The real reason you suck at revenue management

I was invited to a review session not long ago where the numbers weren’t great. Not terrible, not catastrophic, just… underwhelming. The kind of performance that makes everyone slightly uncomfortable but nobody wants to say anything too direct. You know those meetings....a tough question gets asked and everyone sheepishly looks at everyone else to reply.

So to break the silence we went through the usual routine. Pickup was discussed. Competitors were mentioned. Someone pulled up STR. Someone else talked about market conditions. There was a lot of nodding. A lot of “yeah, that makes sense.”

And then someone said it: “We probably need to be a bit more aggressive on price.”

F* me....really??? I knew exactly what was going on. Literally no-one had a clue. So...what happens when people don’t really understand what’s happening!?!?!

They reach for the one lever they think they control: Price. (PS: Regardless is it makes sense or not!)

the comfort of the obvious lever

Price feels like control. You move it, something happens. Up or down, there’s a visible action. It gives the illusion of progress. But most of the time, it’s just noise. Really doesn't move the needle to where it needs to be. And you know why?

Because price only works properly when everything around it makes sense. If your demand isn’t clear, your segmentation is fuzzy, your positioning is weak, and your distribution is messy, changing price is like adjusting the volume on a broken speaker. Louder or quieter doesn’t fix the distortion. It just changes how obvious it is.

Revenue Management has a branding problem

It sounds technical. It sounds complex. It sounds like something that lives in spreadsheets and systems and needs a lot of formulas to work. So people treat it that way.

They focus on the outputs: rates, forecasts, reports! Without really understanding the inputs. The behavior behind the numbers. The why behind the patterns (Hi, Simon Sinek 😍🤘).

It’s like trying to get fit by only looking at the scale. You keep stepping on it, hoping it moves in the right direction, but you’re not actually changing what drives the outcome.

the illusion of being data-driven

Everyone says they are data-driven. What that often means in reality is that they have access to data. Here me loud and clear: Data access does not equal data understanding!!!

You can have dashboards, reports, AI insights, and still make bad decisions if you don’t know what you’re actually looking for. Data rarely provides 100% certainty. It generally gives you more confusion and that's when you start guessing. More is not better....

PS: YOUR RMS IS NOT YOUR STRATEGY!!!!

you suck because you stopped thinking

Most people don’t suck at revenue management because it’s too hard. They suck because they skip the thinking.

They jump to decisions before understanding the situation. They move levers before understanding what those levers actually influence. They react to outcomes instead of analyzing causes.

And then they get really emotional when it works....you know what comes to mind: the difference between investing and gambling: emotions.

the shift that changes everything

The moment you stop asking “what should we do?” and start asking “what is actually happening?” everything changes.

It slows you down at first. It forces you to think. It forces you to challenge assumptions. But it also removes a lot of the randomness. Because once you understand behavior, decisions become a lot less emotional.

the takeaway

Revenue management is not about being right all the time. It’s about making better decisions than you did yesterday. And if your total tally moves into the right direction, then you win the game....which is infinite...never stops...and really doesnt have any rules!

And here is the thing: You are in Revenue MANAGEMENT ... NOT .... Revenue REACTION.

What do you think?

Love, Fabi