Ten questions a GM should ask their Revenue Manager
Two incredibly important roles and critical to the success of every hotel. So, what kind of conversations should they have? Well, for the next few days, we will release one question/conversation that we feel should take place (with an introduction each day for context). I hope you enjoy the read...
General Manager… Revenue Manager… often the ying and yang of a hotel.
Broad stroke this may be, but General Managers tend to come up through Operations. Many of the GMs I have had the privilege of working with have been Chefs, Bar Managers, Restaurant Managers, Duty Managers, or Assistant GMs, and then finally the very rightly coveted role of General Manager.
GMs I salute you! You have a gene that screams ‘people person’. You often love to ‘walk the floor’, love being customer facing and have even been known to help out during a busy service… I am a Revenue Manager who has worked in Operations, but even after over 25 years in hospitality, I could not do your job…
Revenue Managers, on the other hand, tend to have that title bestowed upon them after a career in Front Office or Reservations. Few take the route that I did and came from Sales but thankfully we are seeing more and more of that as the Revenue Management role moves into Commercial Management. This wonderful new Revenue Manager can morph from any department – Sales; Marketing, Accounts – to name but a few… As long as this person wears a commercial hat, we (at last), see this role expanding and growing in stature. ‘Here, Here’ I say…
But still, I go back to the ying and the yang… and that is what makes these two roles so different but so vitally important. And to clarify, the words we are looking to use to describe this relationship are: collaborative, respectful, support, guidance, and the ability to have meaningful and often challenging conversations without confrontation
So where does collaboration start? Well, it starts how all great relationships start… with interesting questions…
So Mr. Fabulous GM, what should you be asking your Revenue Manager at your weekly meetings and what conversation should this spark?
Question 1: What is our business on the books for the next 3 months?
This 3 might be 6, 9, or 12 depending on your business, but whatever time frame you choose, you need to do a deep dive and be prepared to evaluate every single day. Make sure that your Revenue Manager has the right figures to discuss and set out which reports you to need moving forward (preferably on screen and not printed – we have a planet to save after all!). Only ask for data that you are prepared to measure and build KPIs around. These KPIs can be unique to you, so it might be occupancy / ADR / RevPar or GoPar – you decide… So let’s start:
Why do you want to know this: You want to know if you are trending ahead, on track, or behind where you should be and then put strategies in place.
The Conversation: Where am I compared to pace? Ie Is my business ahead or behind your own KPI (often Last Year, Same Point in Time), but this may be budget or forecast. Revenue Managers typically hate being held to budget as they often can have zero or close to zero input into the figures presented. Many prefer to work to a forecast as that can often reflect their own or a system’s more realistic calculations as they ebb and flow with changes in market conditions and are not carved once in stone and left as a mythical figure to try and achieve. No matter what you choose to measure, you need a deep dive into the response.
Actions if you are ahead of pace:
· Have your distribution channels been restricted? You don’t want to leak business to expensive OTA’s if you don't need to (more to follow on that point)
· Have lower rates been closed and your base rate moved?
· Can we add restrictions such as minimum length of stay (a blog for another day but this restriction is being used less and less) but you may want to look at what restrictions you can add if you feel your business can take it.
· Has the forecast been adjusted and how does that align with the budget (again more to follow)
Actions if you are on pace:
· We all love to beat pace, so what actions are being put in place to beat our forecast/budget?
· Can we push our ADR, change rate strategy, or start to restrict (as above)
Actions if you are behind pace:
· Do you need to look at specific need dates and put specific campaigns in place? Will this mean a mailshot? Do you need to have your Digital Agency on stand-by to run targeted campaigns?
· What packages do you have online?
· Are your OTA’s open for sale?
· What has been communicated to Sales and to Marketing? Are they aware of what they might need to do to plug any gaps? What strategies have both departments jointly agreed on to attract new business?
The bottom line here is that you need to be ahead of need dates, so make sure you have the data and let your Revenue Manager get in front of this… You have a highly skilled team member sitting in front of you who may know the numbers, but their role is the strategy. Your Revenue Manager will know (or should know) what works and what doesn’t… You may be behind now for one month which is three months ahead but that is okay… A great Revenue Manager will relish the challenge to build a strategy around filling that gap.
Question 2: Are you happy with the current performance of our segmentation?
Why do you need to know this: Obvious of course but each segment will have three major influences on your business – 1) ADR 2) Cost of customer acquisition or COCA 3) Potential for incremental spend. There are other considerations such as the risk of cancellation but my advice is to focus on these three.
The conversation: Which segments are performing well and where are the gaps? Are you, as an example getting more leisure business at a higher ADR? If so, what does that mean for the other operational departments within your hotel? Are they ready for this? Does the spa/restaurant/room service/front office understand the demands that leisure guests may be putting on each of their departments? It is your Revenue Manager’s job to communicate that. What if there has been a shift that is now having a negative impact on your business? Do a deep dive into what segments are tracking ahead or behind. What is their ADR? What has changed? Are you now accepting more contracted business than before? Had you budgeted for that and expected that switch? Do you have Tour Business coming back? What rates have been agreed? The goal of course is to stay ahead of this. You may purposely want to do a segmentation shift. The customers you have now may not be the customers you want in 6 months’ time… Your Revenue Manager, with direction and collaboration from you, the General Manager (with of course the support of Sales and Marketing), will need to have either the planned strategy in place or be able to react if the market chooses to change your strategy!
Question 3: How are our other revenue streams performing?
Why do you want to know this: Great Revenue Managers understand the importance of Total Revenue. It is not their job to solely focus on room revenue but to understand the impact that their pricing has on your outlets.
The Conversation: It is often useful to understand the ‘make-up’ of your business eg RO v BB v Dinner inclusive packages v Spa packages v golf packages. Or do you have a large wedding in-house where the majority of BOB is attributed to the wedding? What impact will this have on your bar/restaurant? Will you have empty outlets because of this? Is the FO team aware that they need to be careful when assigning rooms to ensure non-wedding guests aren’t disturbed by noise? Or do you have a large group in-house that might impact the kitchen? Eg the chef may need to adapt the breakfast offering if certain nationalities are in-house. In short, how is the rate strategy that your Revenue Manager has implemented and in turn the business that is due to arrive at your hotel impacting the profitability of the rest of your outlets? This question is critical and you may be surprised by what you find.
Question 4: What is the status of our Group Blocks?
Why do you want to know this: You need to understand the risk to your business ie what might wash or cancel.
The Conversation: Can you give me a breakdown of our contracted block business and assign a risk factor to it. Eg, if you are holding 300 rooms over the next 3 months and only 50 of them have picked up and moved to guaranteed, what is the possibility of the other 250 rooms actually materialising? If the Revenue Manager feels that 50 of them are at risk, then what will losing 16% of your business mean in revenue terms?
Again, get ahead of this and you may well start to see patterns. Are your brides holding too many rooms that are never fully committed? Are those golf groups more lucrative than you thought? All of these business insights will fall out in the data and a great Revenue Manager will probably see the patterns long before you as a GM do.
Question 5: What did I pay OTA’s last month and what was that as an overall percentage of a) my room business and b) my revenue?
Eg OTA’s equated to 52% of overall room production and 44% of nett room revenue.
Why do you want to know this: Every single GM is now acutely aware of costs. STR (among others) is now citing that your current ADR needs to have circa 11% deducted to reflect rising costs. Again, your commercially aware Revenue Manager should have those figures for you, and if they don’t then a better relationship with the FC is needed.
The Conversation: Going back to costs… reducing commission cheques is one of the quickest ways to impact your profitability. Most of us need OTA business but we certainly don’t need to allow the floodgates to open. Lazy Revenue Managers (yes, I did say lazy…) will allow any and all business in through the door. Bums on beds are better than nothing, right? Wrong! If you have a large percentage of business leaking to OTA’s then your Revenue Manager isn’t doing their job properly. That percentage is different for differing personas of hotels. We have high-end resort hotels with single-digit reliance on OTA’s and believe it or not, we have some hotels with eye-watering percentages, but the industry as a whole is pushing for an average of around 50-52% (and preferably below). Know what your current percentage is and then task your amazing Revenue Manager to reduce it by 10% by the end of the year. This will be a slower-than-you-would-like process but definitely well worth doing.
The second part of this question is: how much of your future OTA business is at risk?
Why you need to know this: As you know, Booking.com openly say that 50% of all of their reservations cancel. Your Revenue Manager will know your unique percentage and what the financial risk to your business is and how will that be mitigated
Question 6: Where are our customer reviews sitting?
Why do you want to know this? Customer reviews affect your ability to price and also shine a very bright light on what your customers actually think of your product and service. TripAdvisor… love it or hate it, we need to watch it like a hawk! And of course, Trip Advisor is one of many review sites, so your amazing Revenue Manager should already have a handle on which sites your guests leave reviews on and also be considering these sites as valuable information providers. We all know that we have ‘professional complainers’ and I have seen enough fake reviews to last a lifetime but as a GM, you will understand how failings in your service or product are magnified ten-fold when keyboard warriors get to hide behind a laptop
The Conversation: How many reviews have been left? What is their rating? What are we doing right and what are we doing wrong? What operational and service issues have been recorded? What needs to be addressed? Are we seeing patterns where we need to be alerted to real issues? Is there anything noted that will affect our ability to price either short-term or long-term?
Again, this is where your amazing Revenue Manager will come in and they will know that strong relationships with other departments are key to the overall commercial success of the business. This really is the definition of ‘breaking down silo’s’. Every department needs to understand the impact they have on the commercial success of your hotel and your Revenue Manager will be the key driver in all of this.
Question 7: How is our brand website performing?
Why do you want to know this? Without trying to sound patronising, we all know that receiving bookings through your brand website has the lowest associated cost of sale. Thankfully more and more hotels are understanding the importance of their own booking channel contributes to their bottom line, so it is important to be ‘all over this’.
The Conversation: What was my performance (rooms and revenue) last month on brand.com? What is it YTD? How does this performance rank against other commissionable distribution channels eg booking.com and Expedia? Are we seeing growth on brand.com compared to other OTA’s and are we seeing business being moved from the OTA’s to brand.com ie is there a channel shift? If so, how can we improve momentum, and if the OTA’s are out-performing brand.com then why?
How are our digital marketing campaigns performing? What is our conversion? What is our ROI (aim for at least 12:1) Which campaigns are working and which are not? Which packages and rates are selling? What is my ABV on my brand site compared to the OTA’s? What actions are in place with our Digital Agency? Do we need to increase spend or activity on certain need dates? How are we performing on Meta? What is our lead time? Country of Origin?
The goal of course is to increase direct bookings and this will certainly be high on the agenda of any Revenue Manager. Your Booking Engine provider will be a great help in providing these stats but please also remember that they are seeing only one part of your business and do not have ‘eyes’ on every other segment or booking behavior, so stand back and allow your clever Revenue Managers to make informed decisions
Question 8: What is our pricing strategy compared to our Competitive Set?
Why do you want to know this? Those of you who know me will know that whilst I am all for understanding comp set pricing I am dead against that defining a hotel’s own rate strategy. There are so many reasons why (see blog - https://www.rightrevenue.co.uk/blog/dont-be-a-sheep) but what I do not shy away from is that you do need to understand where you sit within your Comp Set. But this is a point for discussion as well as you probably could have several Comp Sets. For example, we are lucky enough to work with Resort properties and Country Houses - and hotels within these personas could have a Comp Set which includes a hotel 50 or 100 miles from them. Hotels close to you aren’t always who you should be comparing yourself to. For that kind of persona, it is all about customer experience. Aggressive city hotels are of course at the other extreme where a change of £5.00 or even £1.00 can make a huge impact.
The Conversation: How are we pricing for the next X days/weeks (dependent on your own lead time and business mix) compared to our top 5 competitors? Are we comparing apples with apples? Ie are we looking at similar rate types (eg inc or ex breakfast) and room types? What is our BOB on each day and our forecast? This will help you establish whether you need to be more or less aggressive on your pricing. But please review with caution… if your competitors are dropping rates, you could end up with a race to the bottom and NOBODY needs that!
Question 9: Do we need to adjust our current rate strategy?
Why do you want to know this: Now you have a complete 360’ of your business, you will need to review your current rate strategy to ensure it is optimised to sell the right rate, to the right customer, at the right time, for the right duration and through the right channel.
The conversation: Ask to see your BAR rate for the next month (or your own time frame which will be dependent on your pick-up and lead time) and see if this equates to your strategy (which you now have a better idea of). Check which packages are open for sale and if they are priced correctly. My advice is to do a few spot-checks on your website. We often see hotels that have no availability of certain room types over a multi-day stay and of course this can drastically limit your opportunity of converting reservations online. Make sure you have good availability and if you need to ‘over-sell’ certain types of rooms to maximise revenue then at the very least, have that conversation with your Revenue Manager
Question 10: Who’s turn is it to make the coffee?
Why do you need to know this: Because after this, you deserve it!
The conversation: Definitely the next new series on Netflix!
And I guess it would be remiss of me to say at this point that Right Revenue can help with 9 out of 10 of these questions (unfortunately, we are yet to master making the coffee), but all of the answers to all of these questions can be found at the touch of a button in Right Revenue.
We are proud to do the ‘heavy lifting’ for your amazing Revenue Managers and we are there to support (never, ever replace) their strategy… After all, without the data, you are just another person with an opinion and without an opinion you are just another person with data… Right Revenue is here to marry both – the data and the strategy which your amazing Revenue Manager puts in place.
If you would like to give a huge amount of time back to your Revenue Manager and to allow them to become your Commercial Strategist; and if you would like all of the clever data to make decisions on, to be right at your fingertips; as well as of course, amazing forecasting and great rate recommendations, then please just ask@rightrevenue.co.uk
We would love to help…
And most of all, I hope you enjoyed the read… Adrienne