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Who Cares About Revenue Management?

by Jason Q. Freed, Managing Editor |

Nearly 30 years after its debut, we can now safely say that revenue management is an important hospitality discipline. Brands, owners, asset managers and technology suppliers — from entry-level staff to C-level executives — have all joined operators in understanding the importance of pricing your perishable inventory right to meet demand.

Therefore, the role of a revenue strategist has evolved greatly. The revenue manager is no longer a team of one, relegated to a dark office in the corner. At the most innovative hotel companies, the revenue team is a central part of operations that drive many decisions and actions in adjoining departments.

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Ultimately, the revenue team is responsible for delivering the top line results of a hotel’s room revenue, and more hoteliers on the periphery are becoming keenly aware of the heightened responsibility. More people care than you might think.

Which Departments Should be Most Involved?

 When the revenue team is at the hub of operations, it’s important they keep the rest of the hotel in tune with both performance data and goals.

Of particular importance is the revenue team’s relationship with the hotel’s general manager and director of finance. The general manager will want to track key operating metrics, such as RevPAR and RevPAR Index, specifically interested in performance versus the previous year.

For the finance department, however, revenue management is more of an operational expense tool. Finance will want to know data and numbers that flow to the bottom line – expenses, staffing, payroll, etc. They want to know whether it’s going to be a good year or a bad year so they can prepare more or less staff. If the revenue team misses budget or forecast, payroll is affected.

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The revenue team should be actively involved with sales and marketing departments and initiatives, if only to ensure the hotel is stimulating demand during need periods. A revenue manager is often the one to keep sales managers in check by challenging actions like negotiating discounts and filling the hotel with the wrong guests.

What Data Should be Shared?

A daily morning report will inform key stakeholders on the forecast and how actual pickup is replicating the forecast. Managers on property need to know what’s on the books for the day. Additionally, any demand weaknesses or risks will be identified.

Historical performance reports have always been a success measurement for the revenue team. New data sets that show your hotel’s performance against the market or competing hotels are increasing in availability and as solid measurements of success.

New metrics like Total Revenue Per Available Room (TrevPAR) and Gross Operating Profit Per Available Room (GOPPAR) are valuable data sets when available.

Revenue Management Organizational Structure

So who should the revenue manager report to? In successful Revenue Strategy operations, the DORM typically reports directly to the GM. The old practice of revenue managers reporting to the director of sales is difficult when then revenue team is expected to challenge sales on things like discounted business and inflated RevPAR numbers that don’t drive an increase to the bottom line.

In the end, an open revenue culture is critical to having a truly successful Revenue Strategy. By involving all staff of the hotel in the goals, including front office and reservations staff, revenue managers can create a sense of team and that helps the overall effort.

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Jason Q. Freed, Managing Editor

Jason Q. Freed, Managing Editor

Managing Editor at Duetto
Jason joined Duetto as Managing Editor in June 2015 after reporting, writing and editing hotel industry news for a decade at both print and online publications. He’s passionate about content marketing and hotel technology, which leads to unique perspectives on hotel distribution and revenue management best practices.
Jason Q. Freed, Managing Editor
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Jason Q. Freed, Managing Editor

Jason joined Duetto as Managing Editor in June 2015 after reporting, writing and editing hotel industry news for a decade at both print and online publications. He’s passionate about content marketing and hotel technology, which leads to unique perspectives on hotel distribution and revenue management best practices.