By Jon Eliot
Revenue management has grown and evolved in the hotel industry during the past 20-plus years. As part of this evolution, the role of a revenue manager has become a necessity. Whether a dedicated revenue manager, multi-property shared resource or a paid consultant, most properties have invested in some sort of revenue management support. Although revenue management has become an accepted practice, the role of the revenue manager can vary dramatically.
In many cases, the revenue manager’s role consists primarily of report creation and tactical implementation based on direction from some combination of the GM and director of sales. In these instances, the RM is not fulfilling the potential of the position, nor is he actively practicing revenue management. The RM should be an integral part of the decision-making process and provide direction and strategy based on facts, data and analysis. His expertise should not simply be in managing the various systems (CRS, PMS, RMS, third-party extranets, etc.) but in synthesizing data and making sound business decisions to positively affect results.
The challenge becomes shifting the role of RM to one of an influencer and decision maker. This is not to downplay the role of the GM or director of sales in the process or to wrestle “control” away from other leaders, but to add a level of expertise and specific viewpoint on maximizing revenue potential as well as nourishing a revenue-management culture. Some steps that can be taken to elevate the role of revenue management and that of the RM, from the perspective of the RM, GM and director of sales follow.
• Own the Revenue Meeting—I have seen far too many revenue meetings where the RM brings numerous reports and spreadsheets, relays some numbers and waits to be told what to do. The RM’s role should be to not only bring the data, but to come prepared with a strategy based on his analysis of available data and trends. This strategy should be presented to the revenue team using the facts as a basis for the strategy. When disagreements inevitably happen, listen to other points of view and make decisions as a team.
• Provide Conclusions, Not Just Numbers—The RM is constantly asked for numbers and reports. Take this as an opportunity to demonstrate value. The RM needs to make it a rule to never just give someone statistics. Provide a summary of what the data is telling you and what it means. When emailing a spreadsheet, add a brief review of what the information contains. This will not only make it easier for others to pick out what is important, it will aid in positioning the RM as a thought leader.
• Change the Language—When presenting a strategy or tactic to drive results, the RM should have done the due diligence necessary to make that decision and state it with confidence. Language like “I think we should …” or “maybe we could try …” should be replaced with phrasing more in line with “We need to …” or “Our best move is to … ,” and be followed up with the reasons why.
• Be a Team Player—Seek to understand others’ points of view and perspective. A RM should consider the challenges others face in their roles and why they might champion certain strategies and tactics. The RM needs to ensure they are working with, not at odds with, others having a common focus on the hotel’s goals. Part of accomplishing this is educating others about what the RM does and why they make the decisions they make.
• Challenge the Status Quo—The RM is the person who should be asking “Why?” They need to constantly look for new and better ways of achieving optimum performance without settling for doing things because they have always been done. Be an agent for change when needed, but also ensure validation of things that are being done currently.
• Know Your Peers—Develop a network with other RMs in the market. Although you cannot discuss prices or proprietary information, it is always a good idea to talk to your counterparts at competing hotels to better understand local market conditions.
• Be Informed—Keep up on what is happening in the industry. There are some easy ways to accomplish this. Joining relevant groups on sites like LinkedIn will provide access to many interesting discussions. Another excellent resource is subscribing to email updates from some of the many industry specific websites and publications. It is important to learn to filter through the articles and discussions that are sent to you to ensure you are reading relevant information, otherwise it is easy to be overwhelmed with the volume of information. Also, be aware that much of what you see will be authored by vendors who are ultimately trying to promote products and services. Do not ignore these as they can be very useful and informative; simply understand that there may be some bias involved.
Another way to keep informed is to join organizations like HSMAI that focus on revenue management as part of their mission. HSMAI provides many face-to-face and virtual educational opportunities, as well as publications, articles and resources, that address important and timely issues in the discipline. Connecting with your local chapter, most of which have revenue-management specific events as well, provides a built-in network of peers that will help you stay on top of trends.
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Director of sales
• Team First—Ensure the sales team is fully aware of the overall hotel goals and are aligned properly to achieve these goals. Sales managers must strive to achieve their individual goals, but not at the cost of the overarching hotel goals.
• Revenue Management as a Resource—The revenue management department should be positioned so they can provide valuable data and analysis to aid the decision-making process on issues such as: pricing, group acceptance, marketing tactics and goal setting, for instance. The directors of sales should utilize the RM as a business partner.
• Educate—The RM might not have a complete understanding of the sales team’s structure and processes. The director of sales can proactively seek to educate the RM to ensure they fully understand why the team is set up the way it is and what the sales process entails. This education/understanding will assist in building a cooperative atmosphere.
HSMAI Revenue Management
• Build Consensus—The GM of one of the most successful revenue management teams I worked on did an incredible job of letting the director of sales and RM come to consensus. When differences of opinion arose, he would ask probing questions and let us make our arguments and challenge each other. He would participate in the discussion without taking sides and only dictate a final decision when it was apparent a consensus could not be reached. This helped us to learn from each other and, as revenue manager, forced me to be prepared and ready to defend my strategy.
• Support Growth and Learning—Encourage the RM to participate in available learning and networking opportunities. This might include conferences, webinars, networking events and educational opportunities. Have the RM report back on what they learned and who they interfaced with as part of the opportunity.
• Align Goals—I am surprised at how often the question of solving the “conflict” between sales and revenue management comes up. There is really a simple solution: align goals. I worked with a hotel where the sales managers had only roomnight goals. There were no parameters about when the roomnights should be or what kind of revenue they should generate. The sales team was motivated by this goal and quite successful in achieving it. However, the hotel wasn’t making its overall goals. To avoid working at cross purposes, it is important to make sure the entire hotel team’s goals are aligned. Individual goals and targets are definitely a large part of the equation, but everyone should have a stake in achieving the big picture goals. Incentive programs may be dictated from above the hotel level, but the GM can work to ensure goals are established to best support the overall success of the hotel.
• Examine Reporting Lines—To whom does the RM report? The RM would ideally report to the GM. However, based on the team dynamic and experience level of the RM, reporting to the director of sales can work. As revenue management becomes ingrained in the culture of a hotel, the role of RM should answer directly to the GM.
Today’s revenue manager can play a larger role in the overall success of the hotel than ever before. For the potential of the role to be realized, the RM has to take a leadership role and gain the support of others in the organization. It is not always an easy transition and may not be the direction some leaders are willing to take. Just as a revenue manager should have a strategy to achieve hotel goals, they should have a strategy to reach their potential as a leader and influencer.
Special Note: This topic will be explored in more detail on 25 October as part of the 10-part 2011 Revenue Management Webinar Series. The related webinar is titled “Why Does the Revenue Manager Exist? – Elevating the Role of the Revenue Manager.”
Want to Learn More?
This topic will be addressed as part of the 10-part 2011 Revenue Management Webinar Series produced by the HSMAI University in partnership with HotelNewsNow and STR, and sponsored by IDeaS. Each month a webinar covers one aspect of cutting edge revenue management in today's economy in conjunction with articles written by members of the HSMAI Revenue Management Advisory Board. If you’re not able to attend a live program, archives are available. Also, some of these and other timely revenue management topics were the focus of the HSMAI Revenue Optimization Conference on June 20, 2011. Presentation recordings are now available in the ROC 365 Conference Archive.
About the Author
Jon has over twenty years experience in the hospitality industry at the property, regional, and brand levels working across a variety of brands and industry segments. In his most recent role as Director of Revenue Optimization with Carlson Hotels, Jon was responsible for the development and delivery of revenue enhancement programs and strategies as well as training and development of revenue management staff. During his tenure with Carlson, Jon created a subscription-based revenue management program and was integral in the conception, development, and deployment of a leading edge automated price optimization system. Jon is currently seeking new opportunities in the hotel industry. He serves as vice chair of the HSMAI Revenue Management Advisory Board.
The opinions expressed in this column do not necessarily reflect the opinions of HotelNewsNow.com or its parent company, Smith Travel Research and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.
About the HSMAI Revenue Management Advisory Board
The Revenue Management Advisory Board leverages insights, emerging trends, and industry innovations to guide the development of products and programs that optimize revenue for hotels. www.revmanagement.org
• Chris K. Anderson, Ph.D., Professor, Cornell University
• Christopher Crenshaw, CRME, Vice President, Marketing Intelligence, Loews Hotels
• Kathleen Cullen, CRME, Corporate Director of Revenue Strategies, Heritage Hotels and Resorts
• Sloan Dean, CRME, Vice President of Sales & Marketing, Interstate Hotels & Resorts
• Jon Eliot, CRME, CHA
• Tammy Farley, Principal, The Rainmaker Group
• Fred Heintz, CRME, Director of Group Strategy, Marriott & Renaissance Hotels of New York City
• Jay Hubbs, Director Hotel Supplier Relations, Expedia Partner Services Group / Hotwire
• Burl Hutchison, CRME, Manager of Revenue Optimization, Sabre Hospitality Solutions
• Warren T. Jahn, Jr., Ph.D., Manager, Revenue Systems Training AMER, IHG
• Klaus Kohlmayr, Senior Director, Consulting, IDeaS Revenue Optimization
• Orly Ripmaster, CRME, Senior Analyst, STR Analytics
• Scott Roby, CRME, Vice President, Revenue Management, Evolution Hospitality
• Chinmai Sharma, Vice President, Revenue Management, Wyndham Hotel Group
• Susan Spencer, Market Director - N. America, ChannelRUSH
• Trevor Stuart-Hill, CRME, President, Revenue Matters
• Paul Wood, CRME, CHBA, Vice President of Revenue Management, Greenwood Hospitality Group