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Revenue Managers – How We Get It Wrong…

Revenue Managers – How We Get It Wrong…

Revenue Managers rule the world, right? Of course we do… But every now and again, I see some Revenue Managers who just haven’t had the training or mentoring required and due to no fault of their own, get it wrong.

NB: This is an article from RightRevenue

So how do we get it wrong and how do we fix it? Well here are my top 6 tips and some advice

1 – Never, ever work in isolation

Deciding on rates is not a solitary job and never should be. A good Revenue Manager should be a ‘strategist’ and by that I mean: think of a Revenue Manger sitting on top of a hill with a birds-eye view of everything else that goes on in the hotel. So for example, if a Sales Manager is deciding on whether or not a particular piece of contracted business will be taken, surely the first person they need to turn to is the Revenue Manager. The Revenue Manager will understand the concept of ‘displaced business’ and knows what rates they need to accept to make budget and more importantly, forecast. They also understand the impact a 1 night group has on the day before and the day after, so length of stay and multiple day impact is crucial to any decision.

And what about that longer term contracted business (rare these days I know) but do you actually need that Government contract at £80.00 per night when they only stay Tuesday and Wednesdays, your busiest days?

On the F&B side, we all know the impact weddings can have on our business, but are we giving too many rooms to our brides and ensuring that are rooms are sold (so the wedding co-ordinators are happy) but that we have an empty bar, restaurant, spa and golf course?

And finally, operationally, how are the team doing? If we are successful at winning a fantastic piece of business but then the level of service lets you down, how difficult is it going to be to get that piece of business back again???

My advice – perch yourself high. Have an overview of everything else that goes on in the business and don’t let one single decision that effects revenue in any shape or form get past you.

2) Be a better communicator

Revenue Managers by their very design, love nothing more than being knee-deep in reports and analysis. However, as we adopt better technology, we need to take our heads of the spreadsheets and communicate more. We need to be able to sit in a Senior Team meeting and to defend every single decision we have made. We also need to strategise forward and to be able to accurately communicate what needs to happen in each department and why. This only comes with practice and also with the support of owners and managers. So make it happen!

My advice – Owners / General Managers – Let your Revenue Managers speak and listen to what they have to say. Let them make mistakes and learn from them. Allow them to be better communicators and value the impact they make on your business. Invest in technology to allow them to do their job: whether that be RM systems, CRM systems or Channel Managers. But if nothing else, allow them to be mentored. Build confidence and you will reap the rewards

3) Stop looking at occupancy or even revenue as a KPI

Hopefully the days of driving occupancy are well and truly over. Do the simple maths and it is better to have a hotel 75% occupied at £100.00 per night than 100% occupied at £70.00 per night! A strong Revenue Manager will understand not only the impact of occupancy and rate but also cost of sale and incremental spend.

My advice – know where your business is coming from and understand that you are in control. If it isn’t a good piece of business, don’t take it

4) Lead time is everything

If you have 80% of your rooms sold 3 weeks out or 80% of your rooms sold 3 days out, what differing decisions do you make? This is one example of course and you need to understand your own booking patterns but surely if you have a high number of rooms sold well in advance, you can start to push rates? But with 20% still left to sell for this weekend, can you really push too much?

My advice – one number is never enough to use to evaluate business. That is why technology is so important to good Revenue Managers. Occupancy on it’s own (even with revenue added) is not a good enough indicator of business. Consider lead time and then re-evaluate.

5) Booking pace isn’t scary

Often when I talk to hotels about booking pace, they either glaze over or run for a coffee break. No doubt that pace is difficult to track if you don’t have the systems in place to help you do that, but you do need to understand at what pace your bookings are coming in. So for example: if you have had 5 rooms pick up last night, for a date 3 weeks in the future that might not trigger a rate change decision. But what if you had another 5 rooms for the same arrival date, two days ago and maybe 8 rooms, 3 days ago and 6 rooms the day before that. If this is unusual behaviour then your business might be trickling in, but it is trickling steadily, so maybe you need to do something about it?

My advice – track, track and keep tracking. Understand pick-up; pace and velocity and then make sure you are on-top of every rate decision

6) Understand when your Book Direct campaigns work and when you need to rely on the OTA’s

There are two sides to this coin (isn’t there always). I have written many times about how we as an industry often allow the OTA’s to control our business. We are fighting back and although it isn’t a losing battle, it is a difficult one. We need them but we don’t always need them. Use the OTA’s when you need base business and control it. Don’t give them your last rooms; don’t allow them access to your cheaper rooms; don’t be fooled into their so-called marketing strategies – they all work in their favour, not yours and make sure you keep an eye on the meta-sites (such as Trivago and TripAdvisor) to check if OTA’s are practising ‘bate and switch’ to entice customers with a cheap rate that doesn’t exist in the hope of them converting anyway.

However, the other side of the coin is that your Book Direct Strategy needs to stack up and by that I mean, you need to have all the ducks-in-a-row for this to work. That means a PPC budget; having strong SEO in place; a great website (with no more than a 2 year life span); a converting booking engine; recognition; personalisation; a great CRM and most importantly a better rate on your brand site than the OTA’s offer. And even if you have done all the hard work, we as an industry have to realise that customer buying behaviour has changed and we need to be where our customers are – and that most likely is an OTA

My advice – control, control, control… The thing to remember above everything is that the customers coming to our hotels are OURS. Not an OTA’s, ours… and we need to ensure that we do everything we can to entice them to lower commission methods of booking and reap the rewards of OTA’s when we need to.

More next time but for now, allow your Revenue Manager to have a voice; to have control over all parts of your business and to have the tools they need to do their job.

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