Revenue Management: Hotel Industry Revolutionised by Revenue Management
The UK hotel industry’s fascination with revenue management is at an all-time high. We speak to Jennifer Keen, director at Total Revenue Solutions, to discover how this relatively new discipline could revolutionise your business.
hotel-industry.co.uk: In which areas of a business can hotel revenue management be most effective?
Jennifer Keen: hotel revenue management can have an impact in any part of the business that deals with a perishable product. Broadly speaking, hoteliers that have embraced revenue management across their business have a clearer vision and have weathered the recent economic storm. It’s not just rooms we need to be commercially optimising, but also C&E, F&B, Spa, Golf and even car parking!
What can hoteliers do to have an immediate impact on the bottom line?
Keen: I think it’s really important to focus on ancillary revenue. Once you have a guest in house, your aim should be to get as large a “share of wallet” as you can. If your guest has money to spend, you don’t want them spending it elsewhere!
There’s currently lots of debate over how hotel revenue management should be incorporated into the organisational structure. Where are you on this issue?
Keen: I feel very strongly that revenue management needs to be a standalone discipline. A dedicated revenue management team needs to sit at the table alongside the likes of sales, marketing and operations to ensure that appropriate debates and discussions are taking place.
And is this happening in industry?
Keen: Well, no. Not in all cases. In some hotels, we still see revenue management not represented on the executive committee. I always find this astounding! Especially when you consider that this team is managing the hotel’s commercial activity.
However, revenue management is not just about a single person holding the title – it’s a hotel concern and to really benefit from revenue management the whole hotel needs to understand the role they play in optimising revenue performance.
So, a successful revenue management strategy requires a change of business culture in hotels?
Keen: Sure. The level of success (or lack of) is really down to the level of openness, willingness to adapt to new ways of doing things and an internal lack of competitive fear.
So you have to change the culture – and the only way to do this is to continually train and engage your team. Progressing people from the mindset of “I just do my job” to “I contribute to the success of this hotel by adding value” can be a significant leap in many cases.
Adopting a revenue management culture will ensure continual focus on demand forecasting, price, inventory and revenue optimisation and the impact of market segmentation. Quite simply, the business will become more commercially astute through a better understanding of the market and customer buying behaviours.
In my experience, if the team at the top understand revenue management and appreciates what it can do for the business, then the department becomes integrated and is given the room it requires to operate successfully. If they don’t have support, the team can become stifled and ultimately damage the business.
What is the secret behind a great revenue management strategy?
Keen: A great revenue management strategy needs to be forward thinking, one step ahead of the competition, have engagement across the organisation, have an element of risk and yet still be customer centric!
About Total Revenue Solutions: Total Revenue Solutions provides a mix of revenue management workshops, consultancy and support programmes to hotels worldwide. A new online platform is due to be released in January 2011, providing partner hotels with pricing, forecasting and competition monitoring services.