It Takes Two to Tango: Sales Management and Revenue Management

By Mario Candeias General Manager, Espinas Hotels | October 16, 2016

Revenue Management (RM) has taken a lead role in the generation of an optimized top line. As it is technologically based and technology has taken over the world, RM benefited from those tailwinds in its rise to supremacy. Such, that most literature, research and general writings have been almost exclusively focusing on it. That is not a problem per se. But RM is merely a fraction of the top line. Sales is the "big picture" and RM is a function of it, not the other way around. Sales must recover its leading role, as without it, RM is nothing but a one-legged body. Yes, it's all about Revenue Management nowadays. This, so to say, discipline has pretty much surfaced to the limelight of Hospitality Management, even being considered now critical in the job description of hotel leaders.

It became mainstream, rather than just the task of young "nerdie" folk getting some pricing and distribution insights and targets from leaders and implementing it through Excel and other dedicated software that most wouldn't understand. Revenue Managers certainly conquered centrality within hotel organizations, after doing the same in the airline business.

It is obvious that, in an ever fiercer and faster business world, optimizing revenues became the do or die for many organizations, especially the ones operating with fixed inventory (thus, highly perishable). Mathematicians and statisticians were also brought to the scene, to add science and automation to software that would increase intellectual capital levels and would ease achieving that edge, that extra-mile and, also, that "feel good factor" that comes with the notion that one is at the forefront of things and doing more than all others to extract that extra buck from them and from the market. We were and still are operating under the perception that Revenue Management increases the market.

While it may do so, the dimension of it is in my view very limited. In its role of optimizer, Revenue Management operates on top of something that already exists. So, we need to satisfy some conditions ex-ante in order to be able to optimize.TThose conditions, so to speak, are Sales. Yes. Good old school Sales. We need to sell first, to be able to optimize sales afterwards. If we don't first sell and bring occupancy levels and rates to a certain level, Revenue Management won't on its own cut it. It will be good for almost nothing.

So, the argument is that we must bring Sales (and Marketing) to its previous glory days or else we will not be able to optimize anything much and, while Revenue Managers will tell us that they are doing their best and will still be optimizing something, the base for optimization is small or low and nothing optimal will come to fruition in the end.

Confused? Well, we're talking about a sensitive topic which, as many others, has been under the so called "herd mentality", where everybody thinks more or less the same about everything. Even if it is wrong. In this case, the real value generating mindset will be the one that thinks differently from that and actually capitalizes on the reality of facts, not on the perception of facts.

Choose a Social Network!

The social network you are looking for is not available.

Close

Hotel Newswire Headlines Feed  

Sridhar Laveti
Megan (Sterritt) Taylor
Sherri Merbach
Tony Heung
Tim Peter
Scott Watson
Stephanie Hilger
Lisa Cain
Kathleen Hayn
Coming up in April 2019...

Guest Service: A Culture of YES

In a recent global consumers report, 97% of the participants said that customer service is a major factor in their loyalty to a brand, and 76% said they view customer service as the true test of how much a company values them. And since there is no industry more reliant on customer satisfaction than the hotel industry, managers must be unrelenting in their determination to hire, train and empower the very best people, and to create a culture of exceptional customer service within their organization. Of course, this begins with hiring the right people. There are people who are naturally service-oriented; people who are warm, empathetic, enthusiastic, pleasant, thoughtful and optimistic; people who take pride in their ability to solve problems for the hotel guests they are serving. Then, those same employees must be empowered to solve problems using their own judgment, without having to track down a manager to do it. This is how seamless problem solving and conflict resolution are achieved in guest service. This willingness to empower employees is part of creating a Culture of Yes within an organization.  The goal is to create an environment in which everyone is striving to say “Yes”, rather than figuring out ways to say, “No”. It is essential that this attitude be instilled in all frontline, customer-facing, employees. Finally, in order to ensure that the hotel can generate a consistent level of performance across a wide variety of situations, management must also put in place well-defined systems and standards, and then educate their employees about them. Every employee must be aware of and responsible for every standard that applies in their department. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.