How to implement the culture of revenue management in your hotel
Revenue management is an extremely important component of the hotel business. Competent and effective revenue management allows the hotel to optimize sales and improve financial results.
Different customers are willing to pay different prices for the same product, depending on when they book a room, what the purpose of their trip is, and what booking channel they use.
Since the hotel has a limited number of rooms, in order to maximize revenue and financial results, it is necessary to decide through which channels, at what price and at what time to sell the rooms, in order to sell the maximum number of rooms at the highest possible price. This is just the tip of the iceberg in hotel revenue management.
Such work requires special competencies, analytical skills, experience and practical knowledge of the market. Let's look at exactly what qualities a revenue manager should have:
It's important to love numbers, tables, and reports. Stay up-to-date with trends and see opportunities. Not only understand the data, but also make quick and informed decisions.
The revenue manager must be aware of the current economic, political, and even demographic situations that may affect a particular segment of the hotel. This knowledge helps to build a pricing policy for each segment that will allow you to achieve the budget and improve your position among competitors.
It is not enough to collect data and present it to colleagues. You need to understand what is behind each figure, why the hotel showed such a result, what strategy worked, as well as how this information can be used in the future, and to convey this information to others.
Communication skills and the ability to lead
The revenue manager must have good communication skills to build relationships in the hotel with everyone — from the line staff to the owner. It is very important to be able to convey to the employees of the front office the need and techniques to sell rooms of a higher category than the guest book; with the colleagues of the sales and marketing department, develop and implement sales strategies; present the financial results to the owner.
For successful work, it is essential to be in good relations with external partners, for example, with the account managers of Booking.com and Expedia, in addition, it is necessary to maintain relations with the revenue managers of other hotels, as well as local tourist communities.
Well-built relationships with colleagues allow, on the one hand, to get the most relevant information about the work of the hotel departments, to understand their problems. On the other hand, they help to introduce the culture of revenue management in the hotel. In the atmosphere of mutual trust, different departments begin to listen to and implement the recommendations of the revenue manager.
It is not enough to develop an effective sales strategy on paper. You need to be able to convey your ideas to your colleagues, enlist their support for its implementation, and lead them.
The revenue manager should be well versed not only in the revenue but also in the hotel costs, understand and know the profit, work closely with the financial department.
Ability and desire to learn
Revenue managers cannot be successful if they are not open to new knowledge. The hotel business is developing and changing very rapidly: new IT technologies are coming, existing programs are being refined and changed, and the behavior of guests is changing.
The revenue manager must have the ability to learn new things and be able to quickly understand new tools. In this profession, you really need to continuously improve your skills, regularly undergo additional training, and then successfully apply the acquired knowledge and skills, expanding the list of professional competencies. In addition, in-depth knowledge of all hotel programs and broad outlook makes it easier for revenue managers to build relationships with partners and colleagues.
Don't be afraid to experiment
The pandemic has destroyed the usual way of life of the hotel business. The revenue manager can no longer rely on historical data and familiar tools in their decisions. To keep up with the market, a professional specialist should not be afraid to test new approaches to pricing.
By making the right decisions and using effective tactics, the revenue manager can help the hotel reduce losses and strengthen its position in the market in the post-crisis period.
It may sound strange, but this quality helps the revenue manager to be successful, to look for new ways and solutions, to fulfill and exceed the set goals, to be better than their competitors, and to motivate the team to achieve high results and set tasks.
Have a good intuition and understand the basics of psychology
What price will be more attractive for a guest: 150 EUR or 149 EUR? 134 EUR for the room only and a delicious breakfast for only 14 EUR or 149 EUR for the room with breakfast included; or is it better to retain both options? The revenue manager must make the best choice for a particular hotel in favor of a particular offer, based on the understanding of the guest's psychology.
The work of a revenue manager is difficult but interesting.
Our profession can be classified as rare. In my experience, it is very difficult to find and retain competent and experienced revenue managers. There are not so many of them on the market, especially in Russia, and there are not so many good training programs where you can master this profession.
Respectively, employers have a logical question: "Where to find a good revenue manager? And how to train them?”
Of course, you may be lucky enough to find a professional with sufficient experience in the market, developed competencies and a desire to grow in your hotel. At the same time, even such a "golden" candidate will most likely need time to explore the hotel, the competition and software products.
However, what if there are no suitable candidates on the market? There are several possible solutions.
Find a worthy candidate among your employees and train them. Look around, my experience has shown that good revenue managers grow out of reception staff. In their daily work, they usually participate in the preparation of analytical reports; look more closely at someone who likes to work with numbers, who has the qualities listed above.
The advantage will be the knowledge of the hotel software, the profile of guests and the compset. It remains a small matter — to train them in revenue management. If you have a corporate revenue director, as in the Mozart Hotel Group management company where I work, he/she will take over the training of a new employee; you can also consider using a cluster revenue manager for several hotels, which will reduce your costs.
If you are an independent hotel and do not have the necessary competencies, contact professionals in revenue management, hire an experienced revenue manager who will train your employee on the spot, set up processes, provide the necessary tools, monitor and advise your revenue manager, bringing significant financial benefits to your business.
There is no reason to give up revenue management if your property is small. The front office manager, the reservations manager or the sales manager can combine their work with the work of the revenue manager, in small hotels this role can also be assumed by the general manager if the necessary competencies are available.
There is another way, you can use the services of a company that provides outsourced revenue management. This service is especially relevant for small properties. You save on salary because you don't use the employee all day, you won't have a problem if they get sick or if they decide to leave, since companies that specialize in revenue management usually have more experience than internal candidates, and their employees are well trained.
You will have more time for operational issues, thus, you can improve the quality of service, increase the rankings of the hotel, reduce costs, which in turn will lead to improved operational results.
And, of course, the use of modern technologies will make the work of the revenue manager more efficient. Make sure that the hotel has a correct, two-way real-time integration between the property management system (PMS) and the hotel’s booking engine and other online channels through Channel Manager, and you have a tool that allows you to track the competitor’s prices (Rate Shopper).
Revenue Management System will facilitate the work of the revenue manager, in particular when working with dynamic prices. Benchmarking tool that compares hotel’s performance against a set of similar hotels will help you understand your position in the market and evaluate your strategy, and a software that provides data on demand for the future will help you build a pricing policy.
Considering the complexity of the current situation, the general manager of the hotel and the owner are very much in need of professional revenue management.
Which way to choose is up to you. I hope that the above information will help you implement a culture of revenue management in your hotel, maximize your revenue, achieve targets and improve your position among competitors.