4 Essential Activities for Today’s Revenue Manager
By Simon Carkeek, Executive Director, EyeforTravel
I've spent the last couple of months chatting to revenue management and pricing professionals from across all sectors of the travel industry. And by all accounts, this is an exciting (albeit challenging!) time to be a revenue manager. As travel companies increasingly put RM and pricing at the core of their business decisions, it's clear that the role of the revenue manager is rapidly expanding and diversifying.
Based on my research for EyeforTravel's upcoming Revenue Management Europe event, I've identified 4 essential activities that revenue managers need to be carrying out in light of current market conditions:
Become more Strategic
Increasingly, revenue managers are becoming more strategically involved in all aspects of sales and distribution. Today's successful revenue managers are evolving into corporate leaders who chair rate-strategy committees, train product managers in pricing strategies, and guide sales and marketing teams in the most effective positioning for their selling strategies and campaigns.
Steve Pinchuk, the chairman for our Revenue Management Conference Series since its inception back in 2003, confirmed this trend in a recent interview. Recently appointed SVP Resort Profitability for Westgate Resorts, Steve's new role will see him oversee not only RM and Pricing, but also distribution, sales, marketing and reservations.
He explained how his new role reflected his long held view regarding the strategic importance of RM: "Because I am in charge of sales and marketing, this allows me to integrate these areas. Rather than being an outsider, coercing people to co-operate, I am able to institute strategies and enforce best practice across the whole organization...Normally people with an RM background are not in charge of these areas, but in my opinion it is highly appropriate. In times of high demand, it's easy for the revenue manager to simply focus on yield, but as demand erodes, revenue managers need to focus on distribution and pricing too."
Maintain Price Integrity
Occupancy levels and load factors are way down across the travel industry. The temptation is to slash prices to stimulate demand – and some are doing this already. However, history warns of the dangers of this strategy. The decisions you make today could affect your profitability for years to come. So cutting prices may delay your ability to benefit when the economy does bounce back. Revenue managers have a key role to play is deciding when, how and where to discount, as well as looking for ways to add value without cutting prices.
All this requires creativity and focus from revenue management, CRM and marketing teams, as they work together to create packages and promotions for specific customer segments.
Become more Customer Centric
Retaining loyal customers is a number one priority for all travel companies. Today's travel leaders are those who not only understand their customers, but are also rolling out customer-centric pricing strategies that reflect this knowledge (not all customers are cutting their travel budgets right now) and putting the right options in front of them at the right time.
Good revenue mangers need to understand the importance of segmentation, and how value driven customers are driving even greater convergence of RM, marketing and distribution
4. Increase Influence on Distribution
An understanding of distribution and customer touch points is now essential for any revenue manager. Whilst linear programming optimisation may be at the heart of revenue management theory, it doesn't take a holistic view of the customer or the transaction. Today, distribution is an organisational challenge, where the role of revenue managers is becoming increasingly important. The role of revenue management in ensuring the right products appear in the right channels at the right price is more important than ever in today's challenging economic climate.
All these issues and more will be discussed in depth by some of Europe's leading Revenue Management professionals at this year's Revenue Management and Pricing in Travel Europe Conference, taking place in Amsterdam on 24-25 November.