The leisure and hospitality industry has lost 3.1 million jobs during the pandemic that have yet to return, according to the Bureau of Labor Statistics. As these severe cuts have taken place, one of the most impacted roles has been the traditional revenue manager. After all, why have a revenue manager when there are no revenues to manage? Now that demand is returning, an important decision for owners and management companies has emerged: When should the traditional role of a revenue manager return?
The pandemic forced a “great reset” for revenue management, with many revenue managers leaving the industry altogether and depleting the workforce of talent. And those who did remain find themselves in a new world—needing to create stronger results with far fewer resources. Simply put, managing hotel revenues in times of high demand, like 2019, was much easier, and any shortcomings in the strategies deployed could easily be covered up by excess demand. Revenue managers had more time and were manually making decisions and placing hard overrides in their revenue management system. Unfortunately, this takes a massive amount of time and is terribly inefficient. Human input can never match the cost efficiency or revenue potential offered by effectively leveraging systems that process vast amounts of data and manage millions of pricing decisions on a daily basis.
As you rebuild the revenue talent to support your hotels, it would be wise to invest your stretched dollars into a more efficient “new-world revenue manager.” Following are a few recommendations/scenarios to help you understand if you are working with a new-world revenue manager:
Look under the rug. Believe it or not, it is highly likely you have certain rate plans and channels inadvertently closed, which makes your hotel unbookable to some customers. Have a detailed system audit run and personally shop your hotel for different scenarios to make sure it is displaying the way you expect it to.
Is your revenue manager efficiently working with the systems or wasting more time fighting it multiple times a day? As author Roald Dahl said, “Having power is not nearly as important as what you choose to do with it.”
Many veteran revenue management experts can get caught in their traditional way of doing things. A new-world revenue manager works from principles and can leverage those principles with whatever technology they have available. Do you find your revenue manager blaming the system and referencing it in the third person saying, “The system overpriced these dates?” Take a look at what overrides they have in place and seek to understand their methodology behind it. Find ways to help influence the system and its decision-making process, versus overriding it. This becomes a virtuous cycle, improving automated decision-making over time.
Does your revenue manager know and leverage your value proposition with unique strategies? As each major brand uses its own revenue management system, that system can work well for the brand as a whole, but it often takes some finesse to get that system to understand your individual hotel’s value proposition and market dynamics.
If you are relying on similar brand promotions as your competition to drive business, you’ve just made your rooms a commodity and it will be a pricing race to the bottom. Getting this right is worth it; just a 1% improvement in price can yield an 11.1% increase in profitability. To find your unique value, dig into understanding which types of guests value your hotel more than any others.
Lastly, it’s critical that you know your hotel’s primary booking window. Leverage your system to test and learn outside the primary booking window, and when you are inside your primary booking window, apply your tried-and-true strategies and closely limit the discounts you have available.
Finding, attracting, training and retaining the new-world revenue manager will be difficult, but the payoff compared to the traditional revenue manager (pre-pandemic) is well worth the investment. After all, this role has full control of the day-to-day pricing and strategy for your investment.
If you are not confident in being able to find a new-world revenue manager, or just don’t want to deal with the constant churn that comes with securing this highly sought-after resource, there are options out there for you. Outsourcing these needs is a smart way to secure the new-world talent, de-leverage overhead risk and ensure that the value proposition of your investment does not become a commodity. Following the pandemic, there are many new options out there with a wide range of experience and expense. So shop around, but act quickly. Now is the time for you to find the new-world revenue manager to enhance your investment.
Josh Ramsey is the founder/managing partner of Prosper Hotels Revenue Management. He spent the last decade at Hilton, most recently as senior director of Hilton Customer Experience. He also served as a founding director of Hilton’s revenue management center, where he helped build the focused service model from 30 hotels to more than 1,500 hotels.
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