We’re out of the rut. Now what?
11 experts shared their view
By the end of 2019, many of the thought leaders in revenue management had begun echoing a common theme, basically that the Revenue Management discipline was stuck in a rut. Industry-wide, Total Hotel Revenue Management was starting the become a joke. There was the longstanding complaint about the OTAs, but little being done about it. And the more recent debate about whether AI was on track to replace the Revenue Manager, despite only 15% of all hotels globally even having a revenue management system. Some openly warned that without evolving, the discipline risked losing relevance, and the influence and opportunities that go along it.
Then COVID-19 came out of nowhere to occupy the top of everyone's mind… overnight. Short term crisis management became the only job requirement. But these concerns did not go away, and if anything, the opportunity (and responsibility) that organizations possess to challenge every existing norm as they rebuild has only shortened the timeline.
The question to the Revenue Management community is: As we move out of the crisis management phase and towards the "next normal", how have your organization and responsibilities changed? What tools, technology, and processes have earned a permanent place in your routine going forward?
To be sure, COVID has impacted everyone in their own unique way. Personally, the proliferation of tools like Zoom, Teams, and GoToMeeting have not only made some of my tasks as a professor way more efficient, I have spoken with old friends and colleagues more in the last four months than I had in the previous three years since making the leap to Switzerland and academia. When discussing the “next normal” with them, there seemed to be two common themes:
They are rebuilding smarter. Having shed most of the processes from fatter times that no longer make sense, a small group of experienced revenue leaders can leverage these new online communication tools and new-found societal acceptance of working remotely to grow with more specialized, entry-level positions. Most of the people I spoke with were looking for “someone to work from home managing inventory and distributing a few reports” or “someone creative to manage our smaller hotels' social media accounts.” Not experienced Regional Directors.
This is good for hotels since it ensures the sharpest and most experienced people are driving strategy and not doing busywork, and good for Revenue Managers since better-defined roles and hierarchy will lead to more opportunities and salary progression for those just entering the industry and veterans alike. Lacking the ability to spread costs over multiple hotels, independents will be at a disadvantage, perhaps creating an opportunity for third-party service providers.
They are focusing on TOTAL PROFIT, not just revenue, and not just rooms. Of course, NetRevPAR must stay top-of-mind in the search for new revenues. Period. But it goes way further. Most hotels should re-evaluate their length of stay strategy based on new cleaning costs and local regulations requiring a room to be vacant up to three days between guests. Low demand and minimum staffing levels make calculating the actual profit from an incremental restaurant cover really complicated. What about that meeting space?
The list goes on and on and the profile of a good Revenue Manager seems perfectly suited to fill the role. Individually, the key to taking advantage of the opportunity at hand is to be nimble and make the adjustment before someone else does. As a discipline of Revenue Managers, our relevance, and thus our future, depend on it.
Revenue Optimization
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