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Revenue Management is the Centerpiece of Hotel Operations

by Jason Q. Freed, Managing Editor |

You need a sales team to get guests in the door and an operations team to take care of them, but more often hoteliers are pointing to a different department as the crux of hotel operations.

Revenue managers are the maestro, forecasting demand to calculate price points for the sales team and budgets for the operating team. Today, your revenue team is at the nexus of supply, demand and price, with the ability to shape your business mix toward profitability.

“Every revenue manager in this room deserves a raise,” said Mike Marshall, owner of Marshall Hotels & Resorts, speaking during the Hotel Data Conference in Nashville earlier this month. “You’ve got an extremely difficult job and I’m glad you do it and not me.”

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No longer is the revenue management department in charge of just setting rates, hoteliers at the conference agreed. Now they oversee loyalty membership data and rates, distribution and channel mix, and benchmark key hotel performance metrics.

To cover so much ground, the first step for hotels is to instill a culture where the revenue team sits in the middle of the operations and communicates effectively with all other departments. The revenue manager must be in constant communication with the GM and Director of Sales, panelists agreed.

“The GM, the DOS, the front desk – they all have to be in sync,” said Johnathan Capps, VP of revenue for Charlestowne Hotels. “Your revenue manager might be 1,000 miles away and might not know what’s going on in that market, so he or she is going to lose out on opportunity that you might have recognized if everyone was in sync.”

RM is Strategic Communication

Hoteliers shed light on their organizational charts to show exactly where revenue management sits in order to foster communication and shared goals.

Charlestowne, with 43 properties across 13 U.S. states, employs eight revenue managers at the corporate level and they all work remote. Therefore, Capps said using a cloud system that is not hosted on property is crucial, as well as having standard operating procedures for communication.

“There’s daily communication and our revenue managers are on call 24-7 if a catastrophic event happens overnight,” added Mark Kucera, VP of operations at MCR Development.

At Marriott International, some of the bigger, citycenter hotels employ their own revenue managers but most often a regional revenue manager oversees multiple properties.

“The key is communication,” said John Cook, senior manager of revenue management analytics for Marriott. “If you have a remote DORM you need to be communicating with them and they need to have communication with the GM and the director of sales. If you have something going on in the market, the GM and sales director need to be in communication with the DORM.”

RM is Channel Management

Like many other hoteliers, Capps said Charlestowne has over the past few years reduced its dependence on OTAs. In doing so, some of the leisure-based hotels took a hit in occupancy.

On using loyalty perks to encourage direct bookings, HDC panelists said they understand the costs involved and still applaud brand efforts.

Panelists said loyalty guests tend to spend more on-property and cancel less frequently. “We’re OK with it ticking it up 2%, 3%, 5% because it’s still cheaper than the OTAs,” Capps said.

RM is Group Optimization

At MCR, Kucera is sharply focused on displacement analysis to help price group business. He considers all revenues and costs, including utilities and van transportation, and fluctuates his rate modeling based on demand patterns as the booking date nears.

“We do the same thing with the independents,” he said. “Even though we don’t have Marriott or Hilton software, we do have some tools, but it’s more of a manual task.”

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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.