From revenue manager to hotel leader

revenue management
As hotel organizations are forced to restructure due to COVID-19 disruption, revenue managers are likely to become more entwined in every aspect of hotel operations, sales and marketing. Photo credit: iStock / Getty Images Plus / MIND_AND_I

Perhaps no role in hospitality has had as much impact on the industry’s evolution over the past few decades than the revenue manager. Following its leap from the airline industry to hospitality in the 1980s, revenue management technology has transformed nearly every aspect of the business, from the way travelers shop for rooms to how hotels collect and apply guest data.

It wasn’t long before hotels were hiring dedicated revenue managers to track this information and remain competitive. This role has continued to change as revenue management becomes more refined, with some revenue managers taking on leadership roles within hotel brand and management companies—all the way up to CFO and CEO positions. Now is the time for revenue managers to develop their core skill set and rise above property-level operations.

As hotel organizations are forced to restructure due to COVID-19 disruption, revenue managers are likely to become more entwined in every aspect of hotel operations, sales and marketing. This goes against the current siloed nature of hospitality, where each department emphasizes its strengths while narrowing its focus, but it is also a natural progression for revenue managers who have been developing new skills and expanding their role during the last business cycle.

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Each year the hotel industry’s reliance on technology and data to make smart pricing and purchasing decisions grows, and revenue management is at the heart of this revolution. However, despite their expanded skill set and influence on hotel profitability, revenue managers often lack influence within their organizations. Now is the time for these integral workers to take charge as leaders within their hotel, using their skills and insights into the industry to define new ways to conduct business during and post-COVID.

The Return to Sales

Early revenue managers were not working a specialized role. They were often reservations sales managers experimenting with what was at the time referred to as “yield management,” a practice that would eventually come to be known as “revenue management.” As a result, sales and revenue management have remained connected in essence and ethos even as the roles grew apart. This connection is sensible, considering both roles are proactive in creating and expanding revenue streams for hotels, and now more than ever it is important for sales and revenue management to remain in alignment.

Looking at current market conditions, with the average U.S. hotel occupancy still struggling to reach 49.4 percent over Labor Day Weekend and global occupancy averaging lower, hotels have had to become more tactical with their messaging. When occupancy is this low, every marketing dollar matters. Data is driving these decisions, but hospitality sales requires collaboration between multiple areas of the hotel to thrive right now.

Revenue management benefits greatly from sales experience, but the position also requires an individual capable of multi-dimensional thinking across a range of disciplines within hospitality. The breadth of information revenue managers work with spans pricing and sales data, as well as distribution strategies and marketing channel mix. Revenue managers who possess the ability to understand these data points at an elemental level are able to become trusted advisors for hotel leadership.

With the right insight, revenue managers can help attract a property’s ideal guest segment mix and can identify clear trends to inform forward-looking operations. This can help operators control what fixed costs per available room they can, and better adapt to variable costs as they fluctuate. No other role in hospitality has the opportunity to help drive the increased health of a property, regardless of the volatility in occupancy the industry is expected to endure.

Despite the growing influence of revenue management, hoteliers who want to equip their revenue managers with the tools they require to properly collect and understand guest data remain challenged by the siloed business structure present throughout the hospitality industry. Once a hotel’s leadership recognizes the threads connecting sales, marketing, distribution, and revenue management, they will ultimately have no choice but to unify these departments in order to remain competitive.

Today, revenue managers sometimes struggle to have their vision understood by a hotel’s leadership. If revenue managers want help direct the growth of their property based on the data and trends they have identified, they must improve the way their findings are presented to hotel executives. In turn, owners and operators need to understand the connective tissue between sales, marketing and distribution, and take note of the new environment that has created a convergence among traditional hotel departments and drive for vertically integrated and shared metrics among these departments.

Leadership Through Communication

Hotels are most successful when they have access to as much information as possible, and it was revenue management that helped drive the integration of on-property technologies into more unified systems to better collect, understand and share guest and market data. As hotels continued to collect and apply guest data to booking and revenue strategies, it has gradually become more difficult for them to operate efficiently while, internally, teams remained siloed. This is particularly true of revenue management.

Currently, a division exists between the way hotel operators approach generating guestroom revenue compared to the rest of the revenue-generating services and amenities on property. In the recent past, many revenue managers would hesitate to suggest changes to a hotel’s dining strategy based on guests’ behavioral data and purchasing decisions, even if they can demonstrate concrete areas for improvement. Often such insights can provide a major competitive edge, not to mention a more insightful way of integrating revenue functions with greater efficiency.

This siloed approach to operations continues to hamper all aspects of hotel operation, and until hoteliers make the leap from guestroom revenue management to a unified revenue strategy, the responsibility rests on revenue managers’ shoulders to challenge tradition.

As part of this responsibility, revenue managers need to better communicate their strategies and goals to create change within their property or organization and drive aligned goals across departments. This requires ongoing, open communication with your property’s general manager and other members of the leadership team regarding actionable trends and concrete ideas to activate your property in unique ways to drive revenue.

Most importantly, it is up to revenue managers to begin this dialogue. With the industry in flux, revenue managers are in a perfect position to use their insights to drive the commercial shifts taking place within their property, but this is unlikely to happen if revenue managers are satisfied with having a diminished voice. It is also up to hotel leadership to identify the individuals within their organization who possess these skills or interests and invest in their development.

Something Out of Nothing

Revenue management has been elevated today partly due to the difficulty associated with running a property at uncharacteristically reduced occupancy levels, but the role will also be integral in creating new revenue-generating strategies. With the hotel event business in a perpetual holding pattern, at least for the foreseeable future, on-property services such as spas and gyms shutting down, and other services such as food and beverage facing cutbacks to save on costs, hotels are in need of new revenue-generating outlets to replace those they’ve lost.

It will likely take some time before traveler confidence returns to what it once was, even after a vaccine for COVID-19 is widely available. With that in mind, the revenue managers who step up to the challenge by broadening their education, point of view, and skill set while building bridges within hospitality’s operating silos will be identified as commercial leaders within the industry.

Hotels are clearly in need of new ways to diversify their revenue base beyond room bookings, but how can operators act on potential opportunities when budgets remain strained? Hotels cannot afford to be complacent with any level of business in today’s economic conditions. Hoteliers who defy established norms effectively—based on quality, well-understood data—are better positioned to succeed than those who stay the course in uncertain waters.

Data remain the favored currency of the day, and revenue managers can use historical and trend data to identify processes or strategies that add little value to a hotel’s operation, while pinpointing areas for improvement. This is a collaborative process, but revenue leaders can take charge by bringing hard facts to the table, assisting the decision-making process by highlighting areas of opportunity only they have the opportunity to discern.

Broad Benefits for Hotels

One of the greatest challenges facing hotels in this new environment is to act quickly, with flexibility to rapid changes in market conditions. Commercial leaders in hospitality must be looking for ways to leverage their myriad tool sets to drive efficiency and more nimbly react to new information. The best way to achieve this is by removing the barriers between departments and increasing internal collaboration.

Hoteliers are progressively being asked to shift their forecasts and react to changes in market trends based on incomplete guest profiles and limited data sets. However, in a unified hotel environment, commercial leaders will be equipped with the technology to act on their personal knowledge and acquire the information they personally lack. This will allow them to react to short-term trends while making meaningful decisions for the long term.

There will come a day when every aspect of a hotel is considered part of a broad, all-encompassing revenue strategy, and every amenity and service offered is chosen to maximize returns, minimize costs and elevate the guest experience. To achieve this, hotels will require a commercial leader with command of revenue management, sales, marketing and distribution to make it capable of making fast, informed decisions.

Mike Chuma is VP marketing, enablement & engagement, IDeaS Revenue Solutions.

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