Revenue Management Impacts: How do you measure them?

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | December 18, 2011

While revenue management professionals devote significant effort towards advancing strategies and tactics to optimize revenue, many revenue managers still lag when it comes to establishing and measuring agreed success criteria. This often leaves revenue management professionals to defend their actions to a skeptical audience with insufficient means.

Crucially, many revenue management professionals struggle when it comes to measuring and articulating the impact of their initiatives to senior management. Industry professionals should spend time considering the methods they use to measure the impact revenue management is having on their hotel so that steps can be undertaken to provide a compelling value proposition to their key stakeholders. In order to be truly effective in the job, revenue managers need to understand that devising, implementing and agreeing on "what success looks like", in many cases, is as important as the activities themselves, and will ultimately go a long way towards supporting their success story.

There are however, key challenges that all revenue managers face when looking to measure their success. These challenges include information overload, over analyzing data and unclear or conflicting objectives.

Gone are the days when a business manager had to scramble to get their hands on data. The reality today is that data is often too easy to obtain and the difficulty lies in trying to see through the deluge of data, to be able to translate it into information, then transform that information into measurable strategies. With the ever increasing amount of data available, a revenue manager can easily become overwhelmed and unfocused when looking at what to measure and – more importantly – what not to measure.

With huge amounts of information easily available – and with revenue managers being naturally inclined to love charts and tables – too many revenue managers attempt to understand, analyze and measure every bit of data available and, in the process, lose focus on the critical success factors for the business. "Analysis Paralysis" often results, with a revenue manager rattling off an overwhelming amount of data, tables and charts to a non-data driven and potentially tuned out audience.

While many sophisticated hoteliers set clear objectives and critical success criteria, a surprisingly large number of businesses measure success based on criteria which are unclear, or, in the worst case, conflicting across different business lines. A typical example is the desire by a hotel to drive performance as measured in RevPAR or profitability; while at the same time setting corporate sales objectives, which are purely focused on volume and do not take into account profitability and displacement. Often a big (room night) volume account is considered a "good" account, even though it might not be the optimal business to ultimately support the overall goals of the hotel.

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Coming up in March 2019...

Human Resources: An Era of Transition

Traditionally, the human resource department administers five key areas within a hotel operation - compliance, compensation and benefits, organizational dynamics, selection and retention, and training and development. However, HR professionals are also presently involved in culture-building activities, as well as implementing new employee on-boarding practices and engagement initiatives. As a result, HR professionals have been elevated to senior leadership status, creating value and profit within their organization. Still, they continue to face some intractable issues, including a shrinking talent pool and the need to recruit top-notch employees who are empowered to provide outstanding customer service. In order to attract top-tier talent, one option is to take advantage of recruitment opportunities offered through colleges and universities, especially if they have a hospitality major. This pool of prospective employees is likely to be better educated and more enthusiastic than walk-in hires. Also, once hired, there could be additional training and development opportunities that stem from an association with a college or university. Continuing education courses, business conferences, seminars and online instruction - all can be a valuable source of employee development opportunities. In addition to meeting recruitment demands in the present, HR professionals must also be forward-thinking, anticipating the skills that will be needed in the future to meet guest expectations. One such skill that is becoming increasingly valued is “resilience”, the ability to “go with the flow” and not become overwhelmed by the disruptive influences  of change and reinvention. In an era of transition—new technologies, expanding markets, consolidation of brands and businesses, and modifications in people's values and lifestyles - the capacity to remain flexible, nimble and resilient is a valuable skill to possess. The March Hotel Business Review will examine some of the strategies that HR professionals are employing to ensure that their hotel operations continue to thrive.