As revenue heroes, revenue managers sometimes face an unexpected challenge: overcomplication. Many revenue managers dig into endless data points and exhaustive analyses in their quest for accuracy and thoroughness.
NB: This is an article from Demand Calendar
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This can confuse their teams and lead to missed opportunities to capture revenue at the right time. It’s common for revenue strategies to become so complex that other stakeholders struggle to keep up, causing delays in decisions and inconsistent execution.
The truth is that being a hero also involves clarity and simplicity. When a Revenue Manager learns to communicate succinctly and transparently, the team understands the “what” and the “why” behind each strategic choice. In other words, they know who or what the Revenue Manager is saving and how they’re saving it.
The big question, then, is this:
Is complexity a necessary byproduct of modern revenue management, or do we all need to learn how to simplify strategies and communication to drive better business results?
Why Complexity Happens
In an ideal world, Revenue Managers (RMs) would have a simple, streamlined process for collecting data, analyzing it, and making decisions. However, the reality is often quite different. Below are three main reasons complexity takes hold, even for the most capable RMs.
Multiplicity of Data Sources
- Data Overload: Hotels generate vast amounts of data daily—guest profiles, booking trends, competitor rates, distribution channels, and more. These originate from systems like PMS, CRS, online travel agencies, digital marketing platforms, and offline records.
- The RM’s Burden: Because they are tasked with optimizing revenue, RMs often feel a duty to track and interpret every possible data point. The more sources they juggle, the more complicated the analysis can become, and the faster clarity can slip away.
- Resulting Overwhelm: Even the most talented RMs can struggle to juggle conflicting or siloed data streams. A single version of the truth becomes elusive if no system integration or robust analytics framework exists.
Pressure to Deliver Quick Results
Rapid Market Shifts: Customer demand can spike or plummet in days or hours. In addition to seasonal fluctuations, changing competitor landscapes, and unforeseen external factors (e.g., economic shifts, sudden events), RMs are under constant pressure to adapt.
A Flurry of Adjustments: Attempting to keep up with these swift changes can lead RMs to layer multiple pricing tactics and inventory controls on top of each other. Each “quick fix” can introduce new variables, making it harder for teams to see the bigger picture.
Unwieldy Strategies: The result of these numerous minor tweaks is often a tangled web of overlapping promotions, rate codes, and restrictions. Without a clear framework to manage them, RMs risk losing track of how each piece contributes to overall revenue goals.
Fear of Missing Out on “Precision”
- In Pursuit of Perfect Forecasts: In hotel revenue management, it’s a common belief that more data leads to more accurate forecasts. While data can refine insights, trying to account for every micro-variable can become a rabbit hole of endless analytics.
- Over-Reliance on Complex Models: It’s tempting to build intricate forecasting models incorporating everything from weather patterns to flight arrival data. But the more variables added, the harder it becomes to discern meaningful signals from noise—and the slower decisions become.
- Analysis Paralysis: Some RMs get caught up in making a perfect forecast, spending too much time on details. Instead of quickly taking advantage of revenue opportunities, they get lost in spreadsheets or complex dashboards, missing the chance to take a decisive action that could have led to better results.
Together, these factors create an environment ripe for overcomplication. When data overflows, rapid-fire decisions pile up, and a perceived need for perfect precision takes hold, Revenue Managers can get caught in a complexity trap that ultimately hinders the revenue growth they strive to protect.
