The Revenue Manager's Role in Market Segmentation

Mastering the Art of Mix and Mingle

By Paula Macdonald Director of Communications, McKibbon Hotel Management, Inc. | September 29, 2013

Co-authored by Inger Oliver, Director of Revenue Management, McKibbon Hotel Management, Inc.

Over the last several years, the role of the revenue manager in the fiscal success of a hotel has taken a much more creative and involved approach. In the past, revenue management was less a carefully choreographed dance of technology and business decision-making and more often a game of chance based on experience and intuition. Today, with the emergence of many new forecasting tools and technological advances, the process of revenue management has become more creative, more precise and much more technical. For the revenue manager who manages a branded hotel, many real-time tools are provided to predict and forecast, streamlining and simplifying the process for those who are responsible for multiple properties, as in the case of many management companies. Independent hoteliers have the ability to contract professional outsourced revenue management services, providing them with many of the number crunching and data analysis tools that the larger brands have to offer. Going beyond the tools provided by the hotel brands, more progressive management companies have incorporated spreadsheet gurus as valuable members of their team, who can further manipulate and examine the data to provide detailed forecasts of a hotel's past and present mix of business. The result is a veritable fete of data and information that the revenue manager must assimilate and blend to arrive at just the right mix of business to ensure growth in peak times and hold the line during down periods.

It Takes Tools to Tango

Today's hospitality industry has become more reliant upon the technology that we have at our fingertips to provide us with the data needed to make better-informed decisions. It is too overwhelming to accomplish without these automated systems, and the days of playing revenue management guessing games are far behind us in today's competitive business market. Accountability to hotel owners is always at the forefront as we continue to develop more sophisticated tools and processes to provide the forecasts needed to be successful in filling our hotels, not only with business in general, but the right mix of business to grow profits and satisfy hotel owners. Today revenue managers have a Mix of Sales Report readily available that they can run in real-time to see current trends as well as future mix which enables them to be proactive and not reactive to historical data.

As we emerge from a tough economic climate in recent years, we have learned to become more thoughtful, more savvy with our decisions regarding the mix of business that we seek in our properties. Gone are the days when any business was good business and the industry relied heavily on OTAs to get us through the rough spots (and there were many very rough spots). Today, a strengthened economy and return of business and leisure travel means that we have more choices and additional opportunities to be successful and on budget, if we know our guests and their travel patterns. Through utilization of the forecasting tools available and the implementation of segmentation in our business strategies, it is possible to increase RevPar and keep rate competitive at the same time. It is imperative that we know who our customers are, to understand when and why they are coming to our hotels, so we can sell to the most profitable customer.

I Can Name That Customer in Three Notes

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