Will Revenue Management exist in 5 years? That was the big question Frederic Toitot, Vice President, Global Learning & Development at Accor & Chair HSMAI Region Europe Revenue Optimization Board to a crowded room at the recent HSMAI Revenue Optimisation Conference.
The world is changing, and Generation Y are worried that machines will replace humans, Toitot explained. Yet he believes a second wind is coming to the Revenue Management field. Revenue Management had a very powerful start and 15-20 years ago it was the hospitality industry's big thing.
"Everyone wanted to do Revenue Management, it was trendy it was the thing to do. We trained people, we trained the GMs and we made sure it had a good path into our organisation. But have our jobs evolved the way they should have in terms of keeping the pace? I'm not sure of that," he said.
Citing an impending recession, Toitot explained that when the economy is slowing down we need to know if we have the levers and the capabilities to answer the needs of the industry. "We need to find partnerships with other services around us to make this a question from the past," he said.
Human beings against machines
'The systems are taking part of our jobs' is a worry for all professionals, but this need not be the case. Rather, we have to understand that the skills we need and the efforts we need to make are somewhere else and it's not always easy for organisations to adapt and understand how jobs are evolving.
"Automation and all the new technology is disrupting the long-held business models we had in the past. We have to adapt in the same way the parameters of profitability are broadening. We have to switch from traditional revenue management to a more holistic approach," Toitot explained.
Hotels need to switch their focus towards managing acquisitions costs and move from a tactical revenue approach to a strategic approach. Toitot explained the importance of strategy in terms of measuring profit and loss, and the need to find more paths to profitability.
"It is very important to understand that revenue is not only about rooms revenue, but also gross revenue. More hotels are working more on a total revenue approach and technology is helping us to do that. We need to make sure we have a net revenue that is optimised. RevPAR as a KPI is old fashioned. We must adapt and change. We have to evolve and move to revenue optimisation."
Breaking down silos
It's a common theme at hotel industry conferences, but Toitot really hammered home the need for integration between revenue, marketing, sales and distribution, calling for the audience to "elevate the industry together".
"We need to be seeing the bigger picture. We had a time when Revenue Managers were geeks hiding on the side of the reservation desk, doing forecasting and pricing. They were good at what they were doing but forgot to look around. We need open minds to make sure we look around and integrate distribution, IT, sales and marketing."
Toitot ended his keynote with three tenets of future revenue optimisation:
Customer knowledge - Really understand who they are, how do they search on Google, what are their wants and needs? Revenue management is not just about forecasting and managing rates. It's about humans searching, looking and making a purchasing decision that can be rational and sometimes irrational.
Data analytics - Make sure that revenue managers are really good at analytics. To know your customer we have to go deep into the data - that is one of the skills we need to increase.
Ability to tell a story - The ability to communicate effectively with the customer in the language and on the platforms they use.
Toitot closed with calling for further cross-department integration.
"We have to bridge the gap between revenue, sales and marketing. It's a question of reaching out to each other. How can we work better together to optimise the revenue of our companies? Let's together reinvent the future of revenue optimisation in hospitality."
[Interested to learn more about Change Management to better prepare your revenue team for the future? Download the free whitepaper, Who Moved My Revenue?]
Duetto delivers a suite of cloud applications to simplify hospitality revenue decisions and allow hoteliers to work smarter, increasing organizational efficiency, revenue, and profitability. The unique combination of hospitality experience and technology leadership drives Duetto to look for innovative solutions to industry challenges. The software as a service platform allows hotels and casino resorts to leverage real-time dynamic data sources and actionable insights into pricing and demand across the enterprise. More than 4,000 hotel and casino resort properties in more than 60 countries have partnered to use Duetto's applications, which include GameChanger for pricing, ScoreBoard for intelligent reporting, and BlockBuster for contracted-business optimization. Duetto is backed by investors Warburg Pincus, Icon Ventures, Accel Partners, Battery Ventures, and Spectrum 28.
In January 2022, Duetto was voted as the Best Revenue Management System in the HotelTechAwards 2022.
For more information, please visit https://www.duettocloud.com/.