Hotel & Catering Review examines the topic of revenue management and how it can be key to a hotel’s success.

Revenue management is a key factor in any hotel’s success – hoteliers need to ensure they’re selling the right room to the right person at the right time and on the right channel. A good revenue manager with the right tools and knowledge can analyse trends, predict demand, and optimise inventory availability to sell rooms on the right channels to optimise revenue and profit. “I won’t say every hotel will require a revenue manager, but someone who is looking after the revenue management function,” explains Helena Rowe, account manager with technology and digital marketing company NetAffinity. For larger properties, Rowe advises employing a dedicated revenue manager who has the time to analyse demand, the competition and incoming bookings to identify room for growth and improvement.

But where to start if you don’t have a revenue strategy in place and you can’t afford to hire a revenue manager? The first step is to look at your performance for the last 12 months, for each month, pinpointing what you did and didn’t do well and highlighting what you want to replicate going forward. Rowe recommends looking at performance by channel – bookings over the phone, through email, from online travel agencies (OTAs) and so on. That’s where a good property management system comes in as its reporting functions provide this information. If those reporting systems aren’t available there are other methods, such as analysing data from your website’s booking engine to discover where bookings are coming from.

A good revenue manager with the right tools and knowledge can analyse trends, predict demand, and optimise inventory availability to sell rooms on the right channels to optimise revenue and profit.

“Look at what’s booked, when it’s booked, but also when they’re staying,” Rowe says. “[You should] look at cancellation rates as well because that’s very important. We do see high cancellation rates from OTAs for hotels, which means that they’re selling the rooms quite far out but then a month or a week ahead of their due date to arrive, that room might cancel and the hotelier has to turn around and sell it again.”

You should also keep an eye out for any gaps in the information you have – are you recording bookings made over the phone or through email? You may be unaware that a significant chunk of revenue is coming from phone bookings rather than OTAs to which you must pay a commission. “Implement the changes in order that this time next year you will have a fuller picture,” Rowe advises.

CHALLENGES

Revenue management is something that isn’t without its challenges. Many hotels have yet to employ a revenue manager – instead the role is often juggled between the sales and reception managers. As a result, key insights can often fall through the cracks and data may not be fully analysed to identify strengths and weaknesses. For dedicated revenue managers, ongoing skills and training can be a struggle – there aren’t a huge amount of related courses in Ireland and making the time to upskill or keep up with the latest industry trends can be difficult. Technology can also be a struggle in terms of securing funding for the latest software (which can be quite expensive), as is ensuring strategy implementation from the top down.

“The general manager needs to buy into it as well as each of the receptionists,” says Rowe, noting that in some cases a customer might spot a cheaper price on an online travel agency and phone the hotel directly for a price match – the receptionists aren’t in a position to offer the lower price and lose out on a direct booking. “The receptionists need to understand enough about revenue management… that they have the approval to be able to go ahead and give them the same rate.”

Collaboration is key in surmounting these challenges. If the sales and marketing team and the revenue team are working in isolation very little can be achieved – Rowe explains that budgets and strategies should be set together, with the teams working in tandem throughout the year to realise targets. For example, a sales manager might decide to hold a 20 per cent off sale on a certain date, not realising that it’s a date that normally sees high demand. “The sales and marketing manager’s goal may be to increase brand awareness and a sale will definitely do that if you put the right marketing behind it,” she says. “But it’s not going to achieve anything if, at the end of the day, the hotel is not making profit on it.”