Part 2 - Revenue Managers - How we get it wrong...

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Part 2 – Revenue Managers – How we get it wrong…

Following on from last weeks blog – which can be found here – http://rightrevenue.co.uk/revenue-managers-how-we-get-it-wrong/   I thought I would take another few moments to outline how sometimes Revenue Managers get it wrong and what we can perhaps do to fix it… These mistakes are usually made due to lack of training, mentoring and support.  Revenue Managers are often promoted through the ranks of Reservations or Front Office and often can get thrown into ‘spreadsheet mania’ without any thought or respect given to the enormity of the job and just how influential the role is to every single part of the business. Therefore mistake number 1 is not valuing the position…

1 – Invest in Training

No matter how big or small your property is… No matter if it is full service or limited service… we all know that profit is made or lost in rooms.  Revenue Management is a strategic role which touches every single part of your business – from guest experience, to wage percentage control; from online reputation to bottom line profitability.  If any one of my team had that much responsibility and that much influence over my overall profit, I would be investing to make sure that they were the very best at their job that they could be.

My advice – train, develop and mentor.  Training your key revenue team member is not a one-off.  The industry changes constantly, so allow them time to develop.  Pick the best training courses and ensure your Revenue Manager is one step ahead – always!

2 – Stop copying the competition

Every hotel in the world has a competitive set and I am not for one moment saying that we shouldn’t take their behaviour into consideration but please, please don’t always be a ‘follower’ – strive to lead!  For example, you don’t know what is happening in the hotel down the street.  They could have dumped their rates as they may have just lost a large group; or perhaps they are not picking up at their expected pace. Or maybe they have just taken a large group and their Revenue Manager has made the decision that ‘rooms sold’ is the only barometer for setting price and has increased rates with no thought on how to manage contracted versus non-contracted business… Maybe if their prices are high and they have filled with group business, you can mop up the ‘diamond dust’ ie all those lovely corporates and last minute bookers who are prepared to pay more???

My advice – get your own house in order first.  Understand every nuance of your own revenue strategy and then make a decision.  Just because the Revenue Manager in a hotel across the street is an idiot, doesn’t mean you have to be!

3 – Stop up-grading for free

Now this one might be slightly controversial as there is always the right time to upgrade.  And in these days of personalisation and improving guest experience, you may feel that it suits your business to allow upgrades.  However, I would err on the side of caution.  As an example, we often have corporate guests (who by-in-large will pay lower contracted rates) having a regular upgrade because one night, one of your Front Office team felt sorry for them but now they expect it all the time.

My advice – There is of course a place for upgrading – special occasions  or when inventory management actually suits you but the general rule should be – don’t upgrade your regulars without them knowing it is a one-off; upgrade only those people who are genuinely celebrating and therefore have more of a chance of telling everyone just how fantastic their stay was and basically  – if they aren’t paying for it, don’t give it away for free!

4 – It’s okay to over-sell 

The flip-side of upgrading for free I guess and this really is to suit your business needs.  There are times when we need to over-sell particular room types – perhaps when a group has a defined budget and you need to bring all  your rooms into ‘standard’ inventory to secure the business within budget.  Or perhaps you need to over-sell your whole property, just to have a chance at coming close to a full house. But before you do anything, you need to track and analyse.  If you are taking a group and need to bring superior rooms into standard inventory then make sure you aren’t displacing higher rated business.

With regards to over-selling, this isn’t as frightening as it sounds, if you again have analysed and know your facts.  This is becoming more and more prevalent as the OTA’s continue to cancel 47% of all bookings (booking.com figures, not mine).  Therefore, we as hoteliers, need to understand the ‘risk of cancellation’ and factor that into our over-selling strategy.

My advice – track and use the maths.  Probability formula is wonderful and if you don’t have a revenue system to do that for you, then allow your Revenue Managers the time to assess.  Have all the facts at hand – probability of: un-constrained demand; probability of cancellation by day of week / room type / segment or source; probability of early arrivals / late departures / re-locations. Use all of the clever data you have and then make a call

5 – Understand the impact that Revenue has on all things Marketing

I am sure that most of you have a pay per click campaign?  Perhaps you are dabbling in the world of meta? Sending e:shots or maybe still using traditional methods such as newspapers to market your hotel? But shouldn’t your Revenue Manager be dictating if and when all of that takes place?  A good Revenue Manager will understand the impact a targeted PPC campaign will have on business.  She will understand the lead time and booking window and also the impact on her business – occupancy; price point and incremental spend potential.  A good Revenue Manager will also understand need dates well in advance of anyone else, and she should be the one tapping at Marketing’s door asking for help to fill 6 months in advance, along with what strategies are needed and when.  The flip side is that a good Revenue Manager will also understand when you don’t need the business.  What is the point in spending hundreds if not thousands of pounds advertising special offers for Spring, when actually you have secured great group business or wedding business already and can mop-up the rest on leisure???

My advice – and I have said it many times… stop working in silo’s and let Revenue Managers ‘rule the world’

And for all things Revenue – just ask@rightrevenue.co.uk

ABOUT THE AUTHOR: Adrienne Hanna

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