Once just a small subset of hotel sales and marketing departments, revenue managers have now risen to rock-star status at many hotel companies.
REPORT FROM THE U.S.—With hotel occupancies continuing to hover near record highs, many operators have had to creatively work to drive rates and accompanying profits, increasingly relying on revenue managers to lead the way.
Thus over time, the importance and hierarchical standing of revenue-management professionals has grown, from being just one part of a larger sales and marketing team, into a discipline—and sometimes a department—all its own.
These days, revenue managers are often the ones who dictate rates and policy to sales and marketing teams, reversing a historical industry framework. Compensation for skilled revenue managers continues to climb, and more than ever, these professionals have a clear path up through the company ranks, even as high as the C suite.
“Revenue management has found its place in the sun these days, and we’ve definitely got the attention of everybody in the organization,” said Lori Kiel, chief revenue and marketing officer for the Kessler Collection. “It shows the understanding that we’re the ones with the analytics; we’re the ones who do the research. We know the whys, and we know the history. There is a lot that a revenue manager can now bring to the table, and there’s a reason they need to be at that table at every level.”
On the surface, experts say the best revenue managers today have strong analytical skills and thorough knowledge of the brands and markets they’ll be working in, as well as the computer systems they’ll be using, but there’s also more to it than that. The role is becoming increasingly collaborative as its prominence grows, so inter-departmental communication is also essential, as is the ability to take educated, calculated risks in the hunt for greater financial rewards.
“They’re no longer just number-crunching analysts that live in a very black and white environment. There are no right or wrong answers,” said Cory Chambers, VP and chief revenue officer for Hospitality Ventures Management Group (HVMG). “The best ones are calculated risk-takers. They understand the upside and downside of risk, and they’re willing to try new things and innovative approaches to pricing, packaging or how we manage our top accounts and segments. They’re able to teach those complex ideas to the sales team and GMs and asset managers with a very constructive, interpersonal approach. The most skilled revenue managers are also great teachers.”
Two teams, one mission
In the past, revenue managers often were considered part of the sales and marketing team at a hotel or larger hotel company, and would likely report to a director of sales and marketing. That’s all changed in many organizations, as the importance of revenue managers has increased.
These days, revenue management often is considered its own department, which operates side-by-side with sales and marketing, each with its own departmental head. Communication between the two teams is still critical, but the nature of those interactions is changing, as well as the scope of each role within those teams.
“Sales and revenue management work hand in hand, but they’ll always kind of be separate,” said Ethan Kramer, president of Paramount Hotel Group. “Sales and marketing, in our view, has become more of a straight sales position. Corporate sales manages the director of sales, sales teams in the field, and also has social media under its belt, but what groups to take is in the purview of the revenue manager. They have to work well together in order to have a successful yield for each individual hotel.”
In some cases, sales personnel are obtaining guidance and pricing approval from their colleagues on the revenue-management side before committing to client bookings. While in theory this makes sense—sales staff should discuss rates with revenue management, to ensure rooms aren’t underpriced—it can also create a situation where building long-term client relationships takes a back seat to rate targeting. Again, experts stress communication as a means of ensuring both departments smoothly function in tandem.
“You have sales people who are succumbing to revenue management. So, the tables have shifted,” Kiel said. “Long gone is the day when a salesperson could be on the phone with a client and negotiate in real time. Now, if the rate doesn’t fit what the computer system tells them to sell, they have to tell the client they’ll call them back, because they’ve got to do a business evaluation with revenue management to see if it’s something they’re allowed to take. It’s always a conversation of, ‘I’ll have to get back to you.’ I’m teaching my revenue managers that it’s not always about the black-and-white; there is a gray area that’s called a relationship.”
The booking process isn’t the only place where revenue managers are holding all the cards, either. The rising visibility and importance of the role in many organizations is giving revenue managers unprecedented leverage when negotiating salaries and titles, too. The relative lack of qualified candidates only enhances this dynamic.
“When your value increases, so does your pay rate,” said Patrick O’Neil, president of Peachtree Hospitality Management. “If you have a low salary slotted for that role, then you might not get the right person, and considering how important that is for strategy and making sure the right decisions are made—not just for rate but for overall strategy and being able to forecast markets and understand dynamics of supply and demand—it warrants getting the right person at the right number.”
From there, the sky appears to be the limit. More than ever, revenue managers are taking their rising organizational importance (and higher pay) and moving progressively further up company org charts, in some cases even cracking into the top-level C-suite positions. Experts say it’s a natural evolution, given the wide array of knowledge and responsibilities shouldered by the best revenue managers.
“Some of the skill sets that lend themselves to successful revenue managers also lend themselves to successful senior executives: a data-driven, objective approach to decision-making. Their analytical and problem-solving skills certainly lend themselves to the C suite,” Chambers said. “The best revenue managers are also very effective at managing relationships and communication. When you add those things together, oftentimes you have the attributes of a successful senior executive.”