Industry Update
Opinion Article 7 January 2020

The Care and Feeding of Revenue Managers

By Kristi White, VP, Product Management at the Knowland Group

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Hospitality revenue managers are a unique breed. The language they speak is not always compatible with the language of group sales people. The result of this means the two departments often have an adversarial relationship. So, as a sales person, how do you speak the language of the person who controls rates in a way where everyone wins?

The first step in the process is to understand their role. A good revenue manager understands all of the ins and outs of demand for your hotel. They accurately forecast more than just occupancy and revenue - they forecast how many arrivals, departures, walk-ins, and no-shows. All of those factors go into how they establish rates for your hotel, both at the transient level and ultimately what they give you for groups in your Daily Business Reviews (DBRs).

As our recent webcast shows, data rules the world of revenue managers. The days of gut instinct (for the most part) are behind us. Revenue managers can easily get into the minutiae and use that to feed all of their processes. This allows them to more accurately create forecast models, displacement analyses, and optimize pricing for your hotel. All of this drives the rates they provide in DBRs.

Needless to say, they are responsible for optimizing the revenue of the entire hotel. That means revenue managers are focused on managing to the most profit for the hotel. They accomplish this by managing the right mix of business which will drive the greatest profitability. Therefore, your one-off group may be less valuable over specific dates than recurring and, typically, higher-rated transient business. But don't take their rejection personally. They are simply being lead by the numbers to create the most optimal financial scenario for the property.

Now that you understand (at least at a high level) what your revenue manager does, let's ask the original question again. How do you speak the language of the person who controls rates in a way where everyone wins?

1. Come Prepared - Know everything you can about the dates in question. And, let's be specific here, the days. A big portion of what revenue managers do is compare year over year stats. But, for pace (forward looking data), they don't look at a date-to-date comparison. They look at day-to-day comparisons. To understand this, Monday, December 16, 2019 was Monday, December 17, 2018. In other words, they are comparing the same Monday this year to the same Monday last year, focusing on the day of the week, not the date.

This is important to you because you want to become familiar with what your occupancy was on those days last year. Occupancies year over year tend to run similarly. So, if you ran 100% occupancy on that same day last year, chances are you will this year, too. Additionally, have a solid understanding of what percentage group contributed to overall occupancy last year. If the hotel was sold-out and 95% of that came from transient, it might mean this year will be the same mix and the revenue manager will therefore limit group business.

Of course, there are always unique factors and if there were any anomalies in the prior year that (positively or negatively) impacted performance the prior year(s) that you are aware of, you should be prepared to discuss how your group could impact performance.

2. Understand your group - If the group is something with broader opportunity than your specific dates, make sure you bring that information to the table, otherwise, your piece of business will be evaluated solely on how it impacts the dates in question. Knowing an opportunity has an additional 3-4 meetings per year, and if you are certain that this event can help you land those other meetings, will catch the eye of your revenue manager more than a one-off piece of business. Bring the total scope of the group business to the table. Knowland provides access to years of actualized event history, along with the analytical tools to easily understand the opportunity at hand.

3. Have Alternate Dates - Ask your prospect if they have date flexibility. It is possible the revenue manager will not be able to offer a rate that will be attractive for your group over their preferred dates, but with date flexibility, a more attractive rate can be offered. Additionally, it will eliminate sales cycles downstream allowing you to serve your customer more efficiently.

4. Ask questions - This can't be a one-way relationship. As a Hunter-style sales person, you are constantly prospecting. Knowing where your hotel needs business can help fuel some of your efforts. Your revenue manager is the keeper of the keys related to need periods. Keep up-to-date on your need periods (both close-in and further out) as those change regularly. However, beyond knowing what the dates are, ask why those are need dates. Go one step further and ask if those were need dates in prior years. Understanding the why and how of need dates will help you better understand how you can help with those and provide search criteria for sourcing new group business.

5. Be flexible and creative - Your revenue manager may not be able to meet all of your needs for a group. If the rate they offer isn't what you want can you creatively package other features of the event to meet the group's need? Food and beverage concessions in meeting room packages might still allow you to meet the needs of the group while bringing in the appropriate revenue to please your revenue manager.

6. Know your margins - Not all revenue is created equally, which is something your revenue manager already knows. Approximately 70% of guest room revenue flows to the bottom line compared to 85-90% of meeting room revenue. However, even in the best run hotels, only 20-25% of food and beverage revenue flows to the bottom line. Understanding the mix of revenue for your groups and how that flows to the bottom line will better help you be an advocate for your groups.

7. Honesty first - Commissions, concessions, and/or room kickbacks are a fact of life. However, not telling your revenue manager about them until after you get a rate from them is the surest way to break the trust. From the very beginning, be open about any discussions you have had and fees associated with the group that may impact the rate. The revenue manager will factor those into the rate analysis. If you don't do it upfront, be prepared to have to go back to your prospect with a new, higher rate. This will only serve to make you and your hotel look bad in front of the prospect and create animosity with your revenue manager.

The revenue ecosystem of your hotel is the responsibility of your revenue manager. They have to balance the mix of the hotel's business to drive the most profitable revenue for the hotel. Sometimes, that includes group business and sometimes it doesn't.

Speaking the language of your revenue manager will go a long way towards making sure your groups are given the proper consideration. It will also help you be a better negotiator with your own groups. Your revenue manager understands the pulse of not only your hotel but the market as a whole. They know when they can drive rate and when they can't. You can use their knowledge to your advantage in the negotiation process. Sometimes that will mean higher rates (and going in confident in having that conversation with your prospect) and sometimes it will help you skillfully shift your prospects to other dates where you can be more flexible.

Ultimately, understanding how to care and feed your revenue manager will get them in your corner and make you a better group sales person. What more could you ask for?

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Kristi White

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    About Knowland

    Knowland is the leader in group hospitality analytics for hotels, convention and visitor bureaus (CVBs), conference centers and other meeting venues and the driver behind adopting a Proactive Group Sales Strategy. With the industry's largest historical database of actualized events, thousands of customers trust Knowland to sell group smarter and maximize their revenue. Knowland operates globally and is headquartered in Rosslyn, VA. To learn more about our suite of solutions, please visit www.knowland.com or call 202-312-5880.

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