NASHVILLE, Tennessee — Gone are the days when hotel companies didn't know what to do with their revenue managers. Now, revenue strategy is one of the key drivers of decision-making among hotel owners and operators.
During a session on "Elevating Revenue Managers" at the 2024 Hotel Data Conference, panelists discussed how revenue management could be better across the hotel industry.
Where revenue strategy fits in the overall structure of a hotel property team or a larger company is up for debate. The panel was asked whether revenue managers should work independently from sales and marketing, be integrated with the commercial side or lead a larger team that combines both disciplines.
Lynn Edwards, vice president of revenue management at Chartwell Hospitality, said the sales team relies on the hotel booking and pricing data that the revenue team is already looking at, so it makes sense for revenue managers to be working together with sales.
"Revenue managers should lead the total strategy for the hotel, whether it be group, transient, [business transient], we should kind of be the guiding force," Edwards said. "We're looking at stats, day-of-week trends, lead times, we've got all that data, so we should be driving those discussions with our sales teams. But I don't think that means that sales should report to revenue management."
Erin Cerrato, regional director of revenue management at McKibbon Hospitality, took it a step further, advocating for one commercial strategy team with sales and revenue management combined, but with revenue strategy definitely at the forefront.
"It just makes sense for sales to be referencing and relying on the revenue managers to make their decisions for pricing their groups and their negotiated accounts," Cerrato said. "Even with the commercial strategy or commercial departments that many companies have nowadays where sales, marketing and revenue are all kind of under an umbrella together, I do think that team needs to be led with a revenue-management focus or with a revenue-management lead to be successful."
Working With Owners
Edwards said she leans on her sales background when it comes to preparing for revenue meetings either with her team or with various stakeholders of a hotel.
"Everybody's got different interests in revenue management," she said. "There are some teams that want to dig in. There are some teams that are probably doing payroll while you're talking to them. So you have to learn how to accommodate all of those different personalities. You have to adapt."
Then things might get a little different when a hotel asset manager or the owner joins the revenue strategy session, Edwards said.
"My experience is they don't want to hear nitty gritty, granular things that we might get bogged down with sometimes in strategy calls," she said. "They want to hear what are you forecasting to budget? What are your efforts? What are you doing to make that up? What's your STAR [report] look like? They want to hear those types of things, they want to hear strategy. They don't want to hear about do you think we should lower our rate $10 on Friday night?"
Developing Revenue Strategy Talent and Coaching Your Team
As hotel revenue management evolves, the industry is looking to hire and train the next generation of revenue managers. Edwards described how an ideal candidate is naturally "curious," seeking to get to the root of why a hotel is underperforming its competitive set, and is someone that is willing to try new things.
But don't forget to check in with the team of revenue managers to see what biases may be forming in their decision-making, she added.
"A good example would be if you've got a branded system that prices your hotel, you might look and see that [the revenue manager is] constantly overriding prices. So you could sit with that person and say, 'I see that you're overriding the rates. Let's talk about that. Tell me what's going on,'" Edwards said. "And when they tell you why they're overriding rates, you may say, 'Well, let's look at it together. Let's look at the system and see if something's wrong with the system.' But what I also find is they have biases and it's our job as leaders of revenue managers to get rid of those biases."
Hotel revenue managers should get to know their pricing tools well enough so they're comfortable with letting the machine set rates for the majority of days, leaving the most amount of time for personalized strategy on the highest demand days, Cerrato said.
"Make sure that your team is utilizing the system to its fullest capability and not overriding because that overriding on a daily basis is tedious, it's time consuming, it's not necessary," Cerrato said. "Making sure that your team understands how the system works, uses it to its full capability and then is using their time so that they're focusing only on those 20% of dates that are high-revenue-impacting, the Super Bowls, the Taylor Swifts, the big events that can really make or break profitability for a month, and then let the system deal with all those random Sundays and Wednesdays that are longer Thursdays and whatnot."
Craig Shoffit, area manager of IDeaS Revenue Solutions, urged hoteliers to trust in the automated pricing systems to do what they're designed to do.
"There's something to be said about using that technology to make the decision, and let it work, let it work for you versus questioning it," he said.
Overall, the hotel industry has its rooms revenue strategy figured out, but there are opportunities for revenue managers to expand to other parts of the hotel, said Cesar Wurm, vice president of commercial and premium brands at IHG Hotels & Resorts.
"From the room side of things we're in a pretty good spot, right? Meaning that the systems are so advanced that there's very little that we have to do to optimize performance," Wurm said. "But then it opens up the ability to say, 'OK, now, we have the opportunity to do way better in these other areas of the hotel for total revenue generation.' But as an industry, I think we're not quite there yet."
Look for Ways To Embrace Artificial Intelligence
While artificial intelligence applications have sprung up all over the internet, there shouldn't be cause for concern in the hotel industry, Wurm said. Even if it's a starting point, AI helps his teams save time, whether it's in revenue management or in sales.
"There's a lot of things that you can create simple benchmarks internally ... that's free-to-use AI or you sign up for low monthly fees, and we're using that for a lot of things in new development deals, market research, competitive research rates," he said. "It's not always the best output or the most accurate, but it saves a lot of time.
"Part of the traditional sales and marketing plan used to take, let's say, hours to do, and now some of that I can get done in minutes and then just tweak and research. So I would highly encourage you to consider that and see what tasks your teams currently do that it can rely on the existing AI to really do because there's a lot that you can use and you'd be amazed how much time you can save."
The most likely uses of AI are going to be the ones that enhance what human employees are already doing to make them more efficient, Shoffit said.
"It's more interaction between humans and AI, and I think that some people are a little uneasy that we look at technologies and AI to replace people," he said. "There's an opportunity of not looking to replace people but to still give that human element and generative AI and allow that bridge to happen from that human element into AI to be more efficient."