Top 10 Revenue Management Issues for 2014 and Beyond
By Trevor Stuart-Hill President & Founder, Revenue Matters | January 05, 2014
Growing pains (again) may best describe what the revenue management profession is going through today. The role of revenue management in the hospitality industry continues to evolve, but it does so in fits and starts. As we look into 2014 and beyond, there are several significant issues that organizations will need to address in order to retain a competitive advantage. I spoke with several leading industry practitioners to get their perspectives on some of the most pressing issues that are rapidly materializing.
1. The Talent Gap
The world was very different in the early 1990's, when the revenue management discipline first began to emerge in earnest within the hospitality industry. In the vast majority of cases, revenue management was seen as a natural extension of the reservation sales function at the unit level. While a handful of brands employed individuals dedicated to the role, most practitioners had other responsibilities within their organizations. This was perfectly sensible at the time since the return on investment (ROI), was relatively unknown within the hospitality vertical, although had long since been proven within the airline industry.
Leadership within the hospitality revenue management profession naturally emerged from homegrown talent. The net result is that decision-making today relies quite heavily on past experience and inference. Compounding the challenge is the generally unfounded lack of trust of "black box" yield decision outputs created by most of today's revenue management systems (RMS), decision overrides by senior leaders not immersed in the daily practice of revenue management and limited visibility into relevant data contained within many property management systems (PMS).
According to Sloan Dean, Vice President of Revenue Optimization with Ashford Hospitality Trust, "tomorrow's revenue management professional will be much more analytical, will likely come from the financial services or investment banking industries and hold an undergraduate degree in economics. Just as ecommerce expertise has come from outside the industry", Sloan predicts, "so too will analytical capabilities of revenue management be enhanced by external infusion".
Several colleges and universities throughout the world have begun to teach courses on revenue management, but in the vast majority of cases these are simple introductory classes with the thrust of their educational emphasis remaining squarely placed on food and beverage, general hospitality management or finance.