Is Your Organizational Structure Maximizing Your Revenue Potential?

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | July 10, 2016

The evolution of the revenue management industry has been one of 2016’s top trending topics. From the onslaught of big data opportunities to the drastic improvements in the life of the revenue manager, the benefits of revenue management practices and its sophisticated technology have been far-reaching in leaving virtually no revenue stone unturned. However, advanced technology has been accommodating far more in this industry’s evolution than high consumptions of complex data and the bolstering of on-the-job productivity. As the industry continues to propel forward with better insights and more informed strategic opportunities, we’ve also seen a distinctly marked shift in how the role of revenue management is positioned within the organizational make-up of hotel(s) and hotel companies.

Looking closely at the revenue management industry’s past organizational structure, it’s clear to see that revenue management roles within a hotel’s ranks have evolved significantly over the years. From departmental role reversals to critical new job functions to how technology can supplement hotels with limited head counts, there has been no shortage of organizational changes within revenue management. So what exactly does the organizational structure look like now, where is it headed in the future and what are the opportunities for hoteliers to use the industry’s technology and resources to fill their organizational gaps?

Revenue Roles Through the Looking Glass

  • Revenue Management and Sales & Marketing - One of the largest organizational structure shifts to date can be observed by evaluating the dynamic relationship between the revenue management and the sales and marketing departments. While the revenue management department may have directly reported to sales and marketing in the past, they may now find themselves reporting to the hotel’s general manager or a hotel companies chief operating officer instead. This organizational shift can be considered quite telling in terms of how the hospitality industry has strongly embraced the practice of revenue management for not only boosting bottom line profits, but for encouraging its revenue culture to permeate throughout the entire organization.

    How else has the relationship between revenue management and the sales and marketing team been changing? Many organizations have also been experiencing a role reversal between the two departments. Rather than revenue managers reporting into the sales and marketing department (which has historically been the case), the sales and marketing organization is now seeing their reporting structure shift under the umbrella of the revenue management department. The sales organization itself has also been experiencing its own evolution over the recent years - and it has been interesting to observe the changing role of the hotel sales manager and sales team. With the complexity of distribution and digital marketing commanding a larger precedence than before, hotels are beginning to see their revenue and digital teams growing and their traditional sales teams starting to shrink.

  • Revenue Management and Distribution - One could argue the role that distribution holds within the practice of revenue management has experienced one of the most explosive upsurges in the recent past. Having evolved significantly with the influx of new data sources, technology and channels over the past few years, the distribution function could be considered big enough to be on its own – and in some cases, it is. Given the increasing complexity of prices, restrictions, add-ons, channel usage, technology and distribution costs, many hotel organizations have already increased head counts that focus primarily on developing and executing the hotel’s distribution strategy.

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.