ago when he set out on an in-depth analysis of the hotel’s guest mix.

“Historically we have good occupancy, split sixty-forty between corporate and leisure respectively. I put that down to great service. We have fantastic staff retention and happier staff means happier guests. There is a direct link,” said Yusof.

With strong volume a given, thanks to the Royal Plaza’s maintained focus on service, he saw a critical opportunity to how the hotel could optimise revenue, and reduce risk.

Looking into the numbers

“We did not want to simply raise rates across the board. Instead we looked at segments. Who was booking and when, where they booked, what kind of rooms were popular. And we did it all manually.”

That meant a lot of late nights spent poring over Excel spreadsheets. “It was hard work, and we did manage to raise our average rates by doing some selective selling. Good– but not good enough.”

One area where Yusof feels his team did make a strong start on the manual system, however, was on geographical distribution. “Our guests overwhelmingly came from Asia but it does not make sense to put all your eggs in one basket. In the last two years we managed to balance our market to achieve a healthy distribution, with a stronger share of guests from North America, Australasia and Europe.”

Selecting a partner for the long haul

Manual analysis had demonstrated the potential of proactively managing guest composition and yield. Now, the Royal Plaza On Scotts wanted to go further and explore full revenue management using a Revenue Management System (RMS) solution.

Yusof had seen RMS before joining the hotel and was impressed by its simplicity. “It gave you the data you wanted, when you wanted it and made it easy to explain the significance of the numbers.”

The solution was only part of the equation. The Royal Plaza On Scotts wanted a partner – a provider that would deliver an evolving set of solutions. “I knew Amadeus well and I watched its evolution into a total IT solutions company. The fact that Amadeus was moving in this direction, and was a global player, was important.”

As important was the Amadeus local presence. “Amadeus has an office here in Singapore and that is key. We want a partner with staff and support in Singapore.”

A learning curve

Implementation started in October 2004 and the system was up and running and ready for use by January the following year.

At first the RMS system ran in parallel with the manual systems, with regular meetings between the Royal Plaza On Scotts and the Amadeus team to iron out routine teething problems. “It takes time to embed this kind of system and identify patterns which you can use to predict future trends. It’s a genuine learning curve and things just get better.”

A big difference on the bottom line

An RMS solution works by processing vast amounts of data and using it to create models. For Yusof, it’s about making sense of complexity and finding answers. “In today’s situation you need to make the right decisions fast. With Amadeus RMS I can make decisions quickly, based on accurate forecasts.”

Headline benefits include the ability to track customer buying behaviour to predict demand and position rates. That is already making a big difference to the bottom line. “When we compare 2005 with 2004 we see room revenue increase by 16%. In 2006 to date we have generated a further 20% increase on room revenue. That incremental alone is worth millions and millions of dollars – and no significant change in our occupancy. This is all about setting better room rates which we can do easily with Amadeus RMS”

In step with the market

Better forecasts help the Royal Plaza On Scotts refine its strategy to stay in step with a fast-moving market. “If the market moves one way we can too. For example, the annual International Textile Machinery Association (ITMA) conference fills every room in Singapore. We kept rooms free three days before the show – and we were the only hotel in town to do that. That meant we mopped up all the late bookings and achieved the highest average rate in town, beating even the five star hotels. My boss was delighted!”

Did playing that kind of high stakes game cause Yusof any sleepless nights? “It would have done. I used to make sure we had a full house a week before a big event like ITMA. With the data I get from Amadeus RMS I don’t have to worry. Stress levels are down – the trust level is up.”

Staying ahead of the game: Amadeus Platinum Services

With Amadeus RMS, the Royal Plaza On Scotts is on a roll but Mohamed Yusof Hamzah believes he can do even better. The hotel subscribes to the Amadeus Platinum Service that includes a Monthly Audit Services Report, which means monthly meetings to discuss strategy and seek improvements.

“One thing we looked at in the Platinum Service meetings was quality of bookings. We categorise bookings as guaranteed or confirmed etc. We want to see the mix of booking quality every day to ensure we convert provisional bookings into firm or quality bookings. In the past we didn’t monitor quality – now we do and we’ve moved from an 80/20 mix of provisional / quality bookings to a 20/80 mix. And we will do even better!”

Bold ambitions for the future

Amadeus RMS has excelled all of the Royal Plaza On Scotts’s yield expectations. But as Yusof stresses, the hotel can do even better. “We talk continually with the Amadeus team to find new ways to maintain our momentum. We want to invest further in technology to make sure we are on top of the e-commerce model”

Moving to floating rates from contract is one specific area under discussion. However Yusof envisages an even more fundamental shift: from revenue management to profit management.

“Today revenue management is a critical success factor for any hotel. We will go even further. Profit management will see us focus hard on the bottom line and look to manage for this. For example, through better management of distribution costs: the rise of e-commerce makes this a vital piece in the puzzle. With Amadeus we have partner who can help us slide all those pieces into place.”