Do You Want to Form an Alliance?

Do general managers and revenue managers need to form a hotel alliance? Absolutely they do.

Revenue managers and general managers both drive their hotels toward achieving gilt-edge revenue performance. However, they may approach the goal of revenue management with varying strategies. While revenue managers make strategic and tactical decisions designed to capture the highest revenues, general managers typically view revenue management more broadly – their ardent eye on revenues is just one part of their focus on big picture success.

So what happens when a general manager focuses in on executing strategies that aren’t driving the highest revenues for the hotel? A misalignment of objectives between the general manager and revenue manager may not only cause disconnect within their relationship, but could ultimately cost the hotel valuable profits.

Here are a couple of common hotel scenarios facing revenue managers and general managers – and what hotel general managers should be looking to their revenue managers for.

Consider this situation: A hotel is in high demand for an upcoming Friday night and there is a revenue opportunity to convert some of the peak demand into higher shoulder night occupancy. Rather than accepting two nights (a peak and a shoulder night) at 90% occupancy, the general manager wants the revenue manager to release stay restrictions for Friday night. This ends up selling out Friday, but causes the hotel to run at 55% occupancy on Saturday. Not only did the hotel miss an opportunity for higher occupancy on Saturday night, but it caused them to lose revenue over the two-day period.

Then there’s the opposite end of that same spectrum: A general manager at a premier hotel wants to enforce a two-night minimum stay on one of their premium public rates. Every week, the pair of days never forecast to sell out and the stay restriction causes the hotel to achieve just 70% occupancy for each day. The revenue manager wants to remove the stay restriction – increasing rate on the first night and offering a slightly lower rate on the second. While a few weeks of trying out this new strategy successfully nets higher revenues, the general manager still wants to go back to their original two-night minimum stay strategy.

Accomplishing long-term revenue success means it’s extremely important that revenue managers are in lockstep with their general managers on developing optimal hotel revenue goals. Today’s revenue managers need to not only analyze data and business to make intelligent revenue decisions for the hotel, but also need to educate, align and communicate revenue goals throughout the entire hotel organization.

Hotel general managers need to look to their revenue managers as internal leaders who are doing far more than forecasting and optimizing room rates. The decisions revenue managers are making affect the hotel’s total profitability, making it important that general managers are looking to them to execute strategies that drive total revenue performance. If a revenue manager and general manager find themselves conflicted as to which strategy is right for their hotel, it just might be the right time to have a conversation about their objectives and strengthen their alliance.

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