Commercial Arena
Commercial Strategy

Game On – Revenue Management Arrives in the Commercial Arena

By , Vice President, Global Marketing

Hotel revenue management is going corporate, and talented revenue managers are selling out—in a good way.

The role of revenue manager may never be the same. Due in part to advances in technology, along with the need to overcome current and future downturns, hotels are in the process of restructuring their operating models—an aspect of the business that has gone largely unchanged throughout much of history.

The result of this evolution will see many revenue managers step into roles of greater influence as profitability is prioritized across every aspect of a hotel’s operations. As COVID disruption causes more hotels to consolidate, revenue management has become more entwined with every aspect of hotel distribution, sales and marketing. This enables a natural progression for revenue managers who have been developing new skills and expanding their role during the last business cycle. Now is the time for revenue managers to take the helm as commercial leaders within hospitality, beyond the property level.

Reimagine Revenue Management

Unfortunately, revenue managers still have much to overcome before they are able to fully transition into commercial leaders. The individual business sectors within hotels remain heavily siloed, with one area of hotel operations gated off from the others behind the scenes. This remains a significant barrier to efficiency, and it is unsustainable in a business climate defined by slim operating margins and a reliance on data and technology.

The tug-of-war hotels play to attract guests is becoming more competitive. Third parties are once again finding the advantage in attracting guests thanks to their massive marketing budgets and sophisticated data analytics. As a result, revenue management is sinking its teeth into every corner of hotel operations to eliminate inefficiencies and make better purchasing decisions.

Astute revenue managers saw this shift coming. Over time their position has taken on more and more responsibilities, and many revenue managers spent the last business cycle learning leadership skills in addition to operational acumen. As a result, the very concept of revenue management has outgrown its modest description. These professionals are in a position today to reshape the industry to improve fiscal efficiency while providing a more impactful, targeted guest experience. Now, while the business of hospitality is experiencing a broad transformation, revenue managers are considering ways to affect change beyond the confines of the hotel.

Embrace Data-Driven Tech

Consigning hotel operations to separate silos harms more than just revenue management. Guests throughout the past business cycle increasingly asked for an almost prescient experience from hotels, one where their needs are anticipated and met before a request was made. And why shouldn’t they? Travelers gladly parted with their personal information at the industry’s behest with the promise of an improved guest experience. However, hotels struggle to  provide such an experience when their internal systems are unable to communicate or cooperate with each other.

The importance of technology for future success within travel cannot be understated. There is a new wave of leadership establishing itself within the industry that understands the value and utility of data, and is able to make crucial determinations from it at a glance. These leaders recognize the connection between revenue management and commercial success. They see the value in gathering more information on guests and market conditions, and most importantly they are able to think creatively in order to develop new revenue-generating models within hospitality.

This creative approach is invaluable today, as hospitality is in need of new profit-generating exercises. This was a concern operators shared prior to the pandemic, as rate parity, overdevelopment, and high third-party commissions limited hotel profitability. Back then hotels were searching for new ways to grow returns within existing departments, such as meetings & events and food & beverage. Now, with the travel landscape thoroughly altered for the foreseeable future, operators have to become even more creative in order to grow revenue and keep guests invested in their properties.

Rally the Troops

Hoteliers are also being forced to experiment and take risks while mitigating any potentially expensive mistakes. The best way to develop new revenue-generating enterprises within hospitality is through analyzing trends using reliable, actionable data. Revenue management is at the heart of this process, but the requirements for future success in hospitality transcend the current hotel operating model. Instead, it will require broad cooperation from every corner of the hotel, from sales and IT to front-desk and back-of-house operations.

This is a watershed moment for revenue management professionals. The industry’s attentions are focused on profitability, agility, and efficiency, and it is willing to make comprehensive changes to see it through. The next iteration of hospitality is being created at the hands of today’s revenue leaders. Together we can create a more open, cooperative business landscape informed by data and powered by tools that work in concert.

Vice President, Global Marketing

Mike Chuma joined IDeaS in 2016, bringing more than 15 years of experience in marketing and driving growth and strategy for enterprise SaaS technology companies, eCommerce platforms, and other organizations ranging from start-ups to Fortune 500 enterprises. Mike received his Bachelor of Business Administration degrees in Marketing and Finance from Boise State University.

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