NASHVILLE, Tennessee — The revenue-management discipline has come a long way over the years, with advancements in technology serving as a game-changer in how the space is viewed in the overall hotel operations landscape.
Speaking during a revenue-management roundtable hosted by HNN at the recent Hotel Data Conference, Tina Meredith, vice president of revenue management at PM Hotel Group, said when she entered the industry three decades ago, "revenue management" wasn't its own discipline yet. Instead, it was referred to as "yield management," and it was a function of a hotel's front office.
Fast-forward to today, and the discipline holds a lot more weight, Meredith said.
"It's now its own discipline in many hotels, you're part of the executive committee," she said. "A lot of things transpired in between from the evolution of the distribution channels and everything we've had to deal with with that, but it's taken quite a leap from two or three decades ago."
Chris Cheney, senior vice president of strategy and business analytics at Stonebridge Companies, said hotel revenue management used to focus mostly on the pricing component. Thanks to advances in technology, pricing has become easier and has lent revenue managers more time to think strategically.
"Now we can actually expand and focus more on length of stay, customer mix, channel mix, profit," he said. "Technology's really driven that evolution. A revenue manager with idle time on their hands will find something else to optimize and interpret."
Out of all the key changes to the discipline, that technology piece is the biggest one, Meredith said.
"So much of what we did before was manual, and we just didn't have the resources to possibly look at every data point that we needed to look at," she said.
Cheney said there's been a bit of a push and pull in the evolution of technology in the space. It's allowed for tactics to be deployed more efficiently while simultaneously making it easier to pull data from the results. Or as Cheney calls it, "the cycle that just keeps building."
While revenue management has always been a data-driven space, this has catapulted it into being ubiquitous across disciplines.
"Now people look to the revenue management discipline ... as the analysts. They're the ones with the mindset to actually look at results, evaluate what worked, what didn't, and take that across other disciplines," he said.
The distribution landscape has evolved quite a bit as well, Meredith said. There used to be a rack rate and a bar rate and not much in between that. The rise of online travel agencies changed how distribution looks.
"Now it's so much more than that. There are so many different channels we have to watch and account for in our jobs today," she said.
The onset of online travel agencies has been polarizing for revenue managers. On one hand, they take away from direct bookings and decrease the overall piece of the pie hotels take home on the rate side. On the other hand, they increase the exposure of properties.
They also force hotels to make their own product better, Cheney said.
"It's been a huge net positive for our industry, for travel in general. It's created different types of competitive marketplaces," he said. "We see it as we have an expansive distribution network of fantastic partners we love to work with. We prefer to get the business direct, but we also get a lot of incremental business from lots of places on the internet."
Melissa Arana, vice president of revenue strategy at Hospitality Ventures Management Group, said when she personally travels to Mexico, she prefers to book through an OTA. When it comes to booking internationally, consumers lean more toward online travel agencies.
"I've always seen an OTA more as a partner and an ability to reach customers that we may have not been able to reach otherwise," she said. "And then hopefully, if we have strong brands and strong teams, we will convert them. That's always the goal."
Revenue management today
Revenue managers must be strategists in their organizations, said Jenna Fishel, senior vice president of commercial strategy at First Hospitality.
"Revenue experts continue to be the go-to people in so many areas," she said. "It's not just pricing and field management, but we are also the market experts and expected to have a very strong pulse on the people and the strengths and weaknesses of our team and how we customize our approach to generate the best results of a property."
With the pricing component mostly taken care of with technology, it's on revenue managers to be "the ultimate analytical strategist," Meredith said.
"It's looking at that channel mix, how much base business do we have, how much do we need, how do we mix all of that together to bring the most to the bottom line?" she said.
The idea of a fully fledged commercial team — consisting of revenue management, sales and marketing — has picked up steam over the past several years. While those disciplines have always been connected, there's been more of an emphasis on communication and collaboration between the three to optimize results.
Meredith said this philosophy started to gain steam right before the pandemic and is now the norm across most organizations.
"It's more like having an orchestra rather than separate instruments all playing different tunes," she said. "We're so much better as a whole if we're working together, identifying the opportunities and everybody doing their part to address those areas."
Just because this is more of a focus doesn't mean it's been a seamless transition. Arana said there's still some work to do for all the three departments to get along, but at the end of the day, the results are better when they work together.
"What I try to instill from a cultural standpoint is that we're stronger together," she said. "As long as that's the message across the board in the industry, then I think we're going to win. You cannot do it individually."