The Importance of Getting Sales and Revenue Management Systems and Teams in Sync
By Jean Francois Mourier Founder & CEO, RevPar Guru Inc. | March 07, 2010
It's easy sometimes to think of hotels as static monoliths or simple factory; after all, with a relatively large and expensive physical plant (a building with rooms) and a straightforward, time-tested core business practice (renting the rooms), this is how hotels appear on the surface. But industry insiders- owners, general managers, the readers of this publication- know that nothing could be further from the truth.
The truth is that a modern hotel is more like a symphony, drawing its dynamism from making several unique systems and processes work in concert with one another. Just as an orchestra generates rich harmony from a wildly diverse array of musicians and instruments, a hotel relies on a myriad of specific systems and teams to generate revenue and perpetuate a healthy operation.
But also just like a symphony, without a conductor to get them working together, a hotel's systems and teams can descend quickly into a chaotic mess. Hotels face this challenge every day, coordinating the F&B department with the front office and sales, all while making sure engineering keeps the place running right. It's a tough job to be a GM!
One of the greatest challenges facing hoteliers and hotel managers in terms of getting their symphony well-tuned is synching their sales and revenue management systems. Though it may seem like these two systems in particular would be naturally linked, often these two systems do not work together in an optimal fashion. Too often, in fact, will a hotel have two distinct systems for revenue management and sales, with little to foster interaction between them besides the good intentions of the respective department heads.
The disadvantages of this common situation are obvious, and they are magnified by the very nature of sales and revenue management systems. If revenue management is all about getting the best rate for an available room while maximizing the usage of room inventory, then the process by which these rates are distributed and presented (sales) is clearly of the utmost importance. The worst case scenario, representing total breakdown of the communications process between these two systems and teams, is rooms either going unsold because the sales team is quoting a price too high relative to demand, or leaving money on the table in the form high occupancy obtained by granting too-low rates. Extrapolate these misfires over the course of a fiscal year and, well, the curtain's going to come down on a hotel mighty quick.
There are other, less dire shortcomings born of the lack of sync between sales and revenue management systems. Rates should change constantly, as the basic supply and demand economics governing the sale of rooms changes constantly. Unfortunately for standalone sales and revenue management systems, adjusting and implementing rates in real time can be next to impossible. This is not a failure of the individual systems or teams- revenue management systems and professionals are capable of adjusting rates based on inventory factors, and sales systems and professionals are certainly capable of presenting given rates to willing customers. Rather it is unrealistic (and inefficient) to expect sales and revenue management personnel to commit the amount of time (all of their time!) to making the small, minute-by-minute adjustments in rate that are necessary to achieve the highest level of rate optimization possible. Yet this is what unrelated sales and revenue management systems implicitly demand; sales systems will not automatically adjust the rates offered across the spectrum of sales channels, and revenue management systems will not automatically implement the optimal rates based on inventory availability and demand. Most of these standalone systems require manual updating for these individual tasks, and the limitations of that process limit the effectiveness of these systems.
The Hotel Business Review articles are free to read on a weekly basis, but you must purchase a subscription to access
our library archives. We have more than 5000 best practice articles on hotel management and operations, so our
knowledge bank is an excellent investment! Subscribe today and access the articles in our archives.