Skip to main content Skip to search

Archives for Revenue Management

Revenue Managers of the Future

We have confirmed that the hotel revenue management is constantly evolving and in this article Hotel Business Review offers a list of skills that describe a revenue manager. This is a list based on Sherri Kimes’ research from Cornell University and Kelly McGuire’s experience from the SAS Institute.
Here the list of skills for the revenue managers:

Analytical: revenue management is a science and even if we are now surrounded by new revenue management software, we still need the person who understands the results, who is able to translate them and to create the right strategy. Someone who really comprehends numbers and statistics.

Good communication skills: the revenue manager is a “geek who can speak” (S. Kimes), because it is essential to be able to explain, sometimes complex strategies, to the rest of the team, who does not speak “numbers, analysis and statistics”. This person needs to clarify the importance of concepts, of actions taken and at the same time be able to be influential and successful.

Data-minded: it is critical that the data are understood – their origins, their reasons to be, their strengths and weaknesses and gathered and analysed to develop the successful strategy.

Technology-savvy: revenue managers need to have a technical knowledge, to be able to deal with the hotel software, their integrations. They need to have a good expertise on web page and social media as well as new mobile applications.

Negotiator: the revenue management is not only for hotel rooms, but all the departments that bring revenue to the property. Working very closely with the marketing team, the revenue manager becomes the middle person between the operations and the management, working in […]“political waters to drive results”[…]

Education: courses and trainings in revenue management are really important, they give the right fundamentals to the coming experience, to grow in the right direction.

To conclude, revenue managers need to be really empowered and free to make decisions, they need a good knowledge of numbers, statistics, technology, but they need some operations background.

Hotel managers need to create new incentives for the sales team, no longer based on volume!

Cluster offices are not always the right solutions.

Technology is essential nowadays and we need to stay on top of it to be more competitive.

Just one simple fact experienced lately. I have been talking with a lot of people, from the hospitality industry, and many of them, after I stated my profession, have smiled at me and said that they are doing “revenue” since the beginning of the millennium. It sounded really interesting, and then I asked what they meant and the answer was, “we open and close rates and availability many times during the day”. Still confused I asked “what else?”. During the various conversations, I have realised that there is still a little misunderstanding on how the roles are covered among the departments of sales, marketing, reservations, even front office and the management itself, everybody is doing something that should be part of the revenue manager’s job description!

Read more

How to create a better comp set

Many properties, especially independent and small boutique hotels, have no ideas how to look at their competitors, they raise a few questions, they are not sure whom they need to recognise as competitors, if by location, size or style, brands, chains or independent…and if it is really necessary to “waste” so  much time on it. Yes, it is important to have a significant understanding of the comp set, it is one of the elements that helps to create a better strategy.

In this article HotelNewsNow offers a very clear description of how to understand the competitors’ list, how many different sets of competitors the hotel can choose from and how to benchmark them.

Here are a few points to refine the comp set:

  1. Understand comp set composition – the average suggested is five or six properties. I personally worked most of the times with eight, depending on the area, at list for the primary list.
  2. Consider multiple sets – a second or even a third one can be added:
    • Regional – when the typology of our property can really compete with the entire region. E.g. I used to work for a property located at 1500m and nothing else around, so we used to look into other similar properties over an area over 4,000kmq.
    • Local – hotels that are not necessary of the same style.
    • Aspirational – hotels we would like to become, maybe after a renovation.
    • Niche – hotels that are not in the same location, but of similar characteristics.
    • Seasonal – properties open during the same time.
    • Group and transient mix – for properties with a great group business, it is important to focus on what the competition is doing exclusively on the group segments.
  3. Understand how to benchmark your comp set – STR can help on grading the properties to understand which category is better for the hotel:

                […]The grade is based on nine criteria:

  • Comp set average daily rate spread
  • Class variance
  • Nameback percentage
  • Occupancy standard deviation
  • ADR standard deviation
  • Revenue per available room standard deviation
  • Average distance
  • Room count variance
  • Age[…]
  1. Recognize opportunities to improve – it is important to keep an eye on the comp set and to update it, if new properties are added in the area or of a similar category, if some hotels have been refurbished or have been going through a particular change. Waiting years before changing the comp set does not give us the right information.
  2. Use all available tools – the right comp set is a tool and if it is not up-to-date it will bring no help to our strategy.
Read more
About us

Hotel Revenue Managers

Hotel Revenue Managers have transformed the profession in the last 15 years and I particularly like this article when it says that the Revenue Managers “are self-dividing into two distinct categories: those that are well prepared (or preparing) for 2024 and those that are well prepared for 2004.”

In the few years before 2008, we have seen a massive increment in revenue and profits in tourism, it was the time when OTAs have found a fertile ground for a splendid growth. The demand increased exponentially and the hotels were not prepared for such a blast and so with a good look and study towards the fellow airline companies, the revenue manager profession started to develop inside the hospitality walls.

Ten years down the line and the growth has consistently slowed down and sees today a little increase year on year, the offer caught up and overtook the demand. It is in this environment that a real Revenue Manager demonstrates how to maintain and drive more profits.

Here the 8 principles that make the Revenue Manager in a winning position ready to fight:

1. From Rooms to Relationships. The Revenue Manager is no longer focused on Rooms, but on the overall revenue that the guests are willing to bring to the property.

2. From Myth to Math. Analysis is where all starts, examine the data, the figures and anything that bring potential revenue is fundamental to build a stronger strategy.

3. From Silos to Systems. All figures among departments must be combined and analysed together to make sure to reach the overall target. It is not a civil war! The Revenue Manager should be responsible to work with all information at hand.

4. From Organized to Optimized. For the first few years Revenue Managers were drowning in new technologies, which did not talk to each other, but now the optimisation helps to improve the day to day task.

5. From Discounts to Drivers. It is important to see the difference that the value has achieved in the last few years. It is not the discount that drive more revenue, it is showing how valuable the product has become.

6. From Planning to Predicting. The Revenue Manager is not the extension of the financial team, they create one budget with a very mathematical calculation, the Revenue Manager works through a variety of possibilities based on a series of analysis and is flexible to the market evolution.

7. From Data to Decisions. Management used to receive pages and pages of reports with all the little details, nowadays the Revenue Manager prefers to engage the time to make decisions rather than type figures that nobody reads. Basic data are reported to show the improvements.

8. From Business to Better. To avoid to have a stagnant business, the Revenue Manager does not wait to see what happens, he/she makes it happens, being flexible with new strategy, approaches until the profits increases.

Read more

Improve direct booking conversions

An important on-going subject is to improve direct online booking conversions for hoteliers. The question is how do we do that? How do we compete against the big OTAs’ websites How do we increase our visibility? How do we make our websites easier to manage for the potential clients and above all how do we make it more interesting?

Those are the questions that we all ask ourselves and our teams. The answers that sometimes we get are not what we would like to hear and they depend on whom we are asking! According to this article from eHotelier nowadays the average abandonment of hotel websites is 77% and it seems that the marketers are the only ones to blame. Let’s do not give all the fault to marketers, at the present time the potential clients are no longer easy to influence as they used to. They like an extreme varieties of offers, but simple to understand. They spend a lot of time on the internet, browsing many websites, but they prefer the ones straightforward to manage, with a clear process. And the fact is that our potential clients they do want they are looking for, because somewhere they will find it and our job is be that “somewhere”.

Here five specific areas where we can improve our direct conversion:

  1. Avoid extra administration charges that OTAs will not have, and if there are fees out of our control like the city taxes (in selected countries), better to show them upfront and not just before the check-out, it might make the potential client leave and book more likely via an OTA.
  2. Maintain an updated content according to the season, promotions should reflect what the location and property can offer during a specific time of the year. Small hotels tend to leave in the content summer and winter offers at the same time, based on the excuse that they do not know when the guest is going to book.
  3. Present an on-site re-engagement message, a lastminute promotion, added value or special offer that re-gain the potential guest’s attention, before leaving you site unsatisfied.
  4. Do not over-compensate with too many empty and meaningless advertisements, offer some added values instead.
  5. Follow up after the guest’s departure with new promotions or added values that OTAs will not offer.

Easy said than done or at least to see real great results at the end; nothing is left to chance, if we do not even try!

Read more

Hotel Revenue Management

I have recently noticed that hotel revenue management is no longer a profession and a science, it is the new social conversation “talking about the weather” for people in the hospitality industry. Everybody has suggestions to offer on how we need to run the hotel, but nobody would speak up in meeting when opinions and ideas are asked.

You get your coffee in the canteen and the HR Director is talking about increasing rates because the hotel next door is selling higher – she knows it for a fact. (Yes, but it is a 5 star deluxe and we are not!) You have your lunch and the security guy is telling the porter that we definitely need to pay more attention to our promotions, we do not have enough, because the beautiful hotel down the road has at least ten and they are always full! (not really, they have tons of promotions because they are always empty and the rates are really low!)And again the restaurant manager thinks that our menus are too cheap, because we get very cheap clients who do not leave any tips for the staff, we need to increase the prices to get more reach people, who spent and leave tips like the restaurant around the corner. (yes, they are a 1 star Michelin!). The Financial controller wants to increase rates because we get more money. I have never paid too much attention, when I get my lunch or coffee, I usually take these few minutes to relax, but one day it really hit me…colleagues of any department are just talking about the weather, they do not know what to say and the subject in fashion right now is revenue management.

I would love to tell them that “Rome wasn’t built in a day” and that revenue management wasn’t either… not created last year and not even the year before, that there is more to that, than to be the most expensive hotel or restaurant to get more money or “better” clients!

Remko West from Xotels answered to three simple questions on very valid points, what is the past and the future of revenue management:

First question – past vs future/present […]”What are the most important developments & strategies that have led to where we are now with revenue management?”[…]

  • The availability of information – analytic, benchmarking, reviews, no available 5-10 years ago
  • Technological developments – less manual work load and definitely more accurate
  • SoLoMo (Social-Local-Mobile) – more channels to launch promotions, to be visible in the market
  • Maintaining a healthy channel mix
  • Lowest Price Guarantees
  • Metasearch – not yet very clear to many hotels

Second question […]”What are the top changes that you expect to happen in the next 3 to 5 years in hotel revenue management?”[…]

  • Rate Parity will soon no longer exist. On contract – no legal issue? Only a marketing strategy? But the price war is not over
  • Sharing economy
  • Metasearch channels
  • Availability of data

Third question […]”Will these changes be different for chain versus independent hotels?”[…]

Not really the answer that I expected and then I give you my opinion. My answer is yes, it will be very different for independent hotels.

  • They will not have all information at their disposal, because they do not have the budget to implement their technology with all the latest software to improve data analysis.
  • They do not have a dedicated person to manage social media at the right standard.
  • They cannot compete with OTAs marketing strategies
  • Metasearch is still a word for many of them

I will be happy to hear your thoughts to achieve better results and to play fairly and at the same time to make sure that we all understand the meaning and the importance that this new “fashion” can help us all to strategise for the future of our properties!

Read more

SEO organic search results

SEO – Search Engine Optimisation – organic search results for hotels, something very important that in the last few years have been part of the marketing strategy in all businesses; however for many hotels’ management is still a little hazy. We all understand what it is and why it is vital to get it right. It is still quite difficult to act on it and make it work.

We will find suggestions and strategies all over the internet; I found this article by Kerri Fivecoat-Campbell,  a HotelNewsNow contributor, very straightforward to understand. It offers a brief description from the Oxford English Dictionary definition  – “the process of maximizing the number of visitors to a particular website by ensuring that the site appears high on the list of results returned by a search engine” – up to a few suggestions to make it work.

First we have to take in consideration that the SEO is no longer what it used to be. And that every year the algorithms are modified thousands of times to make sure that we keep up with our website; and that we do not ignore it for too long. It is a challenge to keep up with search engines like Google, but if we want to maintain our hotel website on the top of the list, we have to manage it and here a few points to achieve that:

  • Consistency is definitely one of the keys, the hotel information should be written in the same way on all pages.
  • The content is king – we need to make it interesting to engage our visitors, short but with a clear message.
  • Videos play a very important part, however they need to be of a high quality and not too long.
  • Keywords are essential and well spread out in all the pages, three to five main ones are enough.
  • The home page should have the brand promise to catch the interest of the visitor.
  • The website must be mobile friendly, as more than 60% of our potential guests, check out their next trip over the phone.

This is just the beginning, but when we get to start our strategy many other details become clearer.

Read more

Uncontrollable variables

Hospitality like every other businesses needs to rely on great managers or leaders if we prefer. Someone in charge in better or worse, able to comprehend when to step up and to deal with every situation that comes along. They need to lead their teams and consequently the business in the right direction also through difficult times. Every day is a different one and uncontrollable variables could be just around the corner.

Factors, that hotel managers meet every day and have to be prepared to handle them. Max Brass from FrontdeskAnywhere brings up a few, that managers need to be aware off, so they can be organised and do not waste any minute to keep up the good work.

Economy is a primary uncontrollable variable. If the economy is strong, hotel managers have to be able to take advantage of the situation, on the other hand, if the economy is weak, they need to be able to deal with it. For instance, if a currency is strong, hotel managers need to target the right market and fill the hotel without killing rates.

Technology goes at a very fast pace and hotel managers need to keep up with it otherwise they risk to lose business and to be left behind by the competition. Upgrades to old software are essential as well as investing in new ones. Investments are seen as initial costs, but they will create a better and more efficient working environment, hence they will increase revenue.

Keep an eye on the competition and acknowledge it helps the hotel managers to create the right strategy and try to be better than other hotels in the area.

Here just a few of the main uncontrollable variables without talking about the weather!

Read more

Price Positioning Strategies

This week I would like to address another great topic of revenue management: the price positioning strategies. I usually take the subjects from interesting articles on hospitality magazines, today I would like to be a little bit more academic and mention an article published by Bill Carroll on the eCornell blog.

We know that the OTAs offer an endless range of prices, however hotels and restaurants still need to come up with the best price strategies. A price decision is influenced by many different factors like competitors’ rates, events and different markets. Here Bill Carroll offers a price-value matrix to help us to position our product or service. This is possible when we know the targets we would like to achieve. Those could be short term revenues, higher profit margins as well as to stand out from the competitors or just to survive.

Here the five different price positioning strategies to apply:

  • Skim – we position ourselves higher than the competitors, to attract the crowd who is willing to pay more, however high price is equal to extremely high value and guests are still wondering why they should pay more in our property.
  • March – we sell one of our rates like our competitors and the others slightly higher, in this way we can be competitive without beating the other players.
  • Surround – we get one rate lower than the competitors and bring in the market who has a limited budget, but at the same time have higher rates with great products / services and added values for guests who are willing to spend way more.
  • Undercut – we can potentially get more guests, if we offer the same rate like our competitors and one even lower, personally I am not a fan of this one.
  • Penetrate – we stay lower than the competitors, cutting prices and increment offers, but this can take to a price war, depress the price market, lower margins and reflect bad on our property reputation.

Pricing strategies are more complicated than that, however it can be a really good start.

Read more

Revenue and Marketing

Most of the time the roles of revenue and marketing are misunderstood, either they are considered “pretty  much” the same role, one person is enough to cover both or you have two separate departments that unfortunately are not working together but are competitors inside your own house. It is important to clarify that the two roles must exist under the same roof and that they must work together to achieve the targets requested.

We are all well aware that metasearch engines are consistently increasing and that the cost for a property has gone up at the same pace. That means that to be able to invest in the right strategy and be available to as many potential customers as possible, we need to combine our strengths to plan for the success. Samantha Worgull from HotelNewsNow offers the discussion results of a few professionals from leading hospitality companies like Highgate and Fairmont Hotels and Resorts.

They discuss about online and offline marketing, where the online includes everything related to e-commerce and social media, whilst offline is taking care of branding and imagine.

It is essential to share all the data and to apply every possible strategy to improve the results. At the same time to be sure that the marketing and revenue teams are working together, it is necessary to overcome the main obstacles: […]

  • “Sandbox mentality” – revenue managers need to leave the marketing team free to work in their space
  • “Communication” – both revenue and marketing need to speak a simple language that the rest of the team can understand
  • “Non-synchronous goals” – the goals to achieve are all the same and both departments need to make sure that they use the same methods and metrics.[…]

Team work is at the base of every success and it is essential to understand that the competitors are outside the walls and not inside them.

Read more

Marketing Mix

One of the main elements to get the right revenue strategy in place is to choose the right marketing mix. Defining our market segments is essential for any kind of business not only in hospitality. We will come across different kind of market segments and even if the same industry has the same targets, it might still have different approaches to get to its customers. I have found this interesting article written by John Bertino, Founder of The Agency Guy, that can be helpful for every and each sectors that wants to develop the right plan to drive more revenue.

How do we choose the right market segments? It is a series of pieces, that put together, will suggest the right actions for the next marketing campaign.

First of all we start to check what our competitors are doing, which kind of customers they are targeting and how they do that. Clearly we do not copy the same strategy, however we can enhance what they are doing well and we discard what they are doing unsuccessfully.

Then we move to the next step. We want to recognise our ideal customers. We will then try to understand the activities that bring them to us or our location, their interests and their opinions. Based on all these elements we can create a tailor-made campaign to make our hotel the really attractive choice.

Next we need to create the goals and make sure that we are able to measure the results of those objectives. Those could be special offers or packages, a newsletter, a banner on your website, a PPC campaign.

Once we have those elements we just need to mix them together and to upload them on the right platforms. We need to understand which social media are mostly used by our potential clients and make sure to create the right campaign to reach them.

Here is when we choose the budget we are willing to invest and where.

At this stage we try the strategy with the various campaigns and we monitor the results, based on those we modify accordingly until we find the winning results.

Read more