Mr. van Meerendonk

Revenue Management

Five Things Every Revenue Manager Should Be Doing

By Paul van Meerendonk, Director of Advisory Services, IDeaS Revenue Solutions

According to attendees at this year's HSMAI Revenue Optimization Conference (ROC), revenue managers wear a lot of hats these days. When asked to define their roles before the keynote address, just a few of the many answers included "forecaster, analyst, strategist, system designer, marketing guru, talent manager, social media expert, data miner, sales support and, channel manager." With this many labels, it can be challenging for revenue managers to navigate the arena and decipher the best use of their time and energy. On top of this, faced with a seemingly endless amount of data to collect and analyze, it can also be easy to overlook the big picture, which is developing comprehensive, innovative revenue strategies that maximize profitability.

In order to help revenue managers stay on track and better position their organizations for long-term success, below are five high-level tips for raising the bottom line.

#1 - Collect the Right Data

Amid today's high-speed, interconnected nature of business, one of the most important things revenue managers should be doing is collecting and analyzing the right data-particularly data that is both historical and futuristic. For example, from a historical perspective, data should be collected on booking patterns for various market segments, market conditions, room types, and more. Revenue managers can then look at this information and use it to forecast future booking pace-typically about 90 days ahead. By doing this consistently, revenue managers can more easily compare current and predicted activity levels to the historical data and make adjustments to pricing strategies as needed.

However, collecting all of this data manually takes a significant amount of time and energy. Amid a flurry of flash sales, mobile marketing, and online travel agencies (OTAs), it can be tough for revenue managers to quickly recognize changes in demand and react in time to make a profit. In order to remain competitive, many hoteliers turn to revenue management software, which automatically provides executives with the data they need when they need it-often cutting their daily workload in half. Through a series of high-speed, complex algorithms, revenue management software automatically assesses hotel performance on a daily, weekly, monthly, and annual basis, allowing revenue managers to quickly compare rooms sold and revenue against data at the market segment and total hotel level. Automated revenue management systems also free up revenue managers' time for making more strategic, proactive decisions for their hotels.

#2 - Deepen Customer Intelligence Processes

A key part of collecting the right data also includes customer intelligence. Hal Rosenbluth, former president of Walgreens Health and Wellness, once said about business, "There is only one boss - the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else." As Rosenbluth points out, catering to the customer is critical to staying in business, and it isn't just for marketers and customer-facing staff. In order to truly optimize revenue amid today's uncertain and competitive economy, revenue management professionals must take the time to understand their organizations' customers in order to keep them.

One way revenue managers can do this and acquire increased customer intelligence is by working closely with their organization's marketing team. According to a white paper from SAS, "Competing on Customer Intelligence," marketing has historically been guided by the four P's: product, price, promotion, and placement-and in that order. However, SAS states, "this product-centric business model reflects a company that is inwardly focused on what it wants to sell, rather than outwardly focused on what customers want to buy." By paying more attention to the wealth of data marketers collect on customer demographics, segmentation, and preferences, revenue managers can use it to predict future consumer behavior and put together better packages and prices that will attract people to the hotel. In doing so, revenue managers transform choreographed customer data into insights that lead to better, more informed decision-making and profits for the hotel.

#3 - Think Creatively

As pointed out above, the line is blurring between revenue managers and marketers. Increased transparency in business today-including unbiased customer reviews and prices displayed on internet websites-requires that revenue managers exercise creativity and innovative thinking to get ahead.

For example, many revenue managers panic during times of weaker bookings and start slashing rates in the hope that it will drive up demand. However, research has proven (over and over) that this technique rarely works. In fact, one of the worst things a hotel can do is offer a discount to beat out a competitor and then reduce one of their services to help accommodate for the price reduction-something that may differentiate the hotel from the competition in the first place.

To overcome periods of weaker bookings instead of focusing solely on price, revenue managers should approach the lapse as an opportunity to reiterate what makes their property stand out for guests. This can be done by working closely with the marketing team to offer room upgrades, complimentary services-such as a spa treatment, an exclusive gift, or free Wi-Fi in rooms-or another package that attracts customers.

#4 - Start Learning 'Total' Revenue Management

There is little doubt about it-the future of revenue management is 'total' revenue management-optimizing revenue from all of a hotel's available revenue streams (including rooms, food and beverage, spa, golf, retail, etc.). This has been repeatedly emphasized by several organizations and experts in revenue management, including The Cornell University School of Hotel Administration and, more recently, a panel of experts at HSMAI ROC.

Although it's not a new concept, hotels and resorts are spending more time and energy today refining their tools and processes in order to optimize total guest spend. And because it won't be long before technology evolves to accommodate this new approach, it's a good idea for revenue managers to begin familiarizing themselves with 'total' revenue management and communicating its importance to senior leaders.

A good place to start is moving away from a "room-centric" approach and tracking revenue contribution by market segments. In an article titled "Optimizing Total Revenue Management," Bonnie Buckhiester notes that "hoteliers believe they know instinctively what segments produce better flow-through, but often this information is anecdotal in nature and, at best, is confined to the rooms and/or food and beverage divisions, not ancillary revenues." She notes that by tracking profits on a segment basis and really drilling down to understand each segment's revenue contribution, hoteliers can then better manipulate their business mix to drive profitability.

Ultimately, by taking steps now to prepare for this shift in revenue management mindset, revenue managers can better ensure that their organizations will remain competitive later on.

#5 - Serve as a Revenue Management Ambassador

In addition, as the industry shifts towards total revenue management, it's important that revenue management professionals be not only skilled mathematicians, but also effective communicators for their field. During his keynote address at HSMAI's ROC, Craig Eister-VP of Revenue Management for InterContinental Hotels Group-addressed this issue, saying, "We haven't told our story as powerfully as we need to tell our story to create a really strong revenue management discipline."

Although many general managers and senior leaders understand the importance of having a formalized revenue management process and culture in place within their organizations, still many others do not. And as revenue management continues its domain at the corporate and individual property level, revenue managers must work closely with the executive suite to build and instill a strong culture of revenue management to drive profitability. In addition, in order to practice 'total' revenue management and optimize profits from all hotel assets, revenue managers must obtain executive buy-in across multiple departments; including sales, catering, spa, food and beverage, and more. To do so, they must not only accurately forecast and analyze data, but also effectively communicate revenue management strategies and principles to senior leaders.

The New Face of Revenue Management

In summary, it's an exciting time for revenue managers. The industry is rapidly evolving, and revenue managers that are strategic, forward-thinking and entrepreneurially-minded can take the science and art of revenue management to new heights within their organizations. In addition, equipped with the right tools and data, revenue managers can serve as strategic partners to their organizations-driving up the bottom line through enhanced customer intelligence processes and a greater culture of revenue management.

As Director of Advisory Services for IDeaS Revenue Solutions, Paul van Meerendonk leads a global team of revenue management advisors focused on hotel revenue optimization projects. Mr. van Meerendonk is responsible for global development, management and operations of the Advisory Services team. He oversees the hiring, training and management of industry-leading consultants located in London, Beijing, Singapore and Atlanta. Mr. van Meerendonk also represents IDeaS on industry thought-leadership initiatives related to trends and best practices within revenue management, including authoring a number of white papers, conducting public speaking engagements, as well as leading key client webinars with an average audience of over 200 global representatives. Mr. van Meerendonk can be contacted at +44 (0) 118-82-8100 or Extended Bio...

HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.

Receive our daily newsletter with the latest breaking news and hotel management best practices.
Hotel Business Review on Facebook
RESOURCE CENTER - SEARCH ARCHIVES
General Search:

AUGUST: Food & Beverage: Multiplicity and Diversity are Key

Paul Hancock

Vegetables are no longer served as garnishes or accompaniments but, center stage in the dining scene in this day. Plate design and bold flavors are more paramount than ever. The “wow” effect is in full effect. Guests are more eager to try something new more than ever before. It is entertainment, so it has to be great and throughout the dining experience. There is a cultural shift happening right in front of our eyes with vegetables. Vegetables have been the unsung heroes of the plate for many decades. That is changing. READ MORE

Robert  Hood

What does a restaurant look like in 2017? To define what a restaurant is is a difficult process and not an easy thing to do considering that foodservice has evolved so much and comes in so many shapes and sizes. In 2017 restaurants are not even defined for having chairs or tables for diners or even want diners to stay after the point of food purchase and the sale is completed. This is the world of the ‘QSR’ or ‘Quick Service Restaurant’ and since it arrived it has changed restaurant culture, our food service experiences on an almost daily basis, and begs the question ‘is QSR the new fine dining?’ READ MORE

Chris Ferrier

Many hotels are overwhelmed by the thought of putting together a ‘buy local’ or ‘farm-to-table’ culinary program when they also have to serve many guests. Where do you start? Should chefs contact all the local farms, breweries, wineries, fish mongers, meat and poultry farms in their area? Should they visit each farm? Many years ago, this was what we did; but with 1,200 meals to prepare, often we would clear out the farmers’ goods and still not have enough for what we needed. READ MORE

Bobby Martyna

A key trend in hotel development is making the hotel lobby a destination for guests. Where in the past, the focus was primarily on the guest room, moving forward, brands and independents are looking to transform the lobby into a space where guests can socialize, work, snack and dine. In order for the lobby destination to be both compelling and memorable, the retail design, visual merchandising and food selection need to convey what is special about the location and must work together to deliver a surpassing guest experience. READ MORE

Coming Up In The September Online Hotel Business Review




{300x250.media}
Feature Focus
Hotel Group Meetings: Blue Skies Ahead
After a decade of sacrifice and struggle, it seems that hotels and meeting planners have every reason to be optimistic about the group meeting business going forward. By every industry benchmark and measure, 2017 is shaping up to be a record year, which means more meetings in more locations for more attendees. And though no one in the industry is complaining about this rosy outlook, the strong demand is increasing competition among meeting planners across the board – for the most desirable locations, for the best hotels, for the most creative experiences, for the most talented chefs, and for the best technology available. Because of this robust demand, hotels are in the driver’s seat and they are flexing their collective muscles. Even though over 100,000 new rooms were added last year, hotel rates are expected to rise by a minimum of 4.0%, and they are also charging fees on amenities that were often gratis in the past. In addition, hotels are offering shorter lead times on booking commitments, forcing planners to sign contracts earlier than in past years. Planners are having to work more quickly and to commit farther in advance to secure key properties. Planners are also having to meet increased attendee expectations. They no longer are content with a trade show and a few dinners; they want an experience. Planners need to find ways to create a meaningful experience to ensure that attendees walk away with an impactful memory. This kind of experiential learning can generate a deeper emotional connection, which can ultimately result in increased brand recognition, client retention, and incremental sales. The September Hotel Business Review will examine issues relevant to group business and will report on what some hotels are doing to promote this sector of their operations.