Today’s Hotel Revenue Managers are Analysts, Strategists and Total Profit Optimizers

The Hospitality Sales & Marketing Association International (HSMAI) Asia Pacific’s 10^th Annual AsiaConnect Conference was held in Singapore on September 3, 2014 at the Marina Bay Sands Expo & Conference Center. At the conference, two panels discussed how technology is impacting the role of the Sales Manager, and that of the Revenue Manager in hotels.

It sounds simple doesn’t it? The role of the Revenue Manager is to get the right product, at the right price, to the right customer, through the right distribution channel. The diversity of online distribution, along with the implicit direct sales model of mobile, means that hotels are receiving richer data, allowing them to make one to one offers to individuals at the right place and time.

This technology is enabling the revenue management team to become deeply involved in decision making to cater to an ever-more complex sales matrix, impacting the demands for new skills to manage revenue.

Revenue Managers are no longer optimizers of profit alone but are becoming chiefs of strategy offering analytical insights.

Revenue Management reporting lines are shifting

Maunik Thacker, SVP Marketing for Marina Bay Sands, led a discussion on “Revenue management and integrating it into the organization.

Thacker started the discussion with the observation that, “At some point, revenue management started out as being in charge of reservations. Back then, no one really knew what Revenue Management was. ‘Since it’s to do with room bookings, I guess it should be with reservations.’”

“In those days, reservations was under front office. Suddenly people started seeing the value in the revenue management function, and they decided to put it under sales and marketing. And then the GM said this is really quite valuable and took it out of sales and marketing, not to mention the conflict between revenue management and sales. Most places still have a revenue manager reporting to the general manager, but the problem is, I think no one really understands, or not everyone understands, what this Revenue Manager guy is doing”.

Jurgen Ortelee, VP Revenue Performance, Pan Pacific Hotels Group concurred. “Over the years, people have got smarter about what revenue management is and talked about it, and put it into a better place and position within the hotel, became more educated. In the beginning, revenue managers were really reservations managers that were used to working with spreadsheets and from there, it’s evolved into what it is today. Just the distribution side is a lot more than it ever was before. We had a phone and a telex machine back then, that was about it.”

Ben George, Vice President of Revenue Management-Asia Pacific for Hilton said, “Hilton decided about 14 years ago that it did not want to have a revenue manager reporting to the GM. Instead, it created a role called ‘Director of Business Development’ which sat between the GM and the revenue manager and that person who was responsible for sales, marketing, revenue management, ecommerce and PR, could moderate any conflicting discussions between sales and revenue management. 

The evolving role of Revenue Management with hotels

As a profession that’s still developing, the role of the Revenue Manager to date has been focused primarily on rooms revenue. As technology mechanizes the traditional tasks of revenue management, the role of rooms revenue management for hotel groups like Hilton has been taken out of the hotel property and is now with a centralized office. At the property level, the focus is being diverted to areas of ancillary revenue streams – F&B, conferences & meetings, spa and the like. The biggest challenge at the new frontier of Revenue Management is the lack of data, and the lack of resource to collect the data. 

Jeanette Ho, VP Revenue Management and Analytics at FRHI Hotels & Resorts  said, “We are on the cusp of an exciting time for Revenue Management where we can make headway to this dream of total hotel profit optimization by really make use of the data collected, understanding Analytics and knowing what to do with data. By moving more of our systems to the cloud, information is no longer fragmented and locked down ‘property to property’, and this will make our data more visible and useful to the organization.”

On the subject of total profit optimization and available data, Ben George remarked that “Most Salespersons can answer questions regarding room occupancy, but if you ask them ‘what was your meetings occupancy last month?’, most sales people can’t answer it. Meetings are off-the-chart complex. Data technology and focus is required and hotels have veered away from tackling it because it’s so complex and we don’t have the level of money to tackle it.

An exciting development in revenue management is mobile technology. Jeanette Ho said “Mobile allows Revenue Management to do a one on one offer. Mobile combined with customer insights allows us to get engagement and communication one on one.”

To wrap up the session, Maunik Thacker asked the panel “Are the lines between ecommerce, marketing and revenue management becoming blurred?

The panel’s comments were “Once, the hotel had rigid market segmentation, but the days of linear customers have gone. The world is changing and we have to adapt as consumers are no longer channel specific. Revenue management is getting more and more complex and with the convergence of sales, marketing and revenue management, we have to ask, how do we structure ourselves in these disciplines to take advantage of that?”