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One Team Working Together: The Importance of Collaboration in Achieving Revenue Management Outcomes.
By Rachel Grier - Exclusive for 4Hoteliers.com
Tuesday, 7th February 2017
 

Exclusive Feature: Hoteliers know that the relationships between hotel departments and their respective revenue streams can be intricate and very complex; Decisions made with only one revenue stream in mind, or by only one hotel department, can directly impact the business performance of several other areas.

Rather than focusing on one sole business function, hoteliers today are taking a more holistic view of revenue management, focusing on optimising demand across multiple spaces and revenue streams to maximise profit.

The challenge for hotels in the Asia Pacific region is that in order to maximise revenue within a property, all departments must converge and work better together, including the traditional roles of sales, marketing and revenue management, as well as food and beverage, banqueting and finance.

With today’s competitive hotel operating environment, it takes an entire team, not just one department or group, to capture the right guest, at the right time, for the right price.

Revenue managers and marketers: ideal bedfellows

To thrive in a fast-changing marketplace, it’s essential for demand generation, digital distribution and revenue optimisation to work together. A hotel marketing team is charged with the task of connecting directly with consumers to generate demand, whereas the revenue management team controls demand through profitable pricing strategies.

By joining forces, these two teams complement each other and can move swiftly to leverage optimal conditions or proactively address and drive change in a segment’s forecasted performance.

For instance, revenue management will be able to pinpoint areas of priority for demand generation, while marketing is well placed to know which customers they need to communicate with to fill the void. By examining each team's strengths and how they can be synchronised to help each other, hotels can more proactively and accurately target the right types of hotel guests and boost their profits.

To ensure that the revenue management and marketing departments work together, many hotels stage weekly or monthly meetings to bring both sides to the table. However, in this new environment, even weekly is not enough.

Revenue managers and marketers need real-time access to the right information for efficient decision-making. Instead of bringing spreadsheets to weekly meetings to trade routine information, revenue managers and marketers need to be able to access the information they need, when they need it, in the systems they use every day, and in an accessible, easy to interpret format. Both graphical and numerical visualisation is a start.

Importantly, hotels whose marketing and revenue management departments collaborate have reported revenue increases of more than 6 percent, increased market share, and increased demand for shoulder and low-demand periods. In order to understand how and why this works, it's important to examine each department's strengths and how they can help each other - and ultimately the hotel - enhance profitability.

Conferences and events: selling the right package at the right price

Conferences and events have been somewhat underestimated in the past by hoteliers due to a lack of in-depth understanding and appreciation of the positive benefits these activities can bring. Additionally, the overlapping nature of revenue streams across catering, function spaces and sleeping rooms adds complexity to overall business opportunity identification, which has slowed innovation in the areas of conference and events.

To achieve optimal levels of revenue from conferences and events, hoteliers should prioritise collaboration between the revenue management team and conference or events sales personnel. One of the primary focuses for any hotelier looking to enhance their returns from conferences and events is developing the right forecasting methodology to predict demand for function space. This certainly impacts the pricing being used by sales teams to secure business in a long booking window.

To ensure that a hotel is securing the right guest in their conference spaces, hotels also need to
incentivise their sales team on achieving quality of business, balancing this with quantity. Having the right forecasting, data and metrics in place may not result in optimal business without the sales team delivering the right piece of business with the highest revenue impact to the hotel.

Sales teams are best motivated through the right measurements, focused on quality and profitability of a piece of business, rather than on single dimensional metrics such as sales volume or space occupancy.

Forecasting demand to streamline operations

A hotel’s ability to forecast demand more accurately will not just affect revenue, but it can have a wider impact across a hotel’s entire operation. Revenue managers can not only help develop and implement optimal pricing strategies within a hotel, but by working closely with a hotel’s operations team, they can also provide detailed, accurate demand forecasts which assist with critical hotel planning processes.

For example, accurate forecasts can be instrumental in helping with planning inventory and staffing levels. If a hotel can anticipate demand, it will be able to have the right levels of staff working at the right times, even down to forecasting peak check-in and check-out times. This will help not only with optimising wage costs, but will also increase satisfaction from guests.

Guests form opinions of a hotel largely from their first and last impressions, and there is no surer way to annoy them than with long wait times for check-in or check-out.

Accurate forecasts used by revenue managers and shared with a hotel’s operations team can additionally support anticipating demand in restaurants, meaning that levels of perishable inventory such as fresh food can be more accurately ordered, with waste minimised.

Working better together

Many hotels are aware of the benefits of departmental collaboration, but still face challenges from traditional-minded departments that view themselves as distinct from each other.

While removing the boundaries between these previously separate business areas may not happen overnight, a long-term commitment to combining efforts will result in significant improvements for the teams and hotel, optimized revenue opportunities and a sustainable business strategy for the future.

This is strictly an exclusive feature, reprints of this article in any shape or form without prior written approval from 4Hoteliers.com is not permitted.

Rachel Grier is Managing Director Asia Pacific for IDeaS Revenue Solutions - A SAS Company

www.ideas.com

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