Revenue Management Needs Are Evolving…Revenue Managers Need to Evolve Too

How does a Revenue Manager spend his working day?

NB: This is an article from Emanuele Mansueti of Hotelperformance

I’m a Revenue Manager since more than 10 years and this is my typical day: I use to arrive at the office half an hour before to being fresh, drinking a cup of coffee and getting ready for the beginning of the hell: telephone calls, emails and the Director requests for reports and forecasting.

First of all I look at emails, the ones to read, to archive and the urgent ones, up to the reports that the night porter sent me, hopping they are correct: I will need them to populate my excel files and, unfortunately, happens so frequently that I have to redo them, with the fear that the server will hang.

Start looking at pick up date by date. Here we are, for September 1^st a good pick-up, so let raise prices! But pick up is only for single rooms: so I can raise the price and close the single rooms. Looking more closely I see that it is corporate bookings: so I should keep single rooms open and raise the price. Uhm, but no transient has entered.

I’ll do this way: I’m going to close the corporate, put a 2 nights minimum stay on the singles and down the prices for doubles, because competitors… ah no, competitors are increasing rates, it means there is pressure on the date: so let keep the price up and, even if transient isn’t coming in, wait that it will come in.

But why don’t they come in? Here it is: the following day the hotel is almost fully booked and I have a high price. So, what do I do? Down the price for the next day? But on this way I’ll risk to not optimize the date. And why are we almost fully booked? OK, there is a group. Looking at it into the PMS  see it was a tentative group and that the release date has already expired! Well, I’ll not take it into consideration, I raise the price for September 1^st and I open the FIT, while I down prices for September 2^nd and I close the corporate. No-no-no: I close the corporates on 1^st and open the FITs on 02^nd. Yes, decided!!

It’s already half past two, I haven’t eaten and I’ve only seen a few dates. Then I still have to check the prices of the reservations on the book, the disparities, do the forecast for the manager, the availability updates, the Group quotations, update the contents on OTAs, check the campaigns on Metasearch, Google Analytics, check reviews…

It is obvious that claiming to have an eye on everything that happens and having the knowledge and awareness of every single fact that determines the Revenue Management, even just to be able to motivate every choice, is not only inefficient, but also completely unproductive. If one day the “Timing Manager” would come to optimize the Revenue Manager’s time, he would evidently evaluate some performances (like those described above) with a red card.

These decision-making processes must therefore necessarily be automated. It is unthinkable today to expect to have control over everything. The market is increasingly dynamic, characterized by a widespread demand and, at the same time, by a wide offer and the competitive factors certainly cannot be measured with those 5 euros up (or down) on the public rate, especially if it takes so much time for the decision.

In the past, I’ve already tried to adopt some process and method of automation, even on classic excel sheets using macros, indexes and forecasts; but this is not enough. Above all, if we consider the universe of analysis, forecasting and predictive products available, there is no more justifications for not using them!

The dispute that is often heard about these tools, is about the reliability of the price suggestions that, by force of circumstances, will have critical points, but the identification of those critical issues must be part of the Revenue Manager job and, however, what will be lost in efficacy on a single date, will be gained in efficiency for the whole yearlong.

“Perfection is enemy of efficiency” is what was used to tell me the Sales Director when I started doing this job…and I believe she was right. On the other hand we cannot even think that all the considerations necessary to determine a price are “100% right”, not even those made by the “Maradona of Revenue Management” (which, in any case, has missed some penalty too).

It is clear that in order to trust the technology, users must be able to understand the mechanisms that govern it, but nowadays RMS are opening up, so that users can understand more clearly where these suggestions come from, to be able to really get behind the scenes of the analysis.

The worries of the Revenue Manager must necessarily shift from the competition with the OTAs to the improvement of the processes, obtaining a clearer vision of the future opportunities of the demand. Revenue management will inevitably evolve from the analysis of pricing to the creation of demand, through the implementation of more innovative marketing and sales initiatives.

An Hotelier must spend most of its time on periods that actually require attention and to his guests, and not spend too much time to manually setting rates. Are you sure it worth to spend hours to decide about a few euros increase or decrease, rather than evaluate correctly a group request and the value you can extract from selling all your services, to catch new future incremental business?

My impression is that the main resistances that we still see, together with the laziness to abandon the comfort zone represented by the procedures we are used to, are because of the “affection” we have towards excel sheets that we have created, that rend us so proud and made us feel intelligent and innovative. And we also love the proportions, the edges, the colours and the characters used…perhaps this will be the challenge for RMS producers in the future: giving users the opportunity to customize their product and choose that Batang on a cyclamen pink background that reassured them about the right choices of the rate to apply.