Director of Revenue Management & Director of Sales: Friend or Foe?
By Jean Francois Mourier Founder & CEO, RevPar Guru Inc. | September 28, 2014
Anyone who has worked in the hospitality industry for any period of time would know that – in hotels of all sizes – the Director of Revenue Management and the Director of Sales are often completely at odds with one another. No matter how experienced or knowledgeable, there is generally a confrontational relationship even over the simplest pricing issues. If one says to 'offer a discount', the other says to 'raise the rates'. If one suggests a focus on group sales, the other suggests transient sales instead. No matter what the issue, it is often very difficult to get these two employees to see eye-to-eye (or rate-to-rate) and it can create a huge problem for hotels.
The problem with this antagonistic relationship is not so much related to the HR or personnel impact that it can have; instead, this dysfunctional relationship can create a serious financial issue for a hotel, as the two positions are working to fulfill different financial end goals – both of which can be completely contrary to the goals of the other. This lack of continuity creates a break in the productivity and results achieved by the two employees; however, the problem can be resolved by nurturing a stronger partnership between these two highly valuable employees.
While it sounds simple enough, it can be a complicated endeavor as both employees are highly valuable members of your property's management team. As such, let's further examine the possible causes of this unhealthy relationship between the Director of Revenue Management and Director of Sales, before finding a solution for the problem.
In many cases, the antagonism results from an ongoing power struggle between the two departments. There could be many different reasons that this problem exists in each hotel, but in general, the problem stems from one of two common issues. Firstly, there is often a huge disparity between the two positions' responsibilities and goals within a single property, which can create unnecessary friction when making management decisions. As well, while both employees are directly responsible for the overall financial success of the hotel, the capacities in which they manage the property's revenues are very different. Each manages different internal functions, have very different responsibilities assigned to their roles, and use different performance metrics to determine their successes and failures.
For example, the Director of Revenue Management's primary role is to work within the hotel's rate guidelines in order to generate the maximum profit from each booking. The Director of Revenue Management works mostly with individual leisure and business travelers (also known as the hotel's transient business). Their primary performance metrics are a property's ADR (average daily rate), occupancy and RevPAR (revenue per available room), as all three combined offer the means necessary to establish an accurate picture of a property's profit margins.
In contrast, the Director of Sales is responsible for overseeing the overall sales of the property, no matter what profit each individual booking yields. The Director of Sales' purview is the entirety of a property's revenues, as well as group sales and tour operator business speficially, and does not often involve a property's transient business (the type of business that is the Director of Revenue Management's primary responsibility). The Director of Sales is only concerned with the overall financial statement of the property: what was the property's overall revenue (combining all types of business) on a given day? Is this number increasing or decreasing?
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