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This is a question I hear from time to time- especially from independent hotels. The answer of course is not definitive. However, to stay one step ahead of your competitors you do need to have some form of revenue management strategy. This does not necessarily need to be complicated but, depending on the size and type of your business, you should consider your business mix, demand and competitors and, most importantly, your targets.
A good Revenue Manager will more than cover their costs; they should be commercially focused and emotionally detached from the everyday running of the hotel, ensuring that their recommendations are based on what they have established commercially as best for your business. These may occasionally conflict with the views of your management, sales and operational teams.
A good Revenue Manager will help you attract the ‘right person, at the right time for the right price’, by optimising fully any opportunity for a sale, backed up by data analysis and effective inventory management. Principles that can be applied to all divisions of your business.
Some may say that an alternative to a Revenue Manager is an RMS system (Revenue Management System), this however still needs to be managed by someone with a good understanding of revenue management and a high degree of commercial acumen. Systems like this can be invaluable but they can also be pricey; you must decide which alternative can work best for you. In the end it is all about return on investment.
In terms of illustrating a positive change, a myriad of acronyms such as RevPAR, TRevPAR, and GOPAR are used. The simplest way to measure this is by gauging whether there has been an increase in revenue per room available. A large part of a Revenue Manager’s responsibilities will be to ensure that through thorough investigation and data analysis, you and your finances are committed only to those changes that will provide you with a guaranteed return on your investment or an improvement in overall profit.
Thus investing in a good Revenue Manager can be justified by their knowledge of distribution, helping you to stay one step ahead of your competitors through all your distribution channels, including GDS, ADS, OTA, third parties, your own website and even social media. This is a continually evolving area, and your Revenue Manager will be able to stay abreast of the latest trends ensuring that you are ahead of the competition.
These are just some of the benefits to having a Revenue Manager. Revenue Managers have developed a reputation for being revenue focused, which can appear a bit dull, and their views may well be at odds with those of the sales team. You must strike a balance between the two in order to succeed.
At the end of the day, as Hoteliers, you are skilled at finding people who are experts in providing excellent customer service. Why not have an expert fully dedicated to improving revenues, someone who can ensure you are generating the maximum profit for your rooms and your conference space, especially in periods of high demand, while making the most of those more uncertain periods.