The Hotel Asset Manager's Role in Creating Value Through Revenue Management
By Kristie Dickinson Senior Vice President, Business Development & Marketing, CHMWarnick | October 12, 2014
Ask any hotel asset manager what they are focused on these days and revenue management will undoubtedly be at the top of the list. Demand has reached record levels and supply growth remains largely in check, setting the stage for what promises to be another year of healthy RevPAR growth (forecasted in the four to six percent range, depending on the source). With strong gains in revenue comes increased profit potential. Exactly how much revenue will be realized from incremental sales lies squarely in the hands of revenue managers, who must grapple with an ever expanding distribution landscape and rising guest acquisition costs. The complexities surrounding hotel revenue management, coupled with its influence on bottom line results, has garnered much attention by hotel owners and investors, and by extension, the asset managers responsible for aligning operating team efforts. Hotel asset managers can help shape and support the revenue management function to ensure hotels achieve their profit targets and ultimately optimize the asset's overall value.
Taking the Pulse
It is fair to say that most hotels are employing revenue management practices today, and have some level of resources dedicated to the effort. Despite a marked improvement in talent and a general focus on revenue management as an industry, there still is a broad range of skill levels from one property to another.
Some hotels have a dedicated revenue manager on site, while others participate in a "cluster", whereby the revenue management function is centralized and includes oversight responsibility for several hotels in a given region. Each structure presents unique opportunities and limitations which need to be navigated. Some revenue managers approach the role as an analytic discipline, relying heavily on data and trends to forecast demand, make pricing decisions and develop specific strategies by room type and segment. Others are more reactive and focus their time managing channels with little to no strategy to support their efforts. At some hotels, revenue managers serve as members of the executive committee and direct the efforts of revenue management (and profit maximization) across transient and group sales, as well as other operating departments. Other revenue managers are compartmentalized and focused primarily on transient rooms. A team's ability to effectively apply revenue management practices will also vary based on resources available at the corporate/brand management level, including revenue management systems, training and market intelligence.
Having assessed and worked with a wide variety of hotels, asset managers are adept at identifying where operating teams fall along the spectrum and offering immediate recommendations for improvement. Such recommendations may include realigning the organizational structure, making an investment in systems and training, identifying the need for additional talent and resources, and possibly revising goals and incentives in support of optimizing revenue management efforts. Although asset managers can be equally effective in identifying opportunities with both basic and highly sophisticated revenue management teams, being able to quickly assess the situation and outline a clear path is the first critical step.
It all Starts with a Strategy