Why Has Revenue Management Become Essential to Hotels
Today, revenue management is a vital component to any hotel operation, and to maximizing hotel revenue.
Key factors in the sales process such as price and room availability are conditioned by the elasticity of demand.
So it´s necessary for hoteliers and technological partners to work together to price their perishable inventory right to meet demand.
Revenue Management is constantly evolving so it’s important to create partnerships. As hotels sell more rooms, this becomes more apparent.
The revenue management department is the central hub of operations and is responsible for driving decisions and strategic actions that increase revenue.
Which departments should be most involved in your hotel´s revenue management strategy?
When the revenue management department becomes the center of operations, it´s highly important to keep all staff aligned with your hotel´s goals and objectives.
Two of the most important figures in revenue management are the general manager and the finance director. The hotel´s general manager will monitor key operational metrics such as RevPAR, particularly from the previous year. On the other hand, for the finance department, revenue management is a tool for quantifying operational expenditures. Hence, why it’s important to be interested in staffing and related expenses as this will help predict hotel needs.
The revenue team should work closely with the sales and marketing departments as they are key to stimulating demand during slow periods. A revenue manager must also have enough information to negotiate discounts without losing sight of the hotel´s target market.
What data should be shared among the main players in revenue management?
Every morning a daily forecast report should be generated, helping revenue managers gauge the hotel´s current situation. This is necessary for managers to be able to quickly identify any weak points in hotel demand and in related revenue. Historical performance reports have been vital information for the revenue management team, but now revenue managers work with more elaborate and accurate information. New metrics such as Total Revenue Per Available Room (TrevPAR) and Gross Operating Profit Per Available Room (GOPPAR) are valuable data sets that measure the results of your hotel`s revenue management strategy.
What is the ideal revenue management organizational structure?
According to the traditional practice, revenue managers reported directly to department heads and worked less with departments who could benefit from the information gathered in revenue management.
Hotels are now embracing an open revenue culture as a critical part of their revenue management strategy. When your entire staff work together to achieve a common goal, revenue managers can create a strong sense of team and unity and thus make decisions based on collaboration- vital for your hotel´s overall revenue growth.