Most hotels think that a revenue manager is just there to manage their availability on different channels.

Embracing a revenue management culture has a proven track record of success in different industries. Despite that, it baffles me how a lot of hotels still do not see the need for it. It is quite sad that these hotels think that it will just be an added expense or entails too much cost to sustain. One hotel that I recently talked to claimed that there was no need for this position as they did not see the value in it. They further commented that “they did not need a revenue manager to open and close their availability in the system”. They thought, this was what a revenue manager did and they did not want to hire anyone, as it could be handled by a regular reservations agent. I realized then that this hotel did not have a clue what revenue management was about. Most hotels think that a revenue manager is just there to manage their availability on different channels.

By not having this culture, hotels are losing chunks of revenue. For it to be effective, it begins by having the right person lead your revenue management team. Of course, having a “revenue manager” does not imply that you are applying revenue management. One of the hotels I handled before had a revenue manager who was originally the reservations manager of the hotel. During the course of the project it became clear that the staff did not have the right knowledge to perform the duty. The staff went through the motion of what was thought as revenue management practice. But the employee did not really understand the concept and principle of applying it the right way. Upon examination, I found out serious mistakes that prevented the hotel from getting revenue. One of the major faults was that the hotel did not have proper market segmentation. Furthermore, no demand forecasting was done. Also, no proper report was in place to track the performance of the hotel. I discovered that the person assigned as the revenue manager just did menial tasks. Among others, duties assigned included checking occupancy, average rate, and revenue on a daily basis. Based on occupancy, the staff then closed and opened availability. No pricing strategies were applied by the staff as best available rates were sold most of the time. During low periods, rates were sold at almost cost price.

One of the major elements of successful revenue management culture is to make sure that your market segment is correct. When you have this properly created it will have a positive ripple effect on the other elements of revenue management. If you have the right segments you can then achieve better demand forecasting, as you will be able to understand the behavior of each of your markets. You will also be able to apply effective pricing strategies, as your hotel will come to understand the full pricing potential of each of your segments. Also, do not forget that analytics tools can greatly aid you to become a better revenue manager. These are just some of the concepts that hotels need to understand to achieve a thriving revenue management culture.

There is definitely nothing to lose when revenue management is applied. But the key is knowing how to use it correctly in order for it to be effective.

Rochelle Castillejos

Rochelle has over 15 years of industry experience in the fields of Sales and Marketing, Revenue Management, RFPs (Request for Proposals), IBEs (Internet Booking Engines), CRSs (Central Reservations Systems), PMSs (Property Management Systems), RMSs (Revenue Management Systems), OTAs (Online Travel Agencies), and GDSs (Global Distribution System). She oversaw around 55 hotels in the regions of Americas, Europe, Mediterranean, Asia Pacific and Middle East throughout her career.