NB: This is an article by Bonnie Buckhiester, President of Buckhiester Management
Today, consumer buying behavior is evolving so rapidly Revenue Managers must feel like they are trying “to shoe a horse on a dead run”. Not to mention that technology is more complex, distribution options multiply day by day and business intelligence reports are seemingly limitless. How does a revenue management professional keep pace with this change and the associated complexities?
The answer is they don’t. No one can possibly stay abreast of these changes, much less discern which trends are for real and which will evaporate when the next newest phenomena emerges. As a revenue management specialist, I can’t keep up with the plethora of new information, technologies, and best practices….and I do this for a living….all day every day.
So what is a Revenue Manager to do? And how does a hotel or hotel company determine whether their revenue management resources are first, second or third generation professionals?
We must begin to answer this question with an explanation. When speaking of a “first generation” revenue manager, I refer to those individuals who were literally given the revenue manager title when it appeared to hotels there should be someone in charge of managing demand. In many cases this was a reservations supervisor or manager. Some of these people did make the leap to revenue management, but many did not. Hotels eventually realized that the traits of a good reservations manager where not the same as those of a good revenue manager. In addition, the need to be technologically savvy was also evident as distribution evolved from a semi-restricted environment of PMS/CRS/GDS to PMS/CRS/GDS/Website/OTA/Onward distribution and niche sites.
These were our first generation revenue managers and they pioneered the management of an ever-changing online landscape; often finding their inventory showing up on the Web in places they didn’t know existed or even how their room availability got there in the first place. Business intelligence consisted largely of internal spreadsheets and monthly STAR reports (Smith Travel Research). And communication with marketing was sketchy, so much so that reservationists were sometimes the last to know about a new marketing initiative.
As electronic distribution exploded and transparent pricing became the norm, the industry experienced a subtle shift in revenue management expertise. Reporting lines moved from Operations to Sales & Marketing and position titles started to include “Director”. Business intelligence branched out to include rate-shopping tools, GDS market share statistics, and expanded STAR reports (including weekly data and F&B/Other income comparisons). Senior management relied more and more on the revenue manager or director to produce detailed day-by-day, segmented forecasts, extensive year-over-year pace comparisons, and drill-down data by distribution source.
These 2nd generation revenue managers typically are very analytical, love to crunch numbers, and find the creation of a new spreadsheet to be a beautiful thing. Some (certainly not all) can be somewhat anti-social and even get “testy” if interrupted during a major “thought” process….trying to complete a 30/60/90 day forecast is a good example.
Second generation revenue managers have had rate parity thrust upon them and are expected to manage a myriad of channels with ease. They are also expected to be experts in the configuration of property management systems, central reservations technology and global distribution systems. As their jobs have evolved, they must be able to review, interpret and act upon complex business intelligence; and for many in this generation, master the use of highly sophisticated revenue management software systems – either stand alone or proprietary. In many cases corporate offices continue to inundate the revenue manager with new things to create, track or act upon.
For the most part, these second-generation revenue managers have mastered tactical revenue management practices, provide leadership to the weekly revenue meeting and respond to senior management needs for the quick turn around of data to support various contentions of performance. In many cases they are asked to “come up with” packages and promotions when in fact most are ill suited to this marketing oriented role. In some environments they are also asked to manage the reservations department, particularly in resort hotels where on-site reservations have not yet been supplanted by a central resource.
However, these second generation revenue managers, no matter how good they may be in their present role, will not all make it as third generation RM professionals. Many will have to make some tough career decisions. This superbly analytical and talented tactical master has yet a third iteration….that of strategist in serious collaboration with online marketers. Those revenue managers who stare blindly at the sight of web analytics….page views, click-throughs, bounce rates, and key word traffic….are not facing reality. As we speak, the percentage of marketing budgets dedicated to digital marketing is increasing exponentially.
So what exactly is driving this third generation evolution? In my view it is two key realities. The first is the sheer force of rapidly changing consumer-buying behavior. The adoption rates of new technology like the iPad and smartphone are beyond any previous experience. In a recent presentation at the Resort Marketing Council conference in Baltimore, Melissa Edwards-Clayton, a Regional Internet Marketing Manager for Fairmont Hotels and Resorts, shared these statistics: