Remember all the big aspirations we had heading into 2020? I myself made some pretty bold claims about this new decade being the “golden age of revenue management,” and you know what? I still think it will be.
If we’ve learned anything from 2020, this decade is going to be more revolutionary and disruptive than we ever imagined. The entire world is changing fast, and travel and hospitality will never be the same. Now is the time to rethink the industry, reinvent your hotel and get things right for revenue management like you’ve never had the chance to before: the right business mix, the right channels and the right integrations of talent and technology.
These strange times call for a new breed of revenue manager - along with the revenue technology they use - to rise up and lead their organization’s path to commercial success in the prosperous years to come. Yes, I sincerely believe the boom will be back. It won’t happen overnight, but travel and demand will return.
Tactics to help change with the times
This isn’t the first time the industry has been turned upside down; however, it may feel to many as if we’ve been turned inside out as well. But what if we could look at the COVID‐19 crisis as the vehicle to lead to a fundamental shift in how the industry generates and optimizes revenues?
What if, in turn, these changes will lead to the rise of the commercial strategist, an analytically minded leader whose responsibility it is to integrate and optimize all revenue streams and maximize total profitability?
Before the pandemic, I talked about the convergence of revenue management from a technology and structure perspective. Both are still true and are now accelerating. Organizations have been consolidated and departments have been merged, with less people doing more things - including revenue leaders now looking after sales, distribution and even marketing. The rise of the commercial leader is accelerating with this crisis.
The revenue manager as your new insurance policy
If we have learned anything, it is that hotels need to continue to run, even if nobody is onsite.
Revenue managers are now being perceived as an “insurance policy” of sorts because while systems and AI are important, you still need a human backstop to validate edge cases and provide final oversight. Revenue managers have a unique set of skills necessary to optimize the performance of the business regardless of staffing issues prevalent today.
Automation has proven to be a key tactic, particularly from the perspective of the revenue manager. Viewing this key position as an insurance policy comes from the idea that they have a deep‐seated relationship with, and understanding of, the data. They have the insight to keep an eye on trends and leverage the resulting information to ensure the property or portfolio is taking advantage of this information as soon as possible.
It is more critical than ever before to be a good data storyteller in order to help management, owners and investors understand and make sense of the numbers
Today more than ever, having insight into this data is critical, particularly for senior management. The past is gone. We have to think and look at things differently, so the revenue managers of today are effectively becoming insight hunters, analytically minded individuals with the capacity to become creative thinkers. It will be key for revenue managers to work with sales and marketing to identify distribution opportunities that may unlock greater value.
Another tactic we’re seeing is the move from revenue manager to profit hunter - yes, revenue is important, but in times of depressed revenues, and with many hotels struggling, the focus must shift to profit. Today is the perfect time for revenue managers to help optimize the entire business - not just guest room revenue - and move beyond the pigeonhole of forecasting or simply setting the price.
Every revenue manager has the potential to be a key contributor in unlocking growth. The basic concept is that it’s about the profit being delivered to the business. As a profit hunter, and much like the revenue manager who has driven insights in the past, it will be more important to dive into the data to identify more profitable opportunities.
Today’s economic environment requires the revenue manager to become a broader leader by demonstrating that revenue optimization is so much more than forecasting. One of the key imperatives will include taking calculated risks, especially considering current economic circumstances. Who better to advise and uncover those hidden nuggets of data than the revenue manager?
As business leaders strive to better understand what is happening in the market, there are more opportunities today for revenue managers. Those organizations that come out on top will be those that understand how to effectively use the resources available to them.
To that end, it is critical for revenue managers to become a great data storyteller, to build their visualization skills and simplify the message to capture the attention of those who might not understand the depth of the analytics.
Subscribe to our newsletter below
By looking beyond RevPAR, we are better able to unlock the power of price and, in turn, the opportunity for a better profit organization. For instance, this is where scientific revenue management will help us understand the willingness of the customer to pay. We’ve moved beyond the demand mentality and into a time when we need to leverage the customer’s state of mind. To do so, we need to understand the personas of those guests who need to travel because most of those who are traveling today are doing so out of necessity.
From a revenue manager's perspective, we have seen wild swings in demand which only a robust tech stack can handle. More uncertainty means more people want to know what’s going on. But to do so will require getting down and dirty with the data. It will be critical to all involved that your revenue manager is able to craft a narrative with the data coming in. Then get the appropriate data in front of key stakeholders so they can better understand it.
Those who get excited about data are generally able to help convey the information needed to analyze competitive performance and interpret the macro‐economic environment. While the value of data to form insights and strategy has greatly appreciated, many people still struggle with telling a story by utilizing the data.
Experts in the field understand that if you start with a hypothesis before looking at the numbers, you can achieve a greater understanding of the information you are looking for and build out the story better. But the key is to convey the results simply, and cleanly, to help everyone in the room understand the message.
A wise, data‐minded executive once told me that when building out a presentation, the chart shouldn’t be the story, it should only be the illustration. If you have to take half your presentation time explaining what the chart means, you’ve already lost the audience.
Today, the evolution of data has expanded so much we may feel inundated with information. It is more critical than ever before to be a good data storyteller in order to help management, owners and investors understand and make sense of the numbers.
The key fundamentals still hold true
I would like to close by making clear that the fundamentals of the industry are still solid - the middle class is still expected to expand and rise, meaning more people will have more money to spend on travel. This pandemic has generated a backlog of pent-up demand which will be unleashed as soon as it is safe to travel.
I think in late 2021 we will see a wave of people traveling as it becomes safer to do so and restrictions are removed. So here’s to the real roaring ‘20s - a reimagined landscape with tremendous potential for the future of the hotel industry and revenue management.
And while shaking hands may not ever come back as a popular form of greeting and face‐to‐face meetings may look differently than they have in the past, for the most part the human race still craves connection, contact and the ability to meet and greet beyond the next Zoom call. It’s only a matter of rethinking and reinventing the future to build a better, stronger tomorrow. Are you ready for it?