Have you ever been asked what you do for a living and not really known how to answer?
NB: This is an article from IDeaS
Maybe your kids or family members have asked what you really do at work all day, and the words “revenue management” don’t seem to tell the story—nor do they clarify anything to your mother-in-law.
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The real question is, what don’t revenue managers do? This is a very important function that has evolved over time and involves many disciplines. It is about strategy, analytics, forecasting, pricing, change management, salesmanship and more.
Revenue management is a combination of art and science and can be applicable to many people in many ways. We often define the discipline as selling the right product to the right customer at the right price at the right time in the right channel. Likewise, when talking about revenue management, it is important to tell the right story to the right person in a way that is relevant to them.
The best storytellers are often those who make movies. So, in the manner of storytelling, I want to break down the role of a revenue manager through movie storylines. Grab your popcorn, sit back, and enjoy the show.
1. The Wizard of Oz
In case you haven’t watched The Wizard of Oz, it’s a story about a young girl who is transported to a surreal landscape where she kills the first person she meets and teams up with strangers to kill again. That’s how the story goes, right? Try selling that synopsis to Warner Brothers film and entertainment studios.
The point is that there are millions of ways you can talk about and spin a story to pique interest or explain something, but the most important detail is how you word it. Understanding and catering to your audience helps you craft your words in a way that makes sense and resonates with their goals.
Use high-level statements that clearly communicate your end goals and steps to get there, then break down your role to an audience. Keep in mind that your audiences are different and have different understandings of the basics of revenue management. Many revenue managers also switch between audiences daily.
It is important to try to understand your audience and craft the story in the way that makes the most sense to them.
2. The Hunger Games
The Hunger Games is set in a dystopian society where individuals are selected to represent their communities and rely on their survival instincts as they fight to the death. The game starts with all 12 district representatives standing on their platforms, and when the siren blows, they must decide whether they want to run to the middle and gather weapons or run and find protection.
When we think about walking into a meeting to discuss objectives or revenue management strategy, sometimes we feel like we want to run and hide. But revenue management is a game of strategy in itself. If we can break down revenue management and navigate how it affects each decision, we win.
Every single process to keep a hotel up and running boils down to rates and inventory—this is perhaps the most successful way to break down revenue management. What are you selling? At what price? We can also break down products and services further by the elements of the room, bundles, or meeting and event rates. Understanding how to classify inventory and where to put emphasis helps you narrow down what to focus on now.
Breaking down goals and steps help you talk about how you’re driving revenue and value rather than saying, “We’re doing revenue management.” You are actively gathering and fine-tuning your skills to bolster your strategy and take actionable steps.
In other words, clearly think about and define your strategy first.
3. The Best Years of Our Lives
In this classic film, a man returns home from war to his family when his daughter is going through her first teenage love crisis. As she’s crying, she says something like, “you guys don’t know what this feels like, you’ve always been in love, and you’ve always had each other.” The parents look at each other with surprise and respond, “Oh, honey, you have no idea how much we’ve been through, how much we’ve fallen out of love and in love again, and how much we’ve conquered together.”
We’ve all had those successes and those moments on our revenue-management journey where things feel so right and so rewarding. We’ve also had those times when things are bad, and everyone is looking at us for results—think COVID! But we talk to someone, have an insight, execute our strategy, realize how to make progress and we are back on track. It’s a wonderful cycle that is important to our goals as revenue managers.
Crafting a cycle for growth ensures we meet our goals, and rough patches are a part of that cycle. We have our rates and inventory down—how do we develop our cycle for growth in the future? Do you have a list of best practices or notes for how you’ve conquered low points in the past? Your successes and faults are learning lessons that can create something sustainable for the future.
My advice is to have a plan for good times, have a plan for bad times and have a plan for in between.
4. A Star is Born
We can’t all be Lady Gaga (or Judy Garland, or Barbra Streisand, or Janet Gaynor), though being the star within our own companies is slightly more attainable. Successful revenue management doesn’t happen overnight, nor can we trace it back to one single person. But there are things you can be doing now and every day to be the star within your company. Sometimes we’re so involved in our business that the core things take a back seat.
There are always quick wins that can make a difference, but they can get lost with everything else going on. What can you do now that makes a difference?
At the hotel level:
- What are your most important days to review?
- Did any major activity happen (group cancels, etc.)?
- Did the competitors do something different?
- Have you looked at rates for any issues?
At the corporate level:
- What are your product and service needs?
- How can your effect change management?
- Is your org structure defined?
- How do you define success?
There are always things that you can work on to make yourself stand out all the time.
That’s a Wrap
So, what are the key takeaways?
- Know your audience and craft the right message
- Define a clear strategy
- Have a plan for good times, bad times, and in-between
- Focus on the basics and incremental wins
Revenue management is more than going over numbers and creating a budget. It’s about working with many projects and objectives in mind to find the best outcome, just as a movie walks you through a whole plot line to come to a perfect ending. By catering to an audience, knowing your growth cycle in and out, and finding ways to improve continually, revenue managers lead innovation and success.
