Dear Hotelier, in today's demanding environment, there is rarely time or occasion to evaluate the quality of your revenue management.

Fortunately there are two simple questions that go a long way toward determining your hotel's revenue management effectiveness. I encourage you to get together with your revenue team and ask them soon.

1.What decisions were made that contributed to last month's results?

2.What examples do we have of wrong decisions recently uncovered?

These aren't trick questions, but in my experience they'll stump any hotel with ineffective revenue management.

The first question should be a quickie. If you have effective revenue management, decisions are being made that direct your end results. Whenever I hear a response along the lines of "our results just happen to us, they're out of our control", inside a little piece of me dies. The last thing you want to hear in response to the first question is "STR happens."

If the first question gains you blank stares, you can prompt with leading questions like "what did we do with our online travel agencies?" and "how did we price versus the competition?" What you need hear is the understanding that the purpose of revenue management is to determine your results, not report them. In short, having a revenue manager does not guarantee you have revenue management. Please check.

The second question speaks to a mission I've undertaken to encourage wrong decisions. Yes, you heard me. I'm the Johnny Appleseed of spreading wrongness across the revenue management world. The reason? If you're not willing to be wrong, you won't have a chance to be right.

Let me be clear here. I welcome wrong decisions, not bad decisions. There's a critical difference.

When all the usual revenue management metrics such as market intelligence, historical data, economic outlook, etc, are pointing you in one direction, but you make an emotional decision that goes in the other direction, you've made a bad decision. Bad decisions should be avoided.

However in revenue management, more often than not, the metrics don't conveniently lay out a clear path to follow. This is where the willingness to make a wrong decision makes all the difference. When a case can be made for either side and you face a "six on one, half a dozen on the other" approach, your revenue management leadership must be willing to risk making a wrong decision. If not, the only other option is no decision. No decision results in the "our results are out of our control" approach mentioned earlier. The worst possible decision is no decision, leaving your fate in the hands of others. Others do not have your best interests at heart.

It's human nature to try to avoid being wrong, particularly if you believe your employment status may be impacted. Getting over this hurdle is critical to successful revenue management. If you create an open, safe environment for wrong calls, insisting upon a review of available information first to ensure you're not risking a bad call, you empower your revenue management to take control of the reins, which in turn guarantees you a response whenever you ask the first question. Don't you just love it when things come full circle?

I spent quite a few years in convention hotels, making decisions on business five to ten years into the future. Trust me, there is rarely a clear cut path to follow in those circumstances. My sales teams always looked bemused when I assured them that I was likely making wrong decisions daily. Not a proportionately large amount, mind you. But if you're making twenty borderline calls a day, you're bound to have a few clunkers in the mix.

And I'm fully aware that in 2016, someone in San Antonio, TX is going to look at a piece of arriving business and comment about the idiot revenue manager who accepted it. That would be me. But I'm okay with that, because I made the best decision I could with the information available at the time, and they won't be making that same comment about all the other groups arriving that year. That's the attitude you want in a revenue manager.

Oh, a little follow up note. Make sure you keep asking about recently discovered wrong decisions, because if they aren't acknowledged and discussed, they're likely to be repeated unnecessarily. The first time, it's a wrong decision. With repetition, it becomes a bad decision.

I hope this helps you assess the quality of your revenue management and keep your RM team on the right track. Go out there and celebrate a wrong decision today!

Service providers at Dynamic RM are proven leaders in the hotel revenue management field with established track records of success in a variety of hotel companies. These individuals are now independent contractors dedicated to the success of their hotels.

Dynamic RM was established by Jil Larson, a 25 year hotel veteran with leadership experience throughout the U.S.A. and Canada in revenue director positions at the property, cluster, regional, and corporate levels. When warranted, Ms. Larson involves partner revenue management leaders, each with particular expertise in specific markets, market segments, or software systems.

www.dynamicrevenuemanagement.com