Key Points in Revenue Management in a Down Economy
By Robert Gilbert President & CEO, Hospitality Sales & Marketing Association Int. (HSMAI) | March 15, 2010
Playing on an old proverb, we'll soon see why revenue managers are like tea bags: We don't know how strong they are till they're dropped in hot water. Many of today's revenue managers never have had to deal with low demand or zero growth. The water doesn't get any hotter than that.
Revenue management can be distilled into two simple strategies: maximizing rates when demand is high or maximizing occupancy when demand is low. For the past five to six years before the current recession, the task has been fairly straightforward, focused on maintaining rates in the face of seemingly ever-increasing demand. Destinations prospered from seasons of year-over-year growth measured in double-digits. Would the good times never end?
Alas, the economy moves in cycles. For every peak there's a valley. Our industry - like many other sectors - now toils at a low point. Targets for revenue per available room (RevPAR) are declining. Luxury travel is stung by the AIG effect. Lodging stocks continue to vacillate.
Good revenue managers will evolve. They'll innovate and seize opportunities.
To boost forward-thinking throughout 2009, the Hospitality Sales & Marketing Association International (HSMAI) Revenue Management Advisory Board has outlined strategies that will help revenue managers brew new ideas through this challenging time.