Today’s hospitality landscape is more competitive and more complicated than ever before. With revenue management’s recognized contribution to the industry and the majority of hoteliers employing revenue management as part of their overall hotel discipline, now is the time to focus on core competencies that integrate both strategic and tactical skills and initiatives.
A company’s culture, departmental structure, technology and staff’s talents all impact the potential of its revenue management initiatives. To ensure success, there are some core revenue management competencies and components you must ensure are part of your company’s culture. For instance:
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Kathleen Cullen |
• The revenue expert within an organization must be strategic and tactical, understand technology, business processes and consumer behavior, work well with colleagues and be able to set direction and influence others.
• The right technology can allow the revenue professional to process vast amounts of information and take revenue management to a whole new level.
• Setting goals and understanding the right metrics by which to measure the hotel’s performance are vital to achieving revenue and profit potential.
Below are seven core competencies that are crucial for success.
It is vital to the success of revenue management that the company has enthusiasm for, respect for and understanding of the discipline. This needs to start at the top. If the GM of the hotel or the CEO of the company does not understand, and therefore does not support the needs of revenue management, it will show in the revenues. Without proper support and respect from the most senior players, all other staff members might not adhere to the needs and approach set forward by the revenue management professional.
2. Departmental structure
Unless the revenue director has a seat at the decision table and is in a position of authority, the hotel can suffer from the direction of others who might not have a solid understanding of the negative impacts of certain decisions. If goals are not aligned and if the revenue director has limited influence in the organization, it is very possible that decisions will be made to capture more business even if that business is not in the best interest of the hotel’s overall revenue per available room.
3. Demand and strategic forecasting
Demand forecasting is critical to the success of revenue management. Laying out a hotel’s demand forecast day-by-day for all days into the future is the only way to effectively optimize revenues. This is the starting point for all strategic decisions. The demand forecast must include an understanding of the anticipated demand for the hotel and what is already “on the books” for both group and transient. Once the revenue professional puts this together, the future rate strategy can then be determined. This information should be managed and updated on a regular basis to ensure optimal revenue opportunity.
4. Strategic pricing
Every revenue management plan must address strategic pricing. The revenue management team needs to determine the pricing in advance, considering elements such as the hotel product, service levels, competition, market demand and customer segmentation. Advance determination of pricing will allow the hotel to be proactive and avoid reactionary decisions.
5. Talent acquisition
Acquiring and retaining good revenue talent is one of the industry’s biggest challenges today. It is imperative to find revenue professionals who can think about the big picture; focus strategically while acting tactically; demonstrate business acumen; educate team members at all levels; persuade key executives; motivate others; provide expert analysis; make sounds decisions … just to name a few of the must-have skills and abilities.
When considering candidates for this position, keep all the above in mind and avoid focusing on how well they can use the property management system, customer relationship system and online travel agencies—knowing what buttons to push in those systems is something most anyone can learn. Big picture thinking, strategic, strong communication and persuasive skills are hard to find and need to be weighed heavily in hiring.
6. Channel management
It is important to have a strategic approach to channel management and determining channel partners. With the multitude of various distribution channels available to hoteliers, it is vital that every hotelier has a channel management strategy. Every revenue professional should have a predefined list of areas and questions to research when evaluating potential partnerships and be certain to manage channels smartly.
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7. Goal alignment
One of the most common mistakes hotel professionals make is setting different goals for different individuals. In order to achieve company goals, everyone must work toward and be incentivized on the same goals. This means that the group sales department should not have one goal (such as group rooms and revenue) and the transient sales department another (like corporate negotiated rooms and revenue), while the revenue director has a focus on overall RevPAR. Instead, align everyone toward the same goal—RevPAR, for example.
For more details about aligning your hotel’s culture to strengthen core competencies, join the 21 February HSMAI University webinar produced in partnership with the Revenue Management Advisory Board, HotelNewsNow and STR.
Want to Learn More?
This topic will be addressed as part of the 10-part Revenue Management Webinar Series produced by the HSMAI University in partnership with HotelNewsNow and STR. Beginning February 21, 2012, and going through December, each month a webinar will cover various aspects of cutting edge revenue management in today's economy in conjunction with articles written by members of the HSMAI Revenue Management Advisory Board. If you’re not able to attend a live program, archives are available. Also, these and other timely revenue management topics will be the focus of the HSMAI Revenue Optimization Conference, co-located with HITEC, June 25 in Baltimore, Maryland.
About the Author
Kathleen Cullen has more than 20 years of experience throughout the multi-faceted hospitality industry ranging from working on property to varying positions in the corporate office of a dynamic, faced-paced, global hotel company. She is the author of the HSMAI Foundation Special Report, “Evolving Dynamics of Revenue Management: A Comprehensive Roadmap for Hotel Owners, Operators and Practitioners,” and currently serves on the HSMAI Revenue Management Advisory Board. Today she is the corporate director of revenue strategy for Heritage Hotels & Resorts headquartered in Albuquerque, New Mexico.
The opinions expressed in this column do not necessarily reflect the opinions of HotelNewsNow.com or its parent company, Smith Travel Research and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.
About the HSMAI Revenue Management Advisory Board
The Revenue Management Advisory Board leverages insights, emerging trends, and industry innovations to guide the development of products and programs that optimize revenue for hotels.
Members include:
• Chris K. Anderson, Ph.D., Professor, Cornell University
• Bonnie Buckhiester, Principal, Buckhiester Management USA
• Shelia Cosgrove, Director, Revenue Management Ops & Planning, Intercontinental Hotels Group
• Kathleen Cullen, CRME, Corporate Director of Revenue Strategies, Heritage Hotels and Resorts
• Sloan Dean, CRME, Vice President of Sales & Marketing, Interstate Hotels & Resorts
• Kent Duncan, CRME, Vice President, Sales and Revenue Strategy, Marcus Hotels & Resorts
• Jon Eliot, CRME, CHA and co-chair of the HSMAI Revenue Management Advisory Board
• Tammy Farley, Principal, The Rainmaker Group
• Neal Fegan, Executive Director of Revenue Management, Fairmont Raffles Hotels International
• Rhett Hirko, CRME, Director of Revenue Analytics, Hyatt Hotels & Resorts International Operations
• Jay Hubbs, Director Hotel Supplier Relations, Expedia Partner Services Group / Hotwire
• Burl Hutchison, CRME, Director of Revenue Optimization, Sabre Hospitality Solutions
• Klaus Kohlmayr, Senior Director, Consulting, IDeaS Revenue Optimization
• John LeCoz, CRME, Regional Director of Revenue Management, Loews Hotels
• Mark Molinari, CRME, Corporate Vice President of Revenue Management and Distribution, Las Vegas Sands
• Orly Ripmaster, CRME, Senior Analyst, STR Analytics
• Scott Roby, CRME, Vice President, Revenue Management, Evolution Hospitality
• Chinmai Sharma, Vice President, Revenue Management, Wyndham Hotel Group
• Susan Spencer, Market Director - N. America, ChannelRUSH
• Trevor Stuart-Hill, CRME, President, Revenue Matters
• Paul Wood, CRME, CHBA, Vice President of Revenue Management, Greenwood Hospitality Group