Revenue management is an art, and like all art it’s a constantly evolving process that can never be mastered. In this area of ever-changing elements, such as customer behavior trends and the continual march of technological advances, even the most experienced revenue manager must keep learning.
“Revenue management is moving target,” said Don Urbahn, VP of revenue management with New Castle Hotels & Resorts. But there are ways to ensure the revenue manager at your hotel is doing the best work possible, all the time.
1. Create Good Habits
You must work to have a daily routine that makes sense to you, and then stick to it. “For our team, it comes back to habit. You have to build the right habit for the daily routine,” said Isaac Rodriguez, VP of revenue strategy & distribution with Twenty Four Seven Hotels.
Rodriguez said operators need to create a pattern for the week to help orient revenue managers. For example, Rodriguez looks at certain reports on Mondays, then enacts a plan and goes back on Thursday to assess the success of that plan.
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2. Understand the Data
To find success here, Rodriguez stresses the main objective is to look at available data and understand what is truly relevant and what’s extraneous. “The big objective is figuring out what is truly important and makes the difference,” he said, noting it’s an exercise of finding what he calls the “root story” in the data. That story is one revealing the true nature of market demand, not what you think demand might be. “The amount of data coming through because of the recent advent of automation can be overwhelming. But if you set the right habit to look at X metrics, and then make decisions based on those it defines the difference between a revenue manager and someone simply filling the role.
Urbahn said he benchmarks against historical data and information owners and investors are looking at. “We break is all down by business segmentation and the channels that business is coming through. We also look at regional and citywide performances,” he said, noting that as a company with hotels in many regions throughout the country they also consider negotiated rates with discounts, qualified and base business. “We look and measure against our competitive set and community and then set our goals accordingly.”
Tip: Understand the true business drivers of your property and seek out data that helps build those business areas. Look at how direct bookings compare with third-party reservations and adjust accordingly to find more direct business.
3. Stay Organized
“The way data is being accumulated, it is very important for a hotel, or person in my position, to have it organized to a point where we can review on a daily basis,” Urbahn said. “But don’t spend too much time reading it all.”
To simplify the process, Urbahn said New Castle developed internal reports merging info from local informational sources in one place. It helps understand each property’s demand daily. “We have used several products, and find it very beneficial to measure performance and future performance and incorporate that in our daily processes,” Urbahn said.
Tip: Use a revenue-management program to give you an extra layer of insight.
4. Get the Metrics Right
Not all hotel demand is created equal. Sometimes a hotel struggles to fill its rooms, other times it’s easy. That means if your hotel sells out X nights per month, each of those nights actually has a different level of demand, something Rodriquez points out is essential to understand.
“Focus on what’s called unconstrained demand, the true demand in that time frame if the market has unlimited supply. This helps you understand demand is not 100-percent equal,” he said. “Sometimes demand is barely there and you have to use low-rated segments to get business, versus a day where you could sell out the hotel two to three times over.”
This distinction affects what a hotel can charge for a night. So, he said you must understand the nature of the demand. “It’s an issue of context,” Rodriguez said.
If the city is having a major event such as music festival, it’s likely you can sell more quickly at a higher rate. Raise those rates immediately. But you may need to goose demand with incentives to get a sold-out hotel on other nights.
It’s a matter of understanding where specific demand is coming from as well, Urbahn said. He said you should have the ability to forecast demand by segment or channel or special event: “We need to anticipate that demand and how we are going to manage it.”
Tip: Changing rates has zero effect on market demand. So, lowering rates in the hopes of gaining business is not always the most effective strategy.
5. Train, Train, Train
“We are learning new concepts every year—embrace and leverage change,” Rodriguez stressed. “When you are complacent, it’s detrimental to the revenue manager and the property so always embrace new sophistication and automation.”
Meanwhile, Urbahn said if the hotel is affiliated with a major hotel band, leverage its resources. “Engage in all the training that is offered through brands and other resources. Then be sure those tools and those systems are used effectively at the property level. Work with folks at the property level to understand what they are looking at,” he said.