Revenue management is an increasingly important discipline in the hotel industry, and experts in the field highlighted the top 15 things necessary to be a successful revenue manager.
NASHVILLE, Tennessee—Revenue management is a complex but key part of the hotel industry.
So, a group of speakers participating in the “(At least) 15 things every revenue manager must know” panel at the recent Hotel Data Conference analyzed the field’s simplest elements to establish the most important tools, skills and approaches all revenue managers must have in order to succeed.
Here are those 15 things all revenue managers should know.
1. Learn to negotiate and persuade
Kathleen Mallery, senior director of revenue optimization in the Americas for Carlson Rezidor Hotel Group, said revenue managers are largely data-driven people, but they must develop an appreciation for the fact that many of the GMs, owners and other stakeholders they work with are not. For that reason, she said they need to work on refining how they present data.
“We want to present a million data points and have everyone synthesize them and come to the same conclusions we have,” she said. “But they want clarity. What’s clear to you might not be clear to your GM or your owner. Show them what’s in it for them.”
2. Understand your owner, operator and team
Michael Austin, director of revenue management for the Hilton Nashville Downtown, said revenue managers should take it upon themselves to get to know their owners and management companies, what their expertise and motivations are and then do the same for everyone they work with on-property.
“I’ve got to learn what my focus is, and who is on my team,” Austin said. “And beyond that, I’ve got to learn who is on my team but is not my teammate. There are people who are working with their own objectives.”
3. What you need to develop the right culture
Lio Chen, VP of operations for LodgIQ, said while revenue management has been recognized as increasingly important over the last 15 years, revenue managers should still be building connections to other departments, like the front desk, to be as effective as possible.
“You can talk to front-desk agents, and they’ll tell you precisely what (amenities) guests ask for the most,” he said. “Or you can go to housekeeping at a busy hotel, and they can tell you what rooms are truly out of order and what rooms can be magically clean and ready even if they’re marked out of order.”
4. Understand all channels
Rhett Hirko, VP of distribution and revenue management at Preferred Hotels & Resorts, said revenue managers need to put effort into understanding what kinds of demand each channel drives.
“You may find there is a unique demographic from one particular channel, and you’ll have to modify your content to account for that or offer different types of rates to optimize those sales,” Hirko said.
5. How to refine a comp set
Mallery said revenue managers “need to do some soul searching” when putting together comp sets to determine who their true competitors are and whether their current comp set is more aspirational.
“And maybe you need more than one (comp set),” she said.
6. How to know your market
Austin said it’s important to get to know the intricacies of a market whenever you start a new job, including what channels work best at that property, but that isn’t a one-time project.
“Know that your market is going to change,” he said. “There are always new hotels being built everywhere.”
7. Creating dynamic comp sets
Similar to the earlier idea, the panelists said revenue managers should have both “looking-back” and “forward-looking” comp sets, which can help them detect anomalies and outliers while allowing them to benchmark performance against different submarkets and segments.
8. The effectiveness of subscription tools
Hirko said he’s continually surprised how many revenue managers let subscriptions for useful tools lapse simply because they never took the time to learn how to use them. He said it’s important to understand how they work and if you’re “getting your money’s worth.”
“You need to look at how you’re using it and what’s the effective return on investment,” he said.
9. True expectations when setting budgets
Mallery said revenue managers are often handed simple edicts in budget season, often along the lines of raising revenues by 5%. But it’s up to them to dig into what that really means.
“Is that across every segment all year?” she asked.
10. Understanding the tools at your disposable
Austin noted that a lot of revenue managers are relatively new to the field, so they need to take advantage of whatever training tools are available to them.
“If you’re new in the position you have to learn,” he said. “Hilton gives you a lot of educational tools.”
11. How to use technology
Chen noted that many revenue managers fall in love with visualization tools but “even the best data visualization won’t help you that much.” Instead, they should focus on leveraging technology to do things like improving dynamic market segmentation. He said revenue managers can take “practical steps” to improve their technology usage like tracking where demand is coming from and refining strategies based on that.
12. The transaction costs of different channels
Hirko said a successful revenue manager can look beyond basic rates to compare the costs of customer acquisition from channel to channel.
“There’s nothing free out there,” he said. “So take a hard look at those individual transaction costs.”
13. How to dynamically price to different segments
In the presentation accompanying the panel, the group noted that revenue managers should learn to effectively price to demand and should track if rates increase as their hotels fill and if rates increase as competitors sell out.
14. Understanding an ‘outside-in’ approach to demand forecasting
Panelists said revenue managers should be looking at a variety of data sources, which encompass things as broad as U.S. government economic reports and companywide quarterly earnings calls to local supply-and-demand and alternative-lodging reports.
15. Making sense of room configurations
Panelists said communicating with front-desk agents can help you understand preferred room types and how to best price them.