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Skills in revenue management are important, but there are few common structural mistakes that.......

Skills in revenue management are important, but there are few common structural mistakes that are easy to avoid when building revenue management strategies.


1. Reservation management and revenue management are NOT the same thing

A very common mistake is assigning reservation managers the task of revenue management. Equally problematic is promoting a reservation manager to revenue management director. While there is no problem in moving reservations staff into revenue management roles, they need to first be properly trained in revenue management. While reservations staff have good knowledge of many key subjects related to revenue management, they cannot organically learn the skills of revenue management through day-to-day reservation activities. Hire properly trained and experienced revenue management directors to drive your revenue strategy and execution.


2.  Revenue managers need to report to business heads

Revenue managers need to report to GMs within the hotel, or regionally to the Regional Heads. Revenue managers should not be reporting to sales and marketing directors, VPs, etc. While this should be clear, it’s one of the most common mistakes in revenue strategy. There is inherent conflict of interest between those driving revenue (sales and marketing) and those optimizing revenue. On quite literally a daily basis, a revenue manager will recommend rejecting business or increasing rates. Sales and marketing teams will have a difficult time dropping a “bird in the hand,” especially with all the hard work they have put in to generating deals. There will be inevitable disagreement on chasing the bird in the bush or keeping the one in the hand. The GM needs to be making the final call in those situations, not the traditionally biased sales and marketing director. Furthermore, the clear reporting line to the GM signals to the rest of the organization that revenue management is a critical function and a priority to the business.


3. The revenue manager must be a part of the hotel and, at a regional level, the executive committee

The revenue manager must have all the latest information and be involved in all the critical discussions related to the business. Anything impacting the hotel’s revenue, or ability to drive revenue, should be a consideration in the revenue strategies and is therefore critical information that the revenue manager must not only be privy to, but also in a first-hand way, and not as relayed by a memo or through traditional ExCom members reporting on the ExCom meeting. Again, this also signals to the rest of the organization that revenue management is a critical function and a priority to the business.


4. Weekly revenue meetings with business heads are mandatory

Weekly revenue meetings with the GM, director of sales, and marketing and revenue managers should be held without fail. The meeting should be led by the revenue manager, but the GM must be in attendance. This should not be an ad hoc meeting or a supplemental meeting to sales and marketing or any other meeting. A clear agenda with an action item list is a must.


5. Invest in systems that promote data collection, interpretation, and integrity

Good data is imperative. Make sure you have IT systems which enable proper data collection and offer tools for analysis and interpretation. In nearly all cases, excel sheets are not sufficient to run a property revenue management strategy. There is simply too much data and it is too easy to make calculation errors using only spreadsheets. Revenue managers must make accurate forecasts in almost real-time while crunching complex data sets. This means it’s essential to get the right IT solutions including property management systems, point of sale systems, and revenue management software. And of course, ensure front office, reservations staff, etc. are following protocol to maintain the data integrity.

There are entire volumes written on revenue management skills. Those are great, but never forget the critical aspects of basic structure that will enable those skills to be implemented.

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