Curing a Fractured Revenue Management Culture.
By Paul van Meerendonk, Manager of IDeaS Hospitality Consulting
Wednesday, 19th June 2013
A successful hotel acts as a living, breathing organism; In this metaphor, each department becomes an organ – with an individual function, but working in cooperation with others to support and drive forward the hotel as a whole.

However, when a ‘fracture' in the culture of a hotel occurs, a particular discipline may become separated from the rest, isolated, even viewed as dispensable – the ‘appendix' of the hotel. Sadly, revenue managers find themselves in this position all too often.

The Signs, the Symptoms and the Prognosis

The most common symptom of a fractured revenue management culture is seen when revenue managers find themselves sitting outside the strategic decision making process. This occurs when other key players in the hotel perceive the value of revenue management solely as providing data analysis and tactical actions, but not as offering strategic input.

In this environment, other departments in the hotel do not see the huge value that revenue management can bring to their discipline. For example, when setting up a negotiation with corporate or leisure accounts, the sales department may check with revenue managers at the last minute, looking for the final sign-off.

This is, of course, not in their best interests – revenue managers should be involved when such activities are in the planning stages, and their expertise should be utilized to analyze the revenue contribution of accounts, and determine the right price and contract terms to maximize revenue opportunities.

This broken culture has a number of damaging effects. Statistics demonstrate the isolation of revenue managers from key decision makers within the hotel – only 38% report to the general manager, which will directly impact their overall job satisfaction. Indeed, 33% of revenue managers perceive a lack of growth opportunities within revenue management.

However, some of the blame for a fractured culture lies with revenue managers themselves. The common stereotype of the revenue management discipline being dominated by ‘number crunchers' holds a grain of truth. This is, of course, not to say that revenue managers aren't sociable or friendly people – but that many limit the scope of their jobs to systems, complex analytics, numbers, and forecasts. Revenue managers, especially those who are junior, often do not focus enough on how their job impacts others disciplines within the hotel.

Thus, they may be responsible for isolating themselves, further compounding the myth that revenue management ought not to take a leadership role in the organization.

So How Do You Treat a Fractured Revenue Management Culture?

Some disciplines have an excellent track record when it comes to communicating their value. They easily get buy-in from upper level stakeholders and take a leadership role when it comes to crucial decisions about the hotel – sales and marketing being often quoted as examples.

Which is not surprising, given the nature of their jobs – they are, naturally, adept to selling their worth, branding themselves as crucial to the hotel's operations. Revenue managers must learn to borrow some of their techniques in order to do the same. In order to communicate their value, revenue managers need to successfully brand themselves and their skills.

However, branding is more than creating a logo and commissioning a jingle. An effective brand elicits an immediate, visceral reaction. Coca-Cola has the monopoly on being the ultimate, all-American carbonated drink. Apple is almost universally recognized as a company which couples innovation with design. And revenue managers need to make certain that revenue management's ‘brand' has the reputation it deserves – namely, as a discipline that is indispensable to the rest of the hotel and critical to optimizing revenue opportunities across the organization.

To kick-off the branding process, revenue managers need to pinpoint their channels and messaging tactics. To best communicate their messages, revenue managers should ensure they have daily interaction with other departments. But, crucially, these interactions must be ‘data-light'.  They should clearly demonstrate how revenue management can make other player's lives easier, and explain this in a language plainly understood. In order to do this, the central motivations of key players within the hotel need to be identified.

For instance, when dealing with a general manager – who always keeps one eye on the Gross Operating Profit (GOP) – revenue managers must be able to attach a monetary value to their strategies, so that the tangible impact of putting them into action can be evaluated. The director of sales should be addressed in terms of how revenue managers can help identify the market segment that will best help to achieve their objective of customer loyalty.

Revenue managers also need to stress that accurate and transparent pricing can contribute to client satisfaction – something the front office manager will no doubt appreciate. In essence, this means translating the data and statistics that revenue managers love into clear and concise actions that match the goals of the team.

Understanding the goals of others, and then enlightening them as to how revenue management can help achieve these, is the most effective method of stressing the value of revenue management throughout the hotel. Soon, it will be clear to all departments that the revenue manager is an indispensable cog in the wheel of all the hotel's operations.

But of course, when any reputable brand makes a promise, it must be kept. So while revenue managers need to focus more on ‘people processes', this is not to say they should focus less on analytics and forecasts. By utilizing the technological advantages of advanced and accurate technology which automate lengthy manual processes, revenue managers will have more time to focus on strategic decisions.

Prevention is Better than Cure

Revenue managers need to start thinking strategically immediately. They must take it upon themselves to lead strategy-focused discussions, in order to ensure that fracturing doesn't occur.

Communicating their value by branding themselves as essential to all other hotel disciplines will push them forward into a deserved leadership role, allowing them to make a long-lasting impact on the hotel and their career.
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Paul van Meerendonk is manager of hospitality consulting at IDeaS, a SAS company. He is an industry expert with multi-year revenue management, pricing and distribution experience across several continents.

For more information, please visit www.ideas.com

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