The Future of Revenue Management
By Lily Mockerman Founder, Total Customized Revenue Management | July 02, 2017
Revenue Management is a quickly developing and growing field as it strives to adapt to changing trends and technology. There are still many opportunities to enhance the true potential of this discipline. Whether in the areas of metrics, departmental cooperation, technology and social trends, or multiple revenue streams, there is much for revenue management professionals to tackle on any given day. The future of Revenue Management will quickly be defined by those with the vision and ability to harness the evolution of each of these areas.
Today's Revenue Managers have already overcome many challenges which arose as this discipline grew from yield management to a standalone department in many hotels. Although some companies still struggle to grasp the importance of revenue management as a singular discipline rather than an add-on to a front office, reservations or accounting role, most companies have come to understand the benefits of a dedicated, focused individual working towards optimization of their pricing and distribution. However, in today's world, there is much more to Revenue Management than pricing a base room type and making sure that a hotel has a listing on Expedia.
On that note, Revenue Managers are faced with an array of challenges that include advanced tactics like channel optimization, distribution cost management and room type optimization. In case that is not enough, Revenue Management is sometimes asked to function as a miniature IT department, with most companies looking to the revenue management department to be the experts in the PMS, CRS, GDS and RMS systems.
The detailed nature of these systems when it comes to building content, revenue structures, or finding ways to use the system to optimize when it may not particularly lend itself to advance revenue techniques can present a daunting challenge for a new Revenue Manager, who may be surprised that their world is so closely impacted by technology and systems when compared to simply working with numbers. Perhaps in some cases, the job description of a Revenue Manager tends to be misleading in this aspect, seemingly to focus only on things such as forecasting, budgeting and pricing. With the broad scope of the new revenue management role, it is unreasonable to expect someone to manage more than one department when functioning as Revenue Manager, if a hotel truly values and desires focus on this discipline.
Actually, the pace of revenue management's growth has already surpassed the standalone revenue department in some areas and grown towards multi-layer clusters. Some of the strongest Revenue Management departments are not those with one on-site person focused on a single property, but rather those in which multiple hotels – for example, two to five properties – are grouped under one strategic thought leader, and supported by analytical talent and distribution. Often the analytical person has difficulty rising above the minutia to create a holistic strategy, while the strategic talent struggles to implement a big picture at a micro level. However, by pairing these talents in a dual-role department, hotels and companies can achieve much more meaningful and effective strategies. Meanwhile, the additional distribution role focuses on system optimization, content and many of the technical aspects of revenue management. This allows for cross-collaboration within companies, and plays to the strengths of each person.
This multi-property approach may differ when discussing large resort properties. In this case, one strategic thought leader may oversee multiple revenue streams and analytics talent, such as analysts for F&B, Spa, Space Optimization or Golf, which manage the day to day implementation of strategies and become experts in their various areas. Unfortunately, this hasn't been realized in many areas, as several owners see this only as an added expense, rather than understanding the additional dollars that can be had from implementing one or two additional positions.