It's not easy being a revenue manager, it never has been. Even more so now because of the changes in technology, the increased number of booking channels, the increased competition and changing consumer booking habits, revenue managers’ jobs are never done.
It takes a certain type of person to be a successful revenue manager: aggressive, on-the-ball, focused, someone who lives for profit and of course, a fantastic multi-tasker. Add in to that, a keen sense for finances, a good knowledge of the many departments that comprise a hotel and how they function, and the ability to motivate and manage a team of workers. It’s clear to see that the number of activities and initiatives that a revenue manager has to undertake, to deliver their goal of revenue maximization and profitability, is high and inevitably growing higher every day.
In today’s increasingly competitive market, how can revenue managers make sure that they are able to perform at the peak level of their abilities and create a real change in their property’s revenues?
We have compiled a list of the top five ways that revenue managers can make their property (and their work) stand out from the competition in 2011:
1. Use technology to stay one step ahead of your competitors
No hotel operates without competition and so pricing in a vacuum will never yield good results, in terms of online bookings. With the click of a mouse, consumers are able to compare rates and amenities of all comparable properties within a destination so if a property’s prices are too high, consumers will book with someone else. Low rates aren’t a good thing either; by pricing rooms too low, the property loses out on valuable revenues. So it’s obvious that a revenue manager’s day-to-day work and responsibilities directly impact the profitability of a property, and as those responsibilities continue to multiply – manual pricing updates across the OTAs, meeting after meeting, data analysis, etc. – revenue managers can’t do it all on their own.
Thankfully, there are powerful tools that provide the help and assistance they need. Using the right system and managing it effectively, revenue managers can quickly access all the information they need, particularly in the area of pricing. Sophisticated RMS systems can collect pricing information for all comparable hotels within a destination, historical rate information, booking pace, etc. and suggest the best possible price for the revenue manager to set at a given time, all done continuously in real-time.
2. Economize to strategize
A very important part of a revenue manager’s workload is to develop forward-thinking, proactive strategy, which is often used as a foundation for other related departments to develop their marketing and sales strategies. Unfortunately for many hotels, the revenue manager is so overwhelmed with the day-to-day pricing tasks, proactive planning is often replaced by a reactive scramble to keep on top of the competition. By making sure the mundane tasks are taken care of thoroughly and reliably through a sophisticated RMS, the revenue manager can be freed from these minutiae. This liberation allows them to create strategy and work with the other departments carefully to ensure that all aspects of the hotel’s operations - from marketing to sales - work together to bring in as many bookings as possible. After all, the better a strategic thinker the revenue manager is and can be, the more value they can bring to their hotel – and the more profits that they can earn.
3. Keep your (OTA) partners close
A revenue management department cannot function without its partnerships, particularly today, when a large percentage of bookings are made outside of proprietary hotel reservation systems. Far too many hoteliers are too casual about their relationships with the online travel agencies (OTAs) or, worse, they ignore them completely – often citing the expensive cost of doing business with them. This is an error in strategy; the OTAs are not only a useful revenue source, they are essential sites to increase a property’s online visibility, a key factor in increasing revenues.
Today, consumers use the OTA listings as a “Google” of travel. By searching through an OTA’s listing, they can find out all of the info that they could ever need to know about what properties are available, including pricing information, within a particular destination. And if that’s where customers are looking for and booking travel, it stands to reason that if a property doesn’t have a presence on these sites, it’s losing out on valuable business.
4. Think dynamic, not static
Not so long ago, a hotel would print its rate card for a given period of time and would only change the rate when occupancy levels were unusually high or low. Since OTAs have rapidly become the norm for consumer bookings, that pricing mentality is no longer effective. With the increasing mobility and fluid nature of the hotel industry customer base, it's easier than ever for a customer to shop around to find the best value for their money. There is always a better option one mouse click or smartphone touch screen tap away for a potential guest.
This, combined with the fact that hotel markets are dynamic like any other fast-moving business, means that small variations in price can mean the difference between an accommodated guest and an unsold room. So the revenue manager needs to be just as adaptable and dynamic as the market and its clientele, adjusting prices on the fly and making constant tweaks. This certainly isn't an easy task – yet another reason a good RM is often the most valuable employee in the sales effort of a hotel
5. Inventory Spoils
Hotel rooms are inventory, but they’re not cans of tomato sauce or bags of rice. Revenue managers need to get out of the tired old habit of stacking their wares in the same place - apportioned at similar and static levels in the same OTAs. Because hotels operate in an increasingly dynamic and fluid market, as the market goes, so should inventory. Shifts should be made in accordance with demand - if a particular OTA is suddenly experiencing a spike in the number of tourists looking for accommodation in a certain city, for example, more rooms should be apportioned to that outlet. This is not advanced science, but it is a nuts-and-bolts technique that needs to be mastered by revenue managers in order to earn as much money as possible from each booking.
Success in 2011
2011 is already shaping up to be a more positive year for the hotel industry, shining an even brighter spotlight on revenue managers’ pricing responsibilities. Without an effective revenue management strategy, however, hotels will find it harder to distinguish themselves from their competition – and lose out on valuable bookings in the process. No hotel should ever do that. By following the above advice, revenue managers will ensure that their property can generate the most bookings, with the highest RevPAR and maintain their competitive edge. Every hotel should want to do that.
And the greatest way for revenue managers to ensure they can work at their most effective (and efficient) is by implementing a sophisticated RMS system that will automate the small and commonplace functions of every aspect of the revenue manager’s day-to-day work, continuously and in real-time. In other words, a proper system that will act as a trusted and valuable assistant, number cruncher and analyst all rolled into one, freeing up a revenue manager to do what they do best: develop strategies and plan for success long into the future.
About REVPAR GURU
REVPAR GURU provides hotels around the world with an alternative revenue management software solution, designed to deliver maximum bookings and profits. As REVPAR GURU's custom-designed Yield Dynamic Price Engine is the only real-time revenue management software available on the market, it meets the rapidly changing needs of hotels in a very demanding business environment. REVPAR GURU’s solution offers dynamic rate optimization, real-time pricing, integrated internet and extranet yield channel management and GDS sales distribution, to increase a hotel's RevPAR intelligently and effectively, while maintaining rate integrity and automated rate parity. Since 2004, REVPAR GURU’s software solution has been used by hotels worldwide to increase occupancy and RevPAR.
Headquartered in Miami, Florida, additional information can be found at www.revparguru.com or by calling +1.786.478.3500. Follow REVPAR GURU on Twitter, Facebook, LinkedIn or YouTube.