Today’s Revenue Management Culture: Success through Collaboration with Sales

By Barb Bowden Director, Corporate Revenue Management, Peabody Hotels | September 23, 2012

Revenue management is an evolving discipline. For almost two decades, revenue management and its role in operations have been discussed in numerous articles. Each dissertation that explored the role seemed to reveal new opportunities to leverage revenue management in hotels as the revenue manager expanded his or her responsibilities beyond the reservations office. Before revenue management was considered a viable partner in hotel operations outside the reservations office, I began my career like many other revenue managers at the time when rarely were we seen outside those four walls—and, there certainly was not a place at the Executive Committee table for a revenue manger.

Perceived as having a narrow view of data, revenue managers were considered the gatekeeper who must ensure controls were in place to reject business that did not meet established criteria. Insight into the sales process was not offered to revenue managers, which made it difficult for most revenue managers to fully understand each customer’s potential lifetime value. Revenue managers were even considered a bottleneck to booking business, a source that could do nothing more than generate reports upon request.

Forward-thinking revenue managers have made significant strides in sharing their analytical resources to elevate the role for shared success. Revenue managers now serve a critical role within hotel senior leadership teams, alongside the general manager, sales and marketing, and operations associates who work in a collaborative effort to produce results geared at meeting the expectations of hotel ownership. Senior revenue management professionals, who now are identified with a director or VP title, are presently serving in a role that requires much more than business acumen to succeed. Our consumers are becoming more sophisticated with ever-increasing options and resources to make purchasing decisions thereby requiring our systems meet demand with highly coordinated efforts in order for hotels to anticipate our customer’s needs with strategic sales and marketing that enables us to sell the right room to the right client at the right time for the right price—all while ensuring we are meeting our owner’s expectations to achieve profitability, of course. Revenue management has evolved with our business and now requires us to adapt with a new commitment to collaboration at all operational levels to exceed guest and owner expectations.

Owner Involvement

Hotel operations are most effective when managed from the inside-out with management that balances expectations from ownership with front-line guest experience. In order to create exceptional experiences for our guests, we must have a solid internal operation. By implementing processes that are designed to meet our internal stakeholders’ goals, we can create efficiencies that allow our associates to “go the extra mile” to ensure guest satisfaction.

Expectations from owners often seem simple—to achieve profitability goals while increasing the long term value of the asset; however, owners, who have been through the painful and long recession, now seek to take a more active role in the hotel management as the economy starts to recover. More frequently than in the past, we see owners requesting detailed audits, benchmarking reports and on-going market analyses as owners become involved at the hotel-level in identifying opportunities to streamline operations and profit. Revenue managers are called upon to develop detailed proformas that identify tighter expense margins, as well as more aggressive GOP and cash flow projections. In order for today’s hotels to focus on a strategy to achieve the target NOI, which starts with the top line revenue, revenue teams are now challenged to create short- and long-term strategies to meet such aggressive goals.

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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.