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Education is the key to revenue management success

by Ed Watkins, Contributing Editor |

Mehmet Erdem is both a student and teacher of hotel technology. As an associate professor at the University of Nevada, Las Vegas William F. Harrah College of Hotel Administration, he teaches future hospitality executives the art and science of hotel operations and information technology.

He’s also one of the industry’s leading researchers into hotel technology topics. Since 2011, he’s been producing a benchmarking study on IT topics in conjunction with Hospitality Technology magazine. The research traces the shifting directions of technology, as it becomes an ever-increasing factor in hotel ownership, operations and marketing.

Born in Cyprus, Dr. Erdem began working in hotels at age 16. He went to the United States on a Fulbright Scholarship to study hotel administration at Purdue University. After earning his bachelor’s and masters’ degrees at Purdue, he studied for his Ph.D. at UNLV. His first teaching job was in the business school at the University of New Orleans.

Mehmet is current president of the International Hospitality Information Technology Association, an organization dedicated to improving the quality of hotel technology education.

I recently had a wide-ranging chat with Mehmet on a number of topics related to hotel technology in general and revenue management in particular:

Mehmet Erdem

Mehmet Erdem

How has hotel revenue management evolved over the years?
Revenue management has always existed in hotels, but we just didn’t call it revenue management. It’s not that new; the art of it existed but the science of it has changed things immensely. Today, revenue management is an art and a science at the same time.

Revenue management was just a buzzword in 2005 and ’06, with just a couple of major players in the game. But since 2010, there has been a love affair with the topic. Think of how many revenue management-focused conferences we have now: It went from zero to five or six in 10 years.

What are some of the challenges in the area of revenue management?
One thing we don’t like to talk about is salaries. If you think about what a revenue manager does, or others in management positions in hospitality, we’re not paying people the money we should. As a result, we don’t attract certain talent because there are alternatives for them in other industries.

What’s the role of education in revenue management?
As educators we have seen a particular emphasis on revenue management in recent years. Many programs offer it as an elective, and a handful make it a requirement. At UNLV, we offer it in our online masters executive education. We also teach it in financial management courses.

We have been teaching revenue management in operations, marketing and financial management classes but not with a particular emphasis on everything revenue management has to offer.

Now, people in education are saying, let’s make this a separate subject, just like HR or marketing or accounting. As a university we have all the tools we need to put somebody who has operations experience, who understands the basics of business and management, and can go into revenue management as an effective professional.

What about training people already in the industry to be revenue professionals?
Of course, on-the-job training it is cheaper; you put somebody under the wing of somebody else, but you must remember people teach both good and bad habits.

If you’re going to bring in new blood and people who will shake the industry and get them to think differently, you have to start in higher education. We have to build those relationships with industry—internships, work experience—into the person the organization is looking for.

People hire MBAs but they have absolutely no idea about the service industry. They are brilliant and may understand about revenue management, but not necessarily in the context of the hospitality space. Why don’t we do it at the core in higher education and produce the people the industry needs right now?

In your most-recent study you identified a lack of business and marketing skills by hotel IT people. Why is it important IT people have an understanding of the business and marketing sides of the hotel industry?
I’m working on a study of the role of CIO and whether it will be an extinct species. The way we are outsourcing IT and the way technology is becoming more accessible for decision-making by mid- and upper-level management, I can see some people asking, “Why do we have a CIO?”

If I were a CIO or any tech person I would think about what could I do to demonstrate that I am an asset to have in this organization. We haven’t seen those people getting their hands dirty enough in other operational areas. For example, if you are interested in revenue management, you need to be heavily involved with the director of operations, the director of reservations and others in the hotel.

Tech people can be great problem solvers, but they can also be included in the analysis of operations by having a seat at the table to make the decisions. Either by volunteering, speaking up, getting more engaged with other departments, IT people need to show they are an essential support structure, but they also need to be included in the conversations.

What major forces will shape hotel technology in the next decade or so?
We know the major forces today are social, mobile, cloud and analytics. They definitely influence the way we do things and the way we perceive technology and the way to approach technology initiatives.

Looking out 10 years—and 10 years in technology is a huge amount of time—I think we will see more emphasis on informatics and social informatics. Being able to understand how technology changes culture, and I mean both employee culture and consumer culture.

In the next 10 years, I foresee the forces influencing technology being some sort of emphasis on culture-based learning, derived from informatics. It will be emphasis on improvements and innovations in human interactions. As that happens, we will have different forces emerging quickly to influence the shape of technology.


Ed Watkins, Contributing Editor

Ed Watkins, Contributing Editor

Contributing editor at Duetto
Ed has been covering the hotel industry for more than 40 years. He was editor-in-chief of Lodging Hospitality from 1980 to 2012. He then joined Hotel News Now as an Editor at Large, until his retirement at the end of 2014. Ed still contributes to several publications and is a member of the advisory boards for the hotels schools at Michigan State and Penn State.
Ed Watkins, Contributing Editor

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Ed Watkins, Contributing Editor

Ed has been covering the hotel industry for more than 40 years. He was editor-in-chief of Lodging Hospitality from 1980 to 2012. He then joined Hotel News Now as an Editor at Large, until his retirement at the end of 2014. Ed still contributes to several publications and is a member of the advisory boards for the hotels schools at Michigan State and Penn State.