If you're having a difficult time filling revenue management positions for your hotel, chances are you're not alone; although the profession is booming, the amount of talent isn't, and many organizations are struggling to find qualified revenue managers for positions worldwide, sometimes for months at a time.

In fact, the demand for talent has grown so much that many organizations, such as Accor, are building their own talent pipelines.

A major hotel operator in Europe, Accor has begun sponsoring educational programs to recruit more professionals. Currently putting out an average of 30 to 40 job offers per month in revenue management, the company recently announced a partnership with Institut Paul Bocuse to provide educational content for a revenue management training program at the school.¹

The lack of talent is particularly challenging amid a complex marketplace that includes mobile marketing, flash sales, and competitors who consistently undercut their prices—all of which underscores the need for sophisticated revenue management practices in hotels.

However, by properly preparing their workforce, hoteliers can overcome today's talent challenges to create a strong culture of revenue management and even stronger bottom line.

Less Supply, More Demand

Put simply, the single biggest contributor to the talent shortage is that colleges and universities aren't keeping up with the demand organizations are showing in revenue management. No longer limited to hotels and airlines, revenue management now includes the supply chain industry and even retailers like Home Depot.

Despite this, universities continue to produce the same amount of people they did a decade ago. Although this is starting to change, there's still a two to three year lag period before individuals currently enrolled in revenue management training programs (or applicable degrees) enter the workforce.

Another key contributor to the talent shortage is the increased demand globally for revenue management. For example, Marriott International plans to open one hotel a month in China for the next three years.²

To help meet that demand, many aspiring professionals from China, India and several other countries are earning their degrees in the U.S. and then returning to their native countries to work, stretching the pool of available talent even thinner.

A Call for "PhDs with Personality"

As the hospitality industry grows more complex and more emphasis is placed on total revenue management, organizations are starting to look for different skill sets and competencies in revenue managers. Traditionally, revenue managers served as "number-crunchers" and "record-keepers"—individuals highly skilled in mathematics that used Excel spreadsheets to collect data and determine pricing decisions.

But as revenue management becomes more critical, the skill set has deepened to include math, business and people skills. Although it's still imperative to find math-savvy individuals, it's equally important to find experts who can effectively communicate revenue management strategies and principles to senior leaders.

In his book Competing on Analytics, author Thomas H. Davenport explains the importance of hiring "PhD's with personality—individuals with heavy quantitative skills but also the ability to speak the language of the business and market their work to internal (and in some cases, external) customers."³

The reality is that for revenue management to be effective in today's competitive marketplace, it must be understood and supported by senior leaders across all hotel departments, including sales, catering, front office, reservations, food and beverage, and housekeeping.

In addition, as revenue management becomes more valuable—both at the corporate and individual property level—revenue managers are working more closely with the executive suite to help build and instill a culture of revenue management to further drive profitability.

Building from the Ground Up

Prior to building a revenue management culture from scratch, organizations should consider two options: they can build their own revenue management team and process or they can "buy" (outsource) their revenue management strategies from a third-party organization. Factors such as the hotel's size, budget, and short- and long-term objectives can all influence how the hotel decides to implement their programs.

One major benefit of an in-house revenue management team is having people on site who completely understand the hotel's business, including its clientele, spending patterns, and marketing strategies. Able to work alongside the sales, reservations and even catering teams, in-house revenue managers have immediate access to the information they need to make better pricing decisions and effectively align their strategies with those of the other departments to further optimize revenue.

When assembling a revenue management team, hoteliers should look for individuals who can:

1. Analyze existing data and current business processes and infrastructure in order to identify revenue gaps and exploit opportunities.
2. Take a scientific approach to improving pricing strategy to ensure that the strategy motivates purchases without discouraging interest in less price-sensitive segments.
3. Demonstrate a data-driven approach to formulating competitive pricing strategy.
4. Accurately forecast demand based on market segmentation or product mix in order to apply the appropriate pricing strategy that optimizes revenue.

If the above skill set sounds ambitious, it is—particularly amid today's fast-paced, interconnected marketplace. Yet in order to gain a competitive advantage, revenue managers must analyze data and identify booking trends multiple times a day in order to recognize changes in demand and react in time to make a profit.

Hoteliers can achieve this by equipping their revenue managers with software that automatically assesses hotel performance (through specialized algorithms) and identifies trends so that revenue managers can accurately forecast demand and make more informed pricing decisions.
Virtual Revenue Management

A major roadblock to building revenue management capabilities internally is that it doesn't occur overnight; it can take between one year and 18 months to develop a revenue management team and culture, and experience noticeable returns. For hoteliers looking for a more immediate return on investment, buying revenue management services, or outsourcing, is a more practical option.

Similar to hiring in-house revenue managers, hoteliers should look for consultants experienced in the science of revenue management who can also explain—in laymen's terms—the basic principles of revenue management to decision makers less familiar with the language. This way, virtual revenue managers aren't just analyzing data and executing pricing strategies, they are educating staff at the hotel so that they, too, can learn how to make effective pricing decisions and enhance the culture of revenue management at the hotel.

This is particularly important for hoteliers who choose to outsource while building their own revenue management team and practices—a strategy meant to help fill in the gap between implementing revenue management and mastering the learning curve. By employing virtual revenue managers who take the time to explain their tactics and strategies according to the unique needs of the hotel, the hotel can more easily "disconnect" when the time is ready.

Virtual revenue management is also a practical option for limited-service hotels or properties that don't have the budget or resources to employ full-time revenue management professionals.

Making an Impression

As the revenue management field continues to flourish and expand, it's an exciting time for revenue managers and aspiring revenue managers. Not only is the job outlook strong, it's becoming a highly respected discipline as revenue management moves from the back of the house to the front, receiving more exposure from the executive suite in the process.

For hoteliers building out revenue management teams and practices—whether internally or virtually—it's important to hire results-driven professionals with strong math and analytical skills and the ability to effectively communicate their knowledge to senior leaders.

Doing so ensures that the entire organization buys into the importance of revenue management and brings leaders within every department together to maximize the hotel's products and services.

It's also important to equip revenue managers with technology that improves the forecasting process and helps foster more strategic, proactive pricing decisions. By implementing revenue management software, revenue managers can more easily identify and capitalize upon today's complex booking trends so that their hotel remains competitive.

Notes:

1 - institutpaulbocuse.com/us/ipb/accor_and_the_institut_paul_bocuse_
commit_to_the_professions_of_the_future_in_revenue_management
2 - chinadaily.com.cn/bizchina/2011-11/09/content_14061668.htm
3 - hbr.org/2006/01/competing-on-analytics/ar/1

Nick Curcuru is the lead consultant for the Americas region of IDeaS Revenue Solutions.  Nick has worked for nearly 20 years in operations and consulting, delivering solutions with and for companies such as The Walt Disney Company, Royal Caribbean International and The Home Depot. 

Over the last 15 years working for Arthur Andersen and in the SAS Professional Services Group, Nick has focused on high-end analytics working with his clients to enable fact-based decisions by employing data mining, analytical forecasting, and operations research to drive revenue, understand customers, and determine the right products/services to offer in the market.

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