Ms. Noone

Revenue Management

Developing the Revenue Management Talent Pipeline: An Industry and Academia Partnership

By Breffni Noone, Associate Professor, School of Hospitality, The Pennsylvania State University

It is no secret that revenue management is facing a talent shortage. Current revenue management practice requires a focus on managing the profitability of all of a hotel's revenue streams, and hotel companies are looking for emerging revenue managers who have the skill set required to meet that challenge. Amidst growing concern that hotel schools do not make the cut in terms of graduating students who are prepared for the demands of this new era in revenue management, I suggest that a strategic industry-academia approach is needed to develop a viable, and strong, revenue management talent pipeline.

The Right Talent for Revenue Management

The expanding scope of hotel revenue management, from a stand-alone function charged with managing rooms revenue, to an organization-wide initiative concerned with maximizing the profitability of all hotel revenue streams, calls for the right talent pool prepared to meet the increasing demands placed on the revenue management function. There appears to be a consensus on the skill set required of emerging revenue management professionals. In addition to strong analytical and communication skills, revenue managers of the future need to be both forward looking and creative, using data to form actionable strategies, and have the ability to work with, and influence, managers of all revenue streams to drive total hotel profit. However, a significant consequence of the rapidly evolving nature of the revenue management function is the current shortage of talent in the field.

Addressing the Revenue Management Talent Shortfall

Some hotel companies have responded to the revenue management talent shortfall by creating in-house revenue management training programs to develop their revenue management pipeline, while others have been forced to co-source or outsource the revenue management function. But what role are hotel schools playing in providing a talent pipeline? Hotel schools have traditionally been a solid source of talent for the hotel industry, particularly on the operations front, so can't we expect that they will also deliver for revenue management?

In recent years I have listened to a growing concern among industry colleagues that hospitality programs are not addressing the evolution of the revenue management function within their curriculum, and that students are not being adequately prepared to manage revenue, or profit, from a total hotel perspective. A number of factors have fueled this concern:

  • The revenue management discipline arguably represents an example of academia lagging industry. Hotel companies started practicing revenue management about 30 years ago, while until as recently as 10 years ago only a handful of hotel schools offered a dedicated revenue management course.
  • While all of the major hotel schools across the globe now offer a revenue management course, revenue management is not always a required course. In that instance, unless a student chooses to take a revenue management elective - assuming it is offered at a time that they can fit the elective into their class schedule - their exposure to revenue management will be minimal at best. Compare this to longer-established disciplines like marketing or accounting and finance where a sequence of two or more courses is often required.
  • The focus of the revenue management curriculum - with the exception of a few schools - remains largely on the basics of traditional rooms revenue management. So students are not being prepared to approach revenue management from a total hotel mindset.
  • Hospitality management programs are very often siloed by discipline, making it difficult to incorporate revenue management into the curriculum in a manner that supports the integrated nature of current revenue management practice.

So, does this current state of play suggest that hotel schools cannot play a meaningful role in resolving the revenue management talent shortfall?

I suggest not. Rather, I think that an opportunity exists for hotel companies to develop true strategic partnerships with hotel schools to support the design and implementation of a robust revenue management curriculum that reflects the needs of the revenue management profession. The net result: skilled graduates who represent a solid contribution to the revenue management talent pipeline.

Making an Industry and Academia Partnership Work

The idea of hotel school faculty collaborating with hotel companies to work with students on revenue management course projects is not new. So, how different is the strategic industry-academia partnership approach that I am suggesting?

Here, I am talking specifically about a long term partnership between a hotel company and a hotel school whereby both parties make a commitment to investing in the long term growth of a revenue management talent pipeline. But what does operationalization of this type of partnership look like? There are three key aspects of developing revenue management talent in the hotel school setting: the right curriculum (content), the right assessment methods to ensure that students develop the right skill set, and the right internship opportunities to refine acquired skills.

So, how could a partnership work to enhance each of these three areas?

Curriculum Development

I have experienced first-hand the challenges of trying to expand the revenue management curriculum to reflect the dynamic and constantly-evolving nature of the field. A quick lesson in how many universities work - slowly! To add to the revenue management curriculum, hotel schools have 3 options:

  • Add content to an existing course
  • Add a required course, or convert an elective to a required course
  • Add an elective course

Adding content to an existing course is not much of a problem. But, adding courses to the curriculum, not always so easy. There is typically a limit to the number of credits that students are required to take to fulfil the requirements of a hospitality management major. If a hotel school adds a required revenue management course, it effectively has to remove another required course from the curriculum. Then, regardless of whether the school wants to add an elective or a required course, it has to have the resources to teach the course, and typically has a long road to go to get the course approved by the university.

What does all of this mean and where does a strategic industry-academia partnership come into play? To really advance the revenue management curriculum, we are probably, for most hotel schools, talking about making the 2nd or 3rd option listed above a reality. To do so, it is critical that the faculty at large, not just revenue management faculty, understand the rapidly expanding reach of revenue management within hotel companies such that informed decisions can be made about the breadth of the revenue management curriculum that schools want to make available to students. Under a strategic partnership, the hotel partner would be charged with the role of curriculum advisor, advocating for the needs of the revenue management discipline. In that capacity, the frank sharing of concrete evidence of the evolving roles and responsibilities of the revenue management function could serve to inform the faculty at large of the value of the revenue management function to hotel operations.

Given the interdisciplinary nature of revenue management, it is also important that hotel schools consider establishing an interdisciplinary faculty team comprising revenue management faculty and those in other areas, particularly marketing, distribution, social media, and broader service operations management courses, to develop the revenue management curriculum and ensure continuity in, and reinforcement of, course content across complementary courses. Shared insights from a hotel partner regarding interdepartmental cooperation in total hotel revenue management initiatives, including experienced challenges and benefits, would then serve as a guide to the interdisciplinary faculty team as they structure the revenue management-related curriculum.

Design and Development of Assessment Methods

Methods of assessment refer to the assessment tools used to monitor and evaluate student learning. The methods of assessment employed to support the revenue management curriculum need to be carefully designed to enable students to develop the broad range of skills needed to succeed in revenue management. A strategic partnership in this domain entails the collaboration of faculty and hotel partners to design assessment tools - a mix of activities, assignments and projects - that foster students' abilities to leverage data to make tactical revenue management decisions, as well as developing students' abilities to think strategically about revenue management problems.

An essential part of the assessment process is providing students access to real data and allowing them to use that data to develop revenue management strategies and inform revenue management decisions in real time. Industry partners can furnish that data and benefit from the insights that students provide. Also key to the learning experience is the design of feedback mechanisms whereby the students get the opportunity to interact with faculty and industry partners and learn from the decisions they have made.

Development of an Internship Program

Internship programs benefit hotel companies as they are a way of identifying and recruiting some of the best hotel school talent. Yet internships in revenue management are difficult for students to attain, and so hotel companies often miss the opportunity to snap up great recruits. One of the reasons I have been given about why hotel companies do not have internship opportunities in revenue management is that revenue management internship programs are simply difficult to design. Unlike operations where management has a good idea of the capabilities of potential interns when designing an internship program, it is difficult to design a meaningful revenue management internship program when the true skill set of potential recruits is unknown.

One of the benefits of a strategic partnership program is that, through working with a hotel school in curriculum design and assessment, a hotel partner will become very aware of the level of exposure of revenue management students to revenue management concepts, tools and techniques, and the skill set that they can expect of students. From there an internship program can be developed that exploits the skills and talents acquired by students in the classroom, and enables students to make a significant contribution to the company's revenue management initiatives. The net result: students gain the right experience and the hotel company has the opportunity to recruit promising talent.

Industry and Academia Partnership in Action

I have witnessed first-hand the benefits of a strategic industry-academia partnership via the Penn State School of Hospitality Management-Penn State Hospitality Services partnership. I will outline their progress to date in terms of student assessment to highlight the benefits a strategic partnership can yield.

Since August 2015, the School of Hospitality Management at the Pennsylvania State University has been in a strategic partnership with Penn State Hospitality Services who manage the two hotel properties on the Penn State campus: The Nittany Lion Inn and the Penn Stater Hotel and Conference Center.

As part of this strategic partnership program, revenue management students in the School of Hospitality Management sign a nondisclosure agreement with the two hotel properties in order to gain access to live hotel data. The data that the students have access to ranges from BAR reports through to STAR reports and, using the hotel data, students are charged with various projects including making BAR pricing decisions, evaluating the hotels' competitive positioning, evaluating growth opportunities from group and transient segments, and assessing the profit impact associated with changing the customer mix.

The benefits yielded thus far from this partnership program, both on the student and the hotel side, have been significant.

Emily Bowen, Director of Revenue, Reservations and Distribution for Penn State Hospitality Services, recently spoke at the 2016 HSMAI Revenue Optimization Conference, explaining the benefits that the partnership has yielded for the two hotels, with student projects allowing, for example, for more accurate competitor analysis and integration with business intelligence tools, and assisting with the development of business mix strategies.

For students, the partnership has created hands-on experience in revenue management, providing them the opportunity to make revenue management decisions and the responsibility to develop robust arguments to sell their recommended strategies to executive management's decisions.

The program has also led to the creation of cross-discipline revenue management internships at the hotel properties, providing dedicated support for additional revenue management projects and further exposure for students beyond the classroom environment.

No Pain, No Gain: Yielding the Benefits of a Strategic Partnership Requires Commitment and Trust

Strategic partnership programs place significant demands on participating faculty and hotel partners in terms of time commitment and trust. The Penn State experience in the realm of student assessment serves as a concrete example of these demands:

  • Time commitment - Unquestionably, a strategic partnership demands a high degree of time commitment. With student assessment, the project selection phase can be lengthy as the projects that are selected have to fit the criterion of meeting a significant business need of the hotel partner, while also providing a rich learning experience for the students within the time constraints of the typical semester long course. Since feedback and the opportunity to revise strategy based on feedback is essential to the development of the skill set required for revenue management, both the industry partner and faculty have to then engage in project evaluation and provide feedback. The more face time the hotel partner can provide the students during this process, the better the learning experience for the students.
  • Trust - The degree of trust required for industry-academia partnerships to really work cannot be overstated. For student assessment, maximizing the quality of the student experience, and providing them the opportunity to make real decisions, requires that the hotel partner furnish the students with highly confidential data. It also requires that the hotel school puts appropriate procedures in place to protect the confidentiality of that data. The use of non-disclosure agreements is the first step in this process.

So, as you weigh the significant costs of a strategic industry-academia partnership, remember the benefits to be gained:

  • Additional insight for industry partners for revenue management strategy development
  • Practical hands-on experience for students through assessments and internships making them more hirable
  • Industry partners get to "audition" high achieving students
  • Revenue management faculty gain access to the support and resources needed to accelerate their revenue management program

Ultimately:

  • A strong revenue management talent pipeline is created.

The Bottom Line

  • The current revenue management talent shortage problem is unlikely to end any time soon.
    
  • The evolution of the revenue management function will continue to place more demands on the revenue manager than ever before.

  • Revenue management is being implemented more broadly within hotel companies, for example in their limited service and economy brands, requiring more talent to support the revenue management function.

  • The pace of construction of hotels globally will accentuate the need for a strong revenue management talent pool.

Compared to other disciplines like human resource management, accounting, and finance, revenue management is a relative newcomer to the hospitality school curriculum. Strategic industry-academia partnerships, where both partners are committed to developing and strengthening the revenue management curriculum and student experience, may truly move the needle, and develop the potential of hotel schools as viable and robust sources of talent for the revenue management profession for the future.

Breffni M. Noone is an Associate Professor at the Pennsylvania State University School of Hospitality Management. She teaches courses in revenue management and service operations management. Before joining the Pennsylvania State University, she was a visiting professor in the School of Hotel Administration at Cornell University, and was on faculty at the Dublin Institute of Technology, Ireland. Dr. Noone earned her doctorate from Cornell University. She also holds an M.B.S. from Dublin City University, Ireland and a B.Sc. (Mgmt.) from Dublin University, Trinity College, Ireland. Dr. Noone has been honored with many teaching, research, and advising excellence awards. Ms. Noone can be contacted at 814-865-7128 or bmn2@psu.edu Please visit http://www.psu.edu for more information. Extended Bio...

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