Revenue managers still face roadblocks
 
Revenue managers still face roadblocks
11 SEPTEMBER 2013 7:38 AM

Revenue management has come a long way, but those pulling the rate levers still face a number of hurdles in the profession.

NASHVILLE, Tennessee—Revenue managers now are mostly viewed as fully integrated cogs in properties’ profit drives, but the profession still faces obstacles, according to a panel of revenue managers at the 5th annual Hotel Data Conference hosted by STR and Hotel News Now.

Among revenue management roadblocks are:

  • the necessity for clarity in the face of the ever-increasing availability of big data;
  • how to use that data effectively;
  • the importance of developing key relationships to ensure everyone is on the same page; and
  • the increasingly complicated analyses of distribution channels, especially due to the upswing in the use of last-minute booking channels.

“Revenue management has come a long way, but I would hesitate to suggest that we are the Magic 8 ball,” said Alise Deeb, senior VP of revenue management at La Quinta Inns & Suites. “We are coming up with more accurate tools and sitting down with the right people in order to make our businesses more effective and ultimately more profitable.”

Dev Koushik, VP of global revenue optimization, InterContinental Hotels Group, agreed.

“Big data allows us to be more knowledgeable when speaking with sales managers and create marketing calendars, which was not happening before,” he said. “But can we predict demand accurately? What we are doing is absorbing big data and revenue management into the demand calendar. We’re not fully there yet, but I do think sales and revenue management are moving in the same direction.”

The panelists, who represented hotel sectors from economy to luxury, agreed that data should not overshadow the details. As with nearly every facet of the hospitality industry, healthy working relationships are key, they said.

“We do not have as much dip into the data as other panelists, so our challenge is to get the hotel owners to share,” said John Burkard, VP of distribution and technology at Vantage Hospitality Group. “Trust is that main factor you have to get over, but when they buy into this, we believe we can have a significant effect on their revenue management.”

“We’re heavily focused on getting everyone out of the ‘80s and ‘90s and into the information age,” Burkard said of his company, which manages approximately 1,000 properties.

Fingers on the pulse
Data should provide up-to-the-minute information, panelists said.

“The data revolution is going to be increasingly proactive. A forecast made today is useless six months from now. Indeed, revenue managers require daily forecasts as a way of better understanding booking behavior, which I believe is the goal of revenue management,” said Marco Benvenuti, co-founder and chief analytics and product officer at Duetto Research, and a former revenue manager at the Wynn Las Vegas hotel.

Erich Jankowski, senior director of corporate revenue management at Host Hotels & Resorts, a real-estate investment trust that owns 118 hotels comprising approximately 62,700 rooms around the world, agreed.

“Revenue managers—(who are) hypersensitive to changes in rate, which might occur every minute—continually question (average daily rate), increasingly so with the increase in access to data and transparency,” he said.

But the speed of data should not come at the expense of clarity.

“Clarity is critical,” Deeb said. “If 18 data reports are delivered to you, you will most likely want to read them all, but one has to see what is important.”

“In addition, we have to have operations buy-in, even with call centers,” she added. “For example, we can tell call centers how many staff they need based on what we believe hotel demand will be.”

Local knowledge is important as well, said Deeb, who oversees revenue management at La Quinta’s 850 hotels worldwide.

“This year Rosh Hashanah immediately followed Labor Day, and for the first time in many years there is no hurricane threat,” she said. “Such knowledge is critical and should not be overlooked.”

Breaking down silos
Data without context is meaningless, especially for those not accustomed to the field. Revenue managers must respond by working closely with other departments, notably sales, to drive the best possible results for the hotel in its entirety, panelists said.

”There exists all this big data, and then sales just looks at revenue management and asks, ‘Well, what is it you want us to do?’” Deeb said.

The critical question revenue managers need to ask everyone at the hotel is, “How do you feel about paying x for y?” The assumption, she said, is that revenue management is in the best position to tweak rates to maximize ADR and other metrics.

“At our RevPAR Task Force, everyone is at the table,” Deeb added. “We look at different types of analytics across all departments. At La Quinta, sales cannot offer discounts, and marketing cannot offer promotions, if revenue management does not approve them.”

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