Evolving Dynamics: From Revenue Management to Revenue Strategy PDF

Evolving Dynamics: From Revenue Management to Revenue Strategy THE STUDY GUIDE FOR THE CERTIFIED REVENUE MANAGEMENT EXECUTIVE (CRME) CERTIFICATION 3RD EDITION By Kathleen Cullen, CRME Published by: Publishing Partner: PMS-377 PM...

Evolving Dynamics: From Revenue Management to Revenue Strategy THE STUDY GUIDE FOR THE CERTIFIED REVENUE MANAGEMENT EXECUTIVE (CRME) CERTIFICATION 3RD EDITION By Kathleen Cullen, CRME Published by: Publishing Partner: PMS-377 PMS-2617 PMS-444 669933 663399 999999 Evolving Dynamics: From Revenue Management to Revenue Strategy THE STUDY GUIDE FOR THE CERTIFIED REVENUE MANAGEMENT EXECUTIVE (CRME) CERTIFICATION 3RD EDITION By Kathleen Cullen, CRME Published by: Publishing Partner: PMS-377 PMS-2617 PMS-444 669933 663399 999999 © 2019 Hospitality Sales & Marketing Association International ALL RIGHTS RESERVED This publication may not be reproduced in whole or in part, without the express written permission of the publisher, except by a reviewer who may quote brief passages in a review; nor may any part of this special report be reproduced, stored in retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying, recording, or other, without written permission of the publisher. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If expert assistance is required, the services of a competent professional person should be sought.  34 years Dear Hospitality Colleagues, As the global leader in hotel performance benchmarking, analytics and insights, STR is proud to once again sponsor this resource. A true testament to the mission of HSMAI, the publication continues to cultivate knowledge, provide insight into the future of our business, and inspire revenue and marketing professionals 63,000 hotels worldwide. Like HSMAI, STR understands that the hospitality industry plays a vital role in the global economy. In March 2018, STR celebrated the 10th anniversary of its international entity, which was launched to enhance the capabilities of revenue professionals around the globe. 8.4 million Today, STR maintains the world’s largest hotel performance data sample, which hotel rooms comprises 63,000 hotels and 8.4 million hotel rooms in 180 countries. Throughout STR’s more than 30 years of service, we have been a collaborative partner in the evolution and success of the revenue optimization discipline through thought leadership, dedicated service and product development. Continuing in that tradition, we remain committed to our company’s foundation 180 countries and legacy of providing the industry with confidential, accurate and actionable data and insights. On behalf of STR and its more than 300 employees around the world, we thank HSMAI for the opportunity to sponsor this significant contribution to the advancement of the global hospitality industry. STR’s growing network of representatives is invested in the success of its partners. To learn more about our STR maintains team and our data-driven solutions, please visit www.str.com a presence in 15 countries with a corporate Amanda Hite Amanda Hite North American President and CEO, STR headquarters in suburban Nashville and an international headquarters in London.  aviano sa berling FUTURA Dear Colleagues, PMS-377 PMS 669933 66 This book is the study guide for the Certified Revenue Management Executive (CRME) designation (www.hsmai.org/crme). We hope you will learn more about the CRME and what it can bring to you and your organization. As you read and use this book, you will understand why every hotel professional needs a copy of it! As part of our mission to provide hospitality professionals with the most up-to-date and forward-looking information on revenue optimization principles, practices, and strategies, we are proud to deliver this industry-leading book. It has been made possible in terms of content and production by many industry professionals, business partners, and HSMAI’s global advisory boards who have contributed their best thinking and experience. We believe this book not only delivers high-quality educational content, but industry-leading insights and best practices. With practical and relevant information along with a comprehensive roadmap for hotel owners and operators to establish and enhance revenue optimization and revenue strategy at their properties, we hope you see this book as giant step toward meeting our mission. We promise to continue to provide resources and information that will help you and your company increase your performance. Even as we send this book to the printer, the industry is changing with impacts on the revenue optimization discipline as we know it. Increasingly, industry leaders are thinking about and talking about Revenue Strategy in hotels as a distinct specialty that ties together revenue optimization, marketing, sales, distribution, and analytics in a disciplined way with a focus on enterprise profitability. Learn more, and understand how revenue professionals, owners, and operators can prepare for the future throughout this book (especially by reading chapters 1, 13, 15, and 16). As you read and use this book in your work, remember: Hotel executives will get the most out of revenue optimization within their organizations if they heed the following advice. n Create an optimal organization for success including having appropriate resources and executive alignment. n Ensure adequate support and the resources needed to execute the revenue strategies. n Commit to staying focused on long-term strategies, employ tactical short-term solutions only when necessary, and be sure that the short-term solutions do not conflict with the long-term strategies. n Commit to understanding the difference between a budget and a revenue forecast and be willing to work with both. Contrary to popular opinion, a revenue forecast should not be created to meet or exceed the budget. Instead, it should be created based on market conditions. n Embrace change and be proactive to stay ahead of the curve and competitors. Please see the page vi for a roster of all advisory board members. iv >>>>>>>>>> © Hospitality Sales & Marketing Association International  Additional Revenue Optimization Resources & Education from HSMAI HSMAI, with its advisory boards, provides leading education, a best practices exchange, thought leadership, and networking for revenue professionals, other sales and marketing professionals, and senior leaders in the hospitality industry. Learn more about these and other resources and educational opportunities at www.hsmai.org. ROC conferences — In all regions where HSMAI operates, these annual gatherings of revenue professionals address the most critical trends affecting hotels today. Certified Revenue Management Executive (CRME) — This certification, for which this book is the study guide, offers revenue professionals the opportunity to confirm their knowledge, experience, and capabilities. Certified Revenue Management Analyst (CRMA) — This certification recognizes students for their understanding of the application of revenue optimization concepts. CRME Review Course — This one-day event is designed to assist those taking the CRME exam with their final preparations. Revenue Ready “Certificate of Revenue Management (Hospitality)” — An online course for people just starting in the revenue discipline, and hotel staff who would like to move into a revenue role. RO2Win — An online course specifically designed for those not currently working as a revenue professional (for instance, sales, marketing, and operations professionals). It teaches the power of revenue optimization, and how the discipline interacts with and influences others in the hotel. Evolving Dynamics: From Revenue Management to Revenue Strategy >>>>>>>>>> v 2019 ADVI SO RY B OAR DS AMERICAS REVENUE OPTIMIZATION ADVISORY BOARD Chair: Tim Wiersma Monte Gardiner Michael Maher, CRME, CHDM Vice President, Revenue Management Managing Director, Revenue Director of Strategic Accounts Red Roof Inns, Inc. Management Services IDeaS - A SAS COMPANY Best Western Hotels & Resorts Vice Chair: Nicole Young, CRME Chris Nixon, CRME, CHDM Corporate Director of Revenue Eric Gravelle, CRME VP Revenue Optimization Management Vice President of Revenue Ashford Group of Companies Rosewood Hotel Group Management, North America Diamond Resorts International Breffni Noone, PhD Chris K. Anderson, PhD Associate Professor Academic Director Linda Gulrajani, CRME Pennsylvania State University Cornell University Vice President, Revenue Strategy & Distribution Julie Abou Nohra Veronica Andrews, CRME Marcus Hotels Regional Director of Revenue Director, Digital Data Solutions Management, The Americas STR Renee Haddad, CRME Mandarin Oriental Hotel Group Director, Revenue Account Vivek Bhogaraju Management Heather Richer Director, Revenue Management Preferred Hotels & Resorts Chief Marketing Officer Solutions RedAwning Expedia Group Adam Hayashi, CRME Vice President of Revenue Corey Stanley, CRME, CHDM Christopher Biondo Management Corporate Director of Revenue Corporate Director of Distribution & Accor Hotels Management Product Development Seneca Gaming Corporation Standard International Brian Hicks Vice President, Global Revenue David Warman Christian Boerger, CRME, CHDM, Strategy Senior Vice President Hotel Marketing CHBA IHG and Revenue Management Revenue Strategist and Digital Four Seasons Hotels & Resorts Marketing Expert Jennifer Hill, CRME VP, Client Engagement Hunter Webster, CHDM Denise Broussard, CHDM Kalibri Labs SVP, Revenue Strategy RVP – CENTRAL, Travelclick Interstate Hotels & Resorts Erich Jankowski Dana Cariss Vice President, Revenue Management Monica Xuereb Vice President, Revenue Strategy Host Hotels & Resorts Chief Revenue Officer CoralTree Hospitality Loews Hotels & Co. Michael Klein Tammy Farley Executive Director, Revenue Co-Founder Performance Strategy Rainmaker MGM Resorts International vi >>>>>>>>>> © Hospitality Sales & Marketing Association International ASIA PACIFIC REVENUE ADVISORY BOARD Devdutta Banerjee Dr. Basak Denizci Guillet Luke Moran VP Revenue Management Associate Professor of Hospitality Executive Director Revenue, Sales Millennium & Copthorne Hotels Business Analytics Mantra Group Hotels & Resorts School of Hotel and Tourism Bilal Chamsine Management Pallavi Nirula Nath Passionate Revenue Guru The Hong Kong Polytechnic Director, President, HSMAI Indonesia University Revmax Technologies Pte Ltd Limin Cheng Rita Jiang Liz Perkins Director of Revenue & Distribution Head of Commercial Performance, Head of Revenue Management- Management Greater China Europe, Asia, Middle East, Africa and Marina Bay Sands, Singapore IHG Australasia IHG Jackie Douglas Suneet Kumar President VP Revenue Performance & Dr. Detlev Remy HSMAI Asia Pacific Distribution Associate Professor Pan Pacific Hotels Group Singapore Institute of Technology Heidi Gempel Managing Partner & Founder Andrew Lau, CRME C.S. Ramachandran, CRME HGE International Corporate Director of Revenue Director Revenue Management - Facilitator, HSMAI Asia Pacific Management South Asia, Middle East and Africa Revenue Advisory Board Rosewood Hotel Group Preferred Hotels & Resorts Tony Gothard Puneet Mahindroo Fanie Swanepoel Senior Director Revenue, Sales & Senior Director of Hotel Marketing SVP Revenue Marketing and Revenue Management Marina Bay Sands Wyndham Hotel Group Four Seasons Hotels and Resorts Jeffrey Young, CRME Director of Revenue Management Development Minor Hotels EUROPE REVENUE ADVISORY BOARD Chair: Paul Van Meerendonk, CRME Gino Engels Director Global Advisory Services Co-Founder and Chief Commercial Bela Nagy IDeaS Officer Global SVP Revenue Management & OTA Insight Pricing Vice Chair: Steven Dow, CRME Accorhotels Vice President of Revenue Etienne Faisandier, CRME Management – Europe VP Revenue Management & Business Perra Pettersson Diamond Resorts International Intelligence Founder & Owner Moevenpick Hotels & Resorts Benchmarking Alliance Thomas Adler Vice President Global Revenue Philip Gardner Joanna Schröder, CRME Strategy Vice President, Commercial Vice President Revenue Management Melia Hotels International Intercontinental Hotels Group (IHG) Deutsche Hospitality Scott Dahl Stan Josephi Chinmai Sharma, CRME Senior Lecturer Senior Lecturer Hotel Management Executive Vice President and Chief Ecole Hôtelière, Lausanne Breda University Revenue Officer Taj Hotels Resorts and Palaces Lennert De Jong Jan Lundborg Chief Commercial Officer Chief Commercial Optimization Officer Stan Van Roij, CRME citizenM Scandic Hotels VP Hospitality Solutions and Program Management Michael McCartan Infor Managing Director, EMEA Duetto Evolving Dynamics: From Revenue Management to Revenue Strategy >>>>>>>>>> vii TA B L E O F C O N T E N T S INTRODUCTION 1 Chapter 4: Economics and Its Role in Revenue Optimization 23 A Special Note to Owners and Operators 1 Economics 101 23 Macroeconomics 23 PART ONE: THE FUNDAMENTALS 3 Microeconomics 25 A Few Words About Costs Factors 29 Chapter 1: From Revenue Management to Revenue Strategy 5 What is Revenue Optimization? 5 Chapter 5: Understanding the Market 31 External and Internal Influencers 31 The History and Evolution of Revenue Optimization 5 Market Trends 32 Demand Indicators 32 Chapter 2: The Revenue Professional 9 Competition 33 The Role of the Revenue Professional 9 Benchmarking 34 Qualifying Candidates 12 Maximizing Market Position 37 The Talent Gap 14 Chapter 6: Segmentation and Sources Career Development and Progression 15 of Business 38 How will you know if you’re doing it right? 16 Traditional Definition: Focus on the Purpose of Travel 38 Evolved Thinking: Focus on the Channel 39 Chapter 3: Departmental Integration 17 Organizational Structure 17 The Next Stage: Focus on the Customer 39 Leadership 17 What Does USALI Have to Do with It? 39 Goal Alignment 17 Chapter 7: Forecasting 42 Communication and Teamwork 17 Forecasting is the Foundation 42 On-Property Revenue Optimization 19 Different Forecasts for Different Objectives 43 Centralized Revenue Optimization 20 Demand Forecasting 44 Outsourced (Third-Party) Revenue Optimization 21 Strategic Forecasting 46 Revenue Forecasting 47 Operational Forecasting 48 viii >>>>>>>>>> © Hospitality Sales & Marketing Association International Chapter 8: Pricing 50 CHAPTER 11: Performance Analysis 89 Strategic Pricing 50 Key Metrics of Success 89 Getting Tactical 54 Key Elements of Reports 92 Discounting 54 Discovering Issues Impacting Performance 93 Impact of Discounting 58 The Front Desk 93 Pricing Methods 58 Elements that Create Value 60 Chapter 12: Putting It All Together 94 Developing a Revenue Strategy 94 Rate Fences 64 Managing Demand 95 One-to-One Revenue Optimization 66 Communicating the Strategy 95 Overbooking by Room Type 67 Implementing a Revenue Strategy 97 Chapter 9: Inventory Control 68 Measuring the Success of a Revenue Strategy 98 Inventory Control Strategies 68 Adjusting a Revenue Strategy During Extreme Market Changes 98 Channel Costs 68 Variable Marketing and Reservation Fees by Channel 69 PART TWO: CROSS-DISCIPLINARY PARTNERSHIPS & THE ROLE OF Implementing a Demand-Driven Inventory REVENUE OPTIMIZATION 99 Control Strategy 71 Stay Pattern Management 72 Chapter 13: Technology Operations, Channel Management 73 Marketing Operations, and Data Analytics 100 Overbooking by Room Type 73 Technology Operations 100 Management of Group Blocks 74 Marketing Operations 103 Data Analytics 104 Chapter 10: Rooms-Only to Total Hotel Revenue Optimization 75 Chapter 14: Owners 105 Defining Total Hotel Revenue Optimization 75 Best Practices for Managing Owner Important Considerations 76 Expectations 108 Key Steps to Get Started 77 Meetings & Events: F&B and Function Space 78 Chapter 15: Strategic Distribution 110 Displacement Analysis 79 The Distribution Landscape 110 Restaurant Revenue Optimization 84 Hotel Distribution Technology 113 Golf Course Revenue Optimization 86 Third Parties in Distribution: Online Travel Agencies (OTAs) 114 Spa Revenue Optimization 87 Third Parties in Distribution: Group Intermediaries 116 Third Parties in Distribution: Alternative Accommodations 117 Rising Costs of Acquisition 117 Evolving Dynamics: From Revenue Management to Revenue Strategy >>>>>>>>>> ix TA B L E O F C O N T E N T S Chapter 16: Marketing in a Digital World 121 The Digital Marketing Trifecta 121 OWNED MEDIA: Website Optimization 122 OWNED MEDIA: Mobile Websites & Marketing 129 EARNED MEDIA: Social Media 130 PAID MEDIA: Paid Search 135 PAID MEDIA: OTA Paid Media 138 OWNED MEDIA: Email Marketing 138 PART THREE: EMERGING ELEMENTS IMPACTING REVENUE STRATEGY 141 Alternative Accommodations 141 Resort and Urban Fees 143 The Consumer 144 APPENDIX A: Revenue Team Meeting Sample Agenda 147 APPENDIX B: SWOT Analysis Example 148 APPENDIX C: Revenue Optimization Tools 150 APPENDIX D: Case Study 152 APPENDIX E: Sample Job Description 156 GLOSSARY 158 ABOUT THE AUTHOR 165 ACKNOWLEDGEMENTS 167 ENDNOTES 169 INTRODUCTION While the foundational concepts of hotel revenue These shifts in focus have implications for those in leadership roles in hotels optimization largely remain the same since and hotel companies today. As the demands on revenue grow, leaders the last edition of this book was published in need to adjust and evolve according to the need, and those supporting and/or 2015, new dynamics have come into play and working in conjunction with the revenue optimization discipline must also adjust are disrupting the traditional landscape. and evolve with this new way of doing business. The intent of this book is to help revenue In addition to providing detailed education on the professionals, as well as operators fundamentals, this edition gives significant attention to the and owners, understand revenue optimization in today’s evolution of, and the new entrants and disruptors impacting, complicated and ever-changing landscape. We’ll answer the critical discipline of hotel revenue optimization. important questions including: Additionally, this edition shifts the focus from traditional n What are the criteria for a successful revenue rooms revenue management to a more holistic approach of optimization operation? total asset optimization. n What changes need to be embraced to be successful in today’s world? Traditionally, hoteliers have primarily focused on rooms — the costs of distribution, understanding the differing costs Today’s world is far more complicated than in times past, by channel, and how this plays a role in optimizing room making revenue optimization a true mix of art and science. revenues. With more and more attention being paid to Supported by appropriate talent and leadership, business optimizing the total asset, applying revenue optimization intelligence, and technology tools, your revenue strategy techniques outside of guest rooms to other revenue centers can achieve your hotel’s optimal business mix. is largely what many revenue professionals are working toward, if they are not already there. And their focus is A Special Note to Owners and Operators shifting toward managing the increasing costs of acquisition There is no question that today’s owners and operations and their impact on profits. executives understand what revenue optimization can do for the bottom line. However, it is crucial that owners and At the same time, hotel revenue management has operators understand the resources — human, technology, historically been a highly tactical discipline. The industry’s and other — that are needed to create and maintain a need has evolved from being tactically-focused to a much strategic focus and timely execution. broader and more strategic approach concentrating on future strategies across all revenue-generating areas. Unfortunately, when times are tough, too many owners and operators fall back on the all-too comfortable tactic of The revenue professional, and revenue discipline, are cutting costs instead of investing in and optimizing top line universally recognized as key pieces to the puzzle of driving revenue. If that is not properly optimized, then the bottom success for the total hotel asset. All revenue centers can line will be negatively impacted, the hotel’s long-term be optimized today, and the expectation from owners and revenue optimization will be negatively impacted, and the operators is to ensure optimal profitability throughout all hotel will lose its ability to attract and retain top revenue revenue centers. professionals to the team. With a broader scope in responsibility or a broader scope in On the other hand, those who invest in ongoing training applying revenue optimization techniques outside of guest and relevant tools, unify the entire organization around rooms, and moving towards optimizing the total asset, it is profitability goals, and trust their revenue teams to act more appropriate to think in terms of “hospitality revenue quickly (and stay out of “analysis paralysis”) will lead the optimization” versus the more traditional “hotel revenue revenue optimization discipline and will win the best talent management.” — all of which leads ultimately to optimal profits. Evolving Dynamics: From Revenue Management to Revenue Strategy >>>>>>>>>> 1 PA R T O N E : T H E F U N D A M E N TA L S A hotel has a finite number of guest rooms and a finite number of seats in its restaurant, making those rooms and seats perishable items. When a sleeping room is not priced right, or the seating n Supply and Demand configuration in a restaurant is not optimal or not flexible, n Product Offering or perishable inventory of any type is mismanaged, that is n Inventory lost revenue that can never be realized. n Booking Pace Revenue optimization is focused on balancing and n Booking Window managing demand by setting appropriate pricing for each n Market Position usage pattern by customer segment. Those usage patterns n Usage Patterns differ depending on the revenue center. n Competitor Pricing For guest rooms, it is the stay pattern; for restaurants it is n Unconstrained Demand the length of time in the seat or at the table; for golf it can n Customer Segments be the amount of time in between tee-times. Each revenue n Optimal Business Mix center must understand its own inventory options, demand patterns, and customer segments in order to set pricing and n Demand Drivers (negative and positive) optimize the profitability. n Consumer Lifetime Value At the same time, there are many dynamic variables Many of these variables, and more, will be explored involved in hospitality revenue optimization. Without an throughout this book. understanding of them, it is virtually impossible to deploy strategies. In addition to usage patterns, other variables impacting the optimization of revenue and profit decisions include: Evolving Dynamics: From Revenue Management to Revenue Strategy >>>>>>>>>> 3 CHAPTER 1 FR O M R EVE NUE MANAGE M E NT TO R EVE NUE STR ATEGY Learning Objectives return is impressive. Firms employing revenue management techniques have seen revenues increase between 3% and n To understand the history of revenue optimization 7% without significant capital expenditures, resulting in a in hotels, and how it has evolved 50% to 100% increase in profits!”2 n To understand the increasingly complex nature of revenue optimization in hotels Bill Marriott, Jr. was quoted in Cross’s book, “Revenue What is Revenue Optimization? management has contributed millions to the bottom line, and it has educated our people to manage their business Revenue optimization is a discipline that is used in many more effectively. When you focus on the bottom line, your industries, but the application and implementation can company grows.” vary greatly from sector to sector. In an industry like hotels, where perishable goods and services are involved, revenue optimization provides a significant competitive advantage The History and Evolution of Revenue to companies that practice it effectively. Optimization Revenue optimization in hotels and hotel companies is not an independent business process or system. It is a It is the science of managing a limited amount of supply to discipline that has evolved significantly over time, and has maximize revenue and profits, by dynamically controlling become intimately intertwined with others including sales, the price and quantity offered by distribution channel. marketing, and distribution. Other ways to think about revenue optimization in Its origins as revenue management were very descriptive, hospitality include: describing historical results: “Here is what happened n It is the art and science of predicting real-time last night….” In its next evolution, it became predictive, customer demand at the micro market level and predicting future results: “Here is what we think is going optimizing the price and availability of products to to happen, and what we’re going to do about it….” Today, match that demand. powered by data and analytics which fuel AI and machine n It allows for the offering of room rates and the learning, the discipline is becoming more and more control of inventory through a variety of channels prescriptive, recommending or even automating decisions that are most appropriate for the anticipated that will achieve the overall goals for the hotel: “Here is how demand. we will achieve our goals….” Revenue optimization can be applied to restaurants: selling The resulting automation can help a hotel company move the right seat to the right customer at the right price for the forward significantly faster. It will be like in Star Wars when right duration. R2-D2 is at the controls of the Starfighter taking care of the routine functions of flight, leaving Luke Skywalker free to Total hotel revenue optimization (THRO) is the “consideration of multiple revenue sources, a deep understanding of customer value, and a shift [from top-line metrics to bottom-line measures to take] into consideration distribution and operating costs.”1 All of these definitions boil down to the simple essence of what revenue optimization is all about: selling the right focus on the strategy and more complex tasks at hand.3 amount of inventory at the right pricing levels based on the customer’s willingness to pay. The Beginning It all started with revenue management in the airline Robert Cross, one of the earliest experts in the discipline, industry. It wasn’t until the late 1980s that revenue and a recipient of HSMAI’s Vanguard Award for Lifetime management made its way into hotels with Marriott Achievement, described the timeless principles of the officially introducing revenue management in its business discipline: “The application of revenue management strategies. principles is limitless and the potential in terms of revenue Evolving Dynamics: From Revenue Management to Revenue Strategy >>>>>>>>>> 5 Early on, all revenue management practices were deployed central reservation system [CRS], and the GDSs). Imagine manually, which meant that data analytics (although it the amount of manual work for properties with many was not referred to as data analytics at that time), pricing, different room types! inventory controls, demand generators, and more were tracked in some type of manual format such as an inventory At the same time, these multiple rates started being offered control book. to different customer types. Where sales teams were once able to comfortably quote rates to a group and know how The manager, typically the reservations leader at that they compared to transient rates over the same dates, time (or front office manager or even general manager for they found that it was no longer so simple. New systems a smaller hotel), manually counted room availability to and processes were required to keep all of a hotel’s pricing, know how many rooms were available to sell for a given sales, and distribution teams on top of things. One enduring date. Reservations were manually recorded — usually innovation is the revenue meeting (originally called the handwritten on a standard form — and then entered into yield meeting). See Appendix A for today’s revenue meeting the inventory control book to get accurate house-counts. best practices. Cancellations were tracked manually in the same book. Calculations for all days into the future had to be counted At this point of revenue management’s development, the and recounted on a regular basis to know availability for revenue leader, who was likely still the reservations director, each day and how many rooms were left to sell. Guest folios had an overflowing plate of responsibilities. In addition were handwritten or typed on a typewriter and then put to continuing to manage the reservations function, he or into a “bucket” based on day of arrival. she was also responsible for strategically looking into the future, setting rates per day by room type, preparing for and The approach to pricing was static, and far from as dynamic running revenue meetings, managing questions on why or as it is today. Typically, a small range of rates were set how rates were determined, and executing these changes. based on room type and seasonality — think High Season, It was a lot of work for one person. Shoulder Season, and Low Season. There was typically one rate per room type during a given season. It did not change As the importance of this role became clear to the industry, by day nor was it based on fluctuating demand within a owners, operators, and general managers began dedicating season. resources to it and creating stand-alone jobs focused solely on pricing and revenue management. The most common It was an uncomplicated time and an uncomplicated titles were yield manager, revenue manager, and in some landscape for hoteliers and consumers alike. For example, on cases, revenue director. For most hotels, this position the consumer side, corporate travel and group management reported directly to the director of sales and marketing, and budget planning was easier for travel managers as costs in some cases to the general manager. could be estimated based on the anticipated number of travelers and one or two rates per season. On the hotel side, As hotels were adjusting to and absorbing the impact of these deployment and tracking of revenue management strategies new pricing strategies, so too were consumers. Consumers was easy because the rate structure was so simple. It was were accustomed to paying the same price for the same possible for revenue management to be implemented in a room type and had a difficult time accepting the fact that manual environment — no technology required. hotel rates can and would change by day-of-week, or even daily. Even though they accepted that airlines employed A Maturing Discipline this type of dynamic pricing strategy, it posed a significant, Once hoteliers started introducing more active ways of long-term communication and education challenge to pricing, it became more complicated and time consuming hotels to help customers understand how it applied to and to execute revenue management strategies. For instance, was being deployed in the hotel industry. Specifically on the instead of one rate per room type per season, multiple corporate travel side, the new pricing approach disrupted rates per room type were set depending on demand. That corporate travel managers’ planning and budgeting. They meant manually opening and closing anywhere from two had to figure out how they would negotiate, set their annual to twelve (or more) rates per room type across the channels budgets, and manage their travel programs when they did used by the hotel (primarily reservation sales teams, the not know rates in advance. 6 >>>>>>>>>> © Hospitality Sales & Marketing Association International Today, consumers — group, transient, and corporate — n Online digital initiatives drive traffic to brand.com have become acclimated to the process and expect to see sites. different rates. They even now know that they can pay one n A variety of tools work together to help revenue rate for the same room type while someone else is paying a professionals better understand profitability and different amount. costs, and so much more. Revenue Optimization Today Hotel revenue optimization has become very complex. As Today, the playing field is significantly more complex. the hospitality landscape, including owners, consumers, Revenue management once meant opening and closing and hoteliers, becomes more sophisticated and demanding, availability and rates. With the explosion of online so too do the tools and resources available from industry distribution channels, transparent rates, user-generated partners. reviews and social media, and a multitude of technologies, the revenue optimization discipline has become significantly Changes in technology, customer behavior and expectations, more complex in order to meet the new demands it faces. owners’ expectations, and more, have forced hotels and hotel companies to think and act differently when it comes Automation made it possible for revenue optimization to revenue optimization. Hoteliers who remain focused on to keep up with the world around it. From automating “the way we have always done it” are falling behind, and reservation entry from one system to another, to automating quickly. Those that refuse to change and adapt to new the distribution of rates and availability from one system to technologies, new methods, or new talent requirements another, more and more automation required less manual are restricting their hotels and companies from optimizing work from the revenue professional. But it presented a revenues to the fullest. new challenge: the need for an entirely different skill set. Understanding and managing the data flow between At the same time, outside of the hotel industry there is various systems became critical, bringing a whole new set rapid adoption of revenue optimization, which is often of responsibilities. Finding and developing talent to fill the accompanied by an increased focus on customer behavior. role became, and remains, a challenge for the industry. As more and more industries identify opportunities to increase revenue, they are learning more about their With the new demands on the discipline, including the customers. These new insights allow them to enhance their increasing focus on revenue optimization for the entire revenue optimization strategies by personalizing offerings hotel and all revenue streams, versus a singular focus on and more. rooms, today it is nearly impossible to continue operating in a traditional manual environment. The complexities of For example, Disney rolled out wristbands that track all of a the analytics involved, and the many variables that have guest’s purchases (giving the company data on their likes), entered the marketplace make it nearly impossible for and make it easier for guests to spend money. Removing anyone to keep up manually. Fortunately, technology has friction in the purchase process has led to an increase in become the norm, the expectation, not the exception. Most spending in multiple areas. The company made a significant owners and operators have invested in sophisticated tools investment in this technology and is leveraging it to collect to help manage and optimize revenue results. massive amounts of data to be used in targeted marketing and revenue optimization efforts. While the fundamentals of revenue optimization remain the same, the approach to managing them has significantly Another example of an industry applying revenue changed as technology has become ingrained in the revenue optimization comes from the government sector. High optimization discipline: Occupancy Toll (HOT) lanes are limited-access lanes n Automated systems use sophisticated algorithms to reserved for buses and other high occupancy vehicles, but determine rates or rate hurdles. open to single occupant vehicles upon payment of a toll. n Rate shopping tools provide advanced insights into market pricing and positioning n Business intelligence tools uncover booking patterns and rates within the market. Evolving Dynamics: From Revenue Management to Revenue Strategy >>>>>>>>>> 7  marketing, distribution, and analytics. Revenue Strategy Revenue Strategy: The Future of Revenue further breaks down these often-siloed disciplines so that Optimization they have access to the same data, are aligned on their goals, Revenue optimization will continue to evolve and grow in and are ultimately collaboratively focused on profitability. sophistication as the practice matures, as the distribution landscape changes around it, and as new technologies Revenue optimization and its strategies are just one of the emerge to support and disrupt hotels’ strategies. It is highly indispensable ingredients in Revenue Strategy. Overarching likely that the discipline will become even more of a science Revenue Strategy is the future of the hotel industry. than it is today with a heavy emphasis on data/science- HSMAI will continue to produce insights, research, and driven pricing. education around this topic. Find the latest information at www.hsmai.org. Today the hotel industry is increasingly focused on Revenue Strategy – an emerging discipline that takes revenue optimization to the next level. Revenue Strategy Questions for Review n How has revenue optimization in hotels evolved? is a longer-term, comprehensive, holistic approach to n What were the most important influences on the driving profitability of the enterprise that is dependent on discipline throughout its evolution? the collective and interdependent efforts of the equally important disciplines of revenue optimization, sales, 8 >>>>>>>>>> © Hospitality Sales & Marketing Association International CHAPTER 2 TH E R EVE NUE PR OFESSI O NAL Learning Objectives The Role of the Revenue Professional n To understand the role and responsibilities of the Anyone who has been around the hospitality industry for a revenue professional while knows how much the role has evolved over the years n To understand ways to qualify appropriate talent for — from reservations manager to yield manager to revenue your organization manager to revenue strategist. Like the discipline itself, the n To understand the talent gap facing the industry, professionals in these roles have dealt with significant and and identify opportunities to address it in your constant disruption since its inception. organization The job description has shifted beyond “pushing buttons,” The importance of revenue optimization has expanded, and generating reports, forecasting, and pricing. The revenue the way hoteliers think about and manage their businesses professional is no longer sitting in an office crunching has changed. It is no longer enough to manage demand to numbers and reporting back. Today the revenue professional ensure an optimal mix, or just focus on optimizing top-line is focusing on driving total hotel profitability using, room revenues. Today, revenue optimization is broader in understanding, and communicating sophisticated data scope and much more strategic, with a focus on the bigger analytics, requiring them to lead, manage, and influence a picture including top-line revenues and profitability, and whole new strategic level. revenue centers outside of rooms. This work rests on a solid foundation of understanding of the “The degree to which hotel operators rely on revenue profitability of channels, segments, and the costs of running management [and revenue optimization] to drive successful the business. Only when the profit drivers and breakeven business operations has grown incrementally over the past thresholds of the points of sales are understood will a 30 years. It has become high profile over the last decade revenue professional make the most profitable gains and to 15 years.”4 That means that now “[r]evenue growth is articulate the right strategy with all internal stakeholders. a fundamental driver of long-term hotel performance. A They are driving the processes and determining the focus on revenue places the revenue management function, strategies for hospitality revenue optimization. as the natural ‘owner’ of top line revenues, squarely at the forefront of driving a hotel company’s success.”5 Revenue professionals are expected to interact with and influence colleagues at various levels and in key areas As yield management has evolved into revenue optimization, such as strategy, tactics, profitability, revenue-related the role and responsibilities of the professionals in the processes, technology, and much more. At the same time, discipline have gone through significant change. And they understanding of and involvement in revenue optimization continue to evolve and grow with the changing demands by owners has significantly changed — and has become and needs of the industry. The discipline requires a more much more granular than ever before. Today, most owners sophisticated leader, influencer, communicator, and and asset managers have a direct line to the revenue leaders collaborator — a strategist — versus the traditional “number in their hotel portfolio. That places revenue professionals in cruncher” or manager needed in the past. even more of a spotlight and places new requirements on them to be better leaders, communicators, and influencers Modern revenue professionals are experts in driving as well as experts on the core revenue optimization sophisticated strategies for the hotel. They are strategic fundamentals. leaders with deep knowledge of forecasting, data analytics, and market intelligence. They must manage demand, As the industry changes and disruption continues, the role customer segments, inventory, rates, booking windows, of the revenue professional will surely evolve again. This stay pattern controls, and the technologies that can support book explores many of the changes happening today and all of these functions. They typically report directly to the those that are on the horizon — and the challenges that general manager or CEO, giving revenue optimization an come along as a result. equal voice with sales and marketing in decision making. Evolving Dynamics: From Revenue Management to Revenue Strategy >>>>>>>>>> 9 Setting Revenue Professionals Up for Success Systems such as automated revenue management systems From the corporate level, owners and operators would be (RMS) can collect data, analyze the data, and make well served to ensure the revenue optimization discipline is recommendations using sophisticated algorithms (e.g., rate properly staffed and supported. This is a discipline that will recommendations, forecasting, displacement analysis, etc.). easily pay for itself in the revenue and profit returns. Channel management tools are another important category One of the bigger challenges accompanying continuous of technology to consider. They allow for management of change is the industry’s ability to adapt in order to preserve rates and inventory through one system versus having to and grow profits. The disruptive distribution landscape manually update multiple systems. Another category of impacts the revenue optimization world in a significant critical tools that more revenue professionals are using way. Managing revenue amid the constantly changing provides business intelligence. digital marketplace is one of a revenue professional’s biggest challenges. Couple the impact of those big disciples When considering a tool, ensure that the integration with OTAs changing business practices, new entrants between it and other revenue tools and systems in place getting between hotels and the consumer, large companies is part of your evaluation. While not vital for every single — both hotel brands and third parties — consolidating their tool, it is absolutely critical when considering an investment merchandising power, and more. in an RMS. Ensure that all of your technology partners are willing to work together to ensure you get the automation While all of this is happening around them, at the property efficiencies and/or data needed. level revenue professionals are inundated with the day-to- day needs and challenges of the hotel, and at the same time There are a variety of tools available to revenue professionals are expected to stay focused on future strategy. It would — and it can be difficult to understand which ones are most be difficult for anyone to remain focused on the important important, as well what is available. Consider the following. and urgent business of today while also understanding how to navigate and adjust to the day-to-day impact of CATEGORY TOOL T YPE fast-moving changes in the business around them. That Technology Revenue Management System (RMS) is where it can be helpful to have corporate level revenue Central Reservations System (CRS) leaders who handle bigger-picture issues for the enterprise, Property Management System (PMS) identifying solutions and resolutions in support of property- Channel Manager level players. Group/Contract Pricing Analysis Spa Booking System Tools to Assist in Revenue Optimization Upsell Software If revenue professionals are working in a highly manual Data & Analytics Competitor Rate Shopping Service environment — extracting data, putting together Reputation Management System spreadsheets, and updating inventory and rates in multiple Booking Pace systems and extranets — then it is nearly impossible for Demand Forecasts them to “get out of the weeds” and focus on strategy. Operational Forecasts Aggregated Data Visualizations The more automation in place, the more productive a Market Intelligence revenue professional has the potential to be. There is a F&B Analytics Tools plethora of tools today to help in the tasks that will allow Reporting Budgeting Templates/Tool the revenue professional to remain focused on strategy, and 30-60-90-365 Day Forecasts stay on top of and manage all the demands required of the Operational Forecast revenue optimization discipline. This section provides some Pace Performance insight into the types of tools and the purpose of these Pickup Performance tools. For information on specific tools and providers, see Pricing Strategy Appendix C. Monthly/Regional Summaries Channel Costs/Profitability 10 >>>>>>>>>> © Hospitality Sales & Marketing Association International Hard and Soft Skills Required optimization. Hard skills can be learned, but it is the The overall role of the revenue professional is to be “soft” skills, the personal attributes, that are much the champion of revenue optimization for the hotel. harder (some would say impossible) to teach. This includes big-picture thinking, continual analysis, decision making skills, expert presentation skills, Someone can learn a CRS, PMS, or RMS. But effective the ability to translate data and analysis visually, the communication and the ability to influence while ability to manage relationships, and effective channel relating to others and being agile while doing it all is an management. absolute must today. A revenue professional who has the highest intelligence along with superior analytical skills, The revenue professional must be able to consistently or the best knowledge of a system, will risk not being educate the hotel’s management team on revenue successful without these important soft skills. optimization as a whole, and have the ability to convey the facts and convince the team to take the risk of If someone is hired for their soft skills, they can often changing strategies when it is appropriate. He or she learn the necessary technical skills. Conversely, if must be comfortable standing strong to support a data- someone is hired for their technical knowledge and based decision even when others do not agree. This expertise, the hotel may miss out on having someone means working productively through disagreements who has the ability to see the big picture or someone with members of the sales team, front desk members, who is analytical. For example, if a hotel hires a and even other executive committee members such as a candidate who is great with Excel or the hotel’s PMS, director of sales, while maintaining a solid professional then they have hired a person that can use that and positive working relationship. technology well but who may not have the attributes necessary to analyze the reports or explain the results The shift in the responsibilities of and expectations from them. for the revenue professional position also requires a shift in the talent that hotels need. It is critical to look Beyond looking for technical skills, it is important to beyond the hard, or technical, skills such as specific identify the following soft skills in individuals who are system experience, forecasting accuracy, and pricing, being considered for a revenue optimization position. to ensure a hotel has the right person leading revenue Competitive Determined and committed with a strong drive to achieve goals Verbal & Visual Ability to articulate revenue strategies and deployment to achieve strategies Communication Leadership Ability to earn trust and directly or indirectly lead teams, at all levels throughout organization Influence Ability to influence decisions at all levels throughout organization; able to convince others to act based on data and information Team Player Collaborative and works effectively as a member of teams Technically Savvy Ability to understand, to a detailed degree, how technology can augment the revenue optimization function Critical Observer Good listener with strong observation skills; able to read situations, identify changes needed, understand environments, and respond accordingly Interpersonal Skills Ability to develop and maintain relationships with colleagues and third-party partners Agile Able to adapt quickly and efficiently according to business changes and needs; adept at navigating change Priority Focused Able to identify and prioritize a focus on highest revenue or profit generating needs compared to time- consuming tasks with low-yield impact Evolving Dynamics: From Revenue Management to Revenue Strategy >>>>>>>>>> 11  n Experience with reporting tools The following skills are nice to have, but should n Online research skills not be requirements. For example, if a candidate n Problem-solving skills has experience with the PMS specific to your hotel n Written & verbal communication company, that is a huge benefit. However, it should not be a requirement. Most qualified candidates will have experience with one or several different PMSs. The basic While not a skill, one additional point to be addressed concept of these systems is the same and a talented is hiring someone for their ability to start immediately. candidate will be able to apply their knowledge and Hiring someone just because they are able to start experience to a variety of systems. Furthermore, they immediately may have a negative impact on the hotel if can be trained by an expert should there be a need. The the employee winds up not having the right experience. following skills should not be the reasons for which a A good revenue professional will most likely have candidate is hired: commitments to honor with a current employer and may need time to complete those before moving to a n Previous experience with a particular PMS, CRS, different property or company. A bad hire is worse than RMS, rate shopping tool, channel management tool, no hire. web booking engine, etc. n Previous training or experience with digital Qualifying Candidates marketing and/or finance/business Once the hotel has identified the required talent needed n Advanced Excel experience in its next revenue professional, the next step is to know n Strong forecasting experience how to qualify candidates. The following interview n Prospecting skills questions can be used for this purpose. n Sales skills INTERVIEW QUESTION WHAT IT MAY TELL YOU What is your biggest accomplishment and why? May offer insight into how they measure success and work with others. Keep in mind at what point in their life or career the selected accomplishment occurred before making a judgment. What has been one of your biggest challenges and why? May offer insight into what they see as a challenge, and How did you overcome this challenge? how they handle and overcome challenges. May help to determine if this person is a problem-solution type person or if they offer problems only. It may also indicate whether the candidate is creative, based upon how they overcame the challenge. How did you make an impact in your last revenue position? This can tell you if the person is goal oriented and focused What was the goal? What was the approach? What were the on results. It will also tell a lot about their approach and if results? they are methodical by nature. Should you be hired and accept this position, what would This will tell you how the person prioritizes and how they your approach be upon starting at our hotel? What would approach new things. What would their priorities be? Again, you do first? a methodical nature is needed for this position. It will also tell you how much thought they have given to the position. Provide some basic data about your hotel to a qualified The results of their methodology, format, and actual analysis candidate and ask them to prepare an analysis with some can tell you a lot about their skills. recommendations. 12 >>>>>>>>>> © Hospitality Sales & Marketing Association International What do you think your biggest challenge in this position This will tell you what they see as a challenge and whether would be? How would you overcome this challenge? it lines up with your thoughts. Based on their answer, you can determine whether you believe they can overcome challenges. Why do you like revenue optimization? This may help you understand what they like best, and therefore, on what they focus their efforts. What factors do you believe are most important about this This should be in line with the hotel’s philosophy. role? If applicable: As a revenue professional during the last As you carefully listen to their response you will be able economic downturn, what was your response and approach? to tell whether they handled themselves in a reactive How did you handle revenue optimization at your hotel? or proactive way. Were they a leader in the market or a follower? Was their approach a methodical, well-thought-out approach? Also consider: If hotels are able to identify candidates with the right n Overall, how are they able to articulate their mix of hard and soft skills, they will find themselves responses and strategies? Based on your interaction in a much better position to elevate their approach and listening to their explanations, are they good to be more strategic and proactive. These are the communicators? hotels that will find they are able to lead in the n Do they know their own hotels well? If they do not revenue optimization arena. Hotels which have these know their own hotels inside and out, they are not competencies, when automation comes into play, will your next hire. find they can embrace the technology much more easily n Within the answers they provide, are they thinking and continue to elevate their level of sophistication. big-picture or are they more focused on tactical items? Ideally, they should have an appropriate Job Description Example balance of the two — meaning more focused on the As with every position, it is very important that each big-picture but able to do some tactical research revenue professional has a job description. This ensures before they turn to strategic or big-picture areas. that everyone has the same understanding of what the n If they quote a lot of meaningful statistics during responsibilities are as well as the evaluation metrics. the meeting, chances of their having a focus on See Appendix E for a sample revenue director job goals and measurements are high. description. Evolving Dynamics: From Revenue Management to Revenue Strategy >>>>>>>>>> 13  with a revenue management degree) into professional The Certified Revenue Management revenue optimization roles in hotels. Working directly Executive (CRME) with hotel schools is an investment opportunity for Since 2006, HSMAI has offered the prestigious Certified hotels and hotel companies to capitalize on now. There Revenue Management Executive (CRME) certification, is a lot of talent coming fresh out of hotel school ready for which this book is the study guide. to jump into the work force and make a difference. Additionally, there is an opportunity to start recruiting A CRME certification denotes that the individual is: the next generation of revenue professionals from n A professional in the field of revenue optimization educational institutions focused on strategy, analytics, and clearly conversant with its intricacies and or data science. importance; n Competent to develop an infrastructure to support Even before promising students get to college, there is revenue optimization within the framework of an an opportunity to influence the talent pipeline. Breffni organization; Noone, Associate Professor, School of Hospitality at n Able to maximize revenue opportunities and The Pennsylvania State University, said6, “The starting optimize profits by managing revenue; point in developing a talent pipeline is to develop an n Capable of making informed decisions to accept understanding of those individuals who are most likely or reject pieces of business to meet overall to fill the pipeline: hotel school students. [There are]… organizational goals; and four key things that students are not clear on: n Proficient at the art and science of revenue optimization. 1. “What career progression looks like: Students know that they can ‘go into’ revenue management but do The hotel or company that supports their revenue not have a clear idea of the potential career path in professionals through the certification process will revenue management. reap the benefits of having an employee with an 2. “What revenue management professional[s] do enhanced level of understanding, knowledge, and on the job: Closely related to career progression, capabilities in revenue optimization. Those who students are not clear on what a job in revenue hire someone with the certification can be sure the management actually comprises. They understand individual is an expert in the area and will clearly the fundamental elements of revenue management bring significant benefit to the company. but do not have a full appreciation of the specific roles and responsibilities of revenue management For more information, see www.hsmai.org/crme. professionals at different points along the revenue management career path. 3. “What opportunities exist while at school: Students The Talent Gap are often unaware, or realize too late, that they The increasing demands on revenue professionals have can pursue an internship or externship in revenue signaled a growing need for a deeper talent pool — more management while at school. Two factors contribute people and a higher caliber of talent — to support the to this. First, hotel companies tend to promote, revenue optimization discipline. At the same time, and recruit most strongly for, operations positions competition for this pool of talent is becoming fiercer: rather than functions like revenue management other industries (e.g., health care, law firms, and others) during campus visits. Second, revenue management have recognized the value of the revenue optimization courses are frequently positioned on hotel schools’ discipline and the success that hotels have experienced. curriculums such that students don’t take them As a result, they are looking to hospitality for talent and until their third or fourth year in the program. expertise and vying for the same recruits as hotels. Therefore, until the point at which they are taking these courses, students don’t know to look for, or ask What can hotels do? To start, there is a need to recruiters for, revenue management internship or streamline the transition of college graduates who have externship opportunities. had revenue management courses (or are graduating 14 >>>>>>>>>> © Hospitality Sales & Marketing Association International  “The importance of exposing students to revenue management through internships and externships The Certified Revenue Management cannot be underestimated. In my experience, Analyst (CRMA) without some exposure to revenue management in Created by hoteliers for those studying to join the the field prior to graduation, students are less likely industry, HSMAI’s Certified Revenue Management to ’risk’ going into revenue management when they Analyst (CRMA) Certification recognizes students graduate. Equally, without some field experience for their understanding of the application of revenue before graduation, a company may be less inclined optimization concepts. to hire a graduate to work in revenue management. 4. “How to ‘sell’ their skill set to potential employers: Recruiters looking for candidates with a verified Students often struggle with determining how to baseline of knowledge in the latest thinking and communicate their revenue management training to practices can use this certification to narrow their list potential employers. Compared to other disciplines to prequalified candidates. For students, the CRMA like human resource management, accounting, separates you from the pack, and demonstrates and finance, revenue management is a relative to current and potential employers that you have newcomer to the hospitality school curriculum and mastered the foundations of revenue optimization. consequently, the revenue management course content and rigor can vary significantly across The CRMA designation is recognition that the hotel schools. In the absence of a standard revenue certification holder understands the core facets of RM management certification that can provide a and can translate that understanding into making benchmark of a student’s knowledge and skill set, strategic and tactical RM related decisions. students are challenged in terms of communicating the depth and breadth of their revenue management Learn more at www.hsmai.org/crma. training.” Perhaps most startling among these student insights Career Development and Progression is that there appears to be a distinct lack of awareness Once talent is identified, it is critical to invest in them in among the next generation of hoteliers of the career order to retain them. Laying out a clear career path, or opportunities that exist in revenue optimization. This options for career paths, is critical. Hotel companies that sends a clear signal to industry and academia that offer a variety of career development options to revenue we need to do a much better job of selling revenue professionals will have more success in hiring top talent. optimization as a viable and sustainable career path. While not a silver bullet for solving talent recruitment and retention challenges, offering options for career HSMAI’s revenue advisory boards globally are focused progression will most definitely help. on developing broad stroke strategies to promote the revenue optimization profession across hotel schools, Once in the discipline, revenue professionals have more and provide revenue management educators with a potential career paths available than ever before. Career toolkit of resources to leverage in the classroom. Think progression within revenue optimization has opened about what you can do at a company level to engage to a wider variety of clearer paths over the last several students and grow your own pipeline. years. Many brands and management companies today offer multi-property hotel revenue positions which allow for professional growth. Area revenue directors, responsible for two or three hotels, are recognized as a higher-level position typically offered to more seasoned individuals with proven results and solid experience. Remote-based revenue positions are also considered for more seasoned individuals with proven results. Evolving Dynamics: From Revenue Management to Revenue Strategy >>>>>>>>>> 15 There are other career path opportunities as well. How will you know if you’re doing it right? n Ownership and asset management now look at There is a seemingly endless number of KPIs and revenue optimization experience as one prerequisite formulas to help to measure the success of the revenue for filling general manager positions. This is a pretty team’s performance. In hotels, the most commonly used clear path moving forward for those who want to measure of the revenue team’s success is revenue per stay at the hotel level. available room (RevPAR). n Hotel companies that have a good infrastructure to support hotel-level revenue optimization often have Other metrics that are becoming more common regional revenue leadership positions. This would be include: Profit Per Available Room (ProPAR), because of a natural next step. And then of course, being the increasingly profit-driven approaches where revenue revenue leader for an entire company is a possibility. optimization is the tool to get there; TRevPAR, which n Paths into the development discipline have become measures the total revenue per available room from of interest and proven successful for revenue all revenue centers; and, RevPAG, which helps hoteliers professionals. Development for an ownership understand the total revenue per available guest. company or development within a hotel company are both possibilities. See chapter 11 for more information and insight into n Real estate investment firms, and a variety of other performance analysis. asset management firms, are starting to employ revenue professionals with the sole purpose of Questions for Review working with that firm’s portfolio of hotels to ensure n What are some of the most important optimization. responsibilities of a revenue professional? n Some hotel companies are moving toward n Having access to which tools and resources can a commercial approach where the revenue increase the productivity and effectiveness of professional is more involved in, or has revenue professionals? responsibility for, everything commercially focused, n What are some of the most important skills for a while driving revenue optimization through digital revenue professional to have? marketing, sales, and yielding. n What can hotels do to address and overcome the lack of experienced revenue optimization talent? At the same time that career paths are outlined and promoted, hotels must invest in training to build skills and expertise including exposure to other commercial disciplines like sales, marketing, branding, communications, public relations, and, most certainly, digital marketing. 16 >>>>>>>>>> © Hospitality Sales & Marketing Association International CHAPTER 3 DE PAR TM E NTAL I NTEG R ATI O N Learning Objectives contributions to results that revenue optimization can make, the buy-in from ownership and senior management n To understand how to assemble and deploy an ensures that the investments needed to implement and effective revenue team maintain a successful revenue strategy will always be a n To understand commonly used organizational priority. structures, and the benefits and challenges of each At the same time, hiring executives in all disciplines who Revenue optimization is not an independent business understand the fundamentals of revenue optimization and process or system. It is an approach to conducting business keep it top of mind is essential. that delivers the most value if it is fully integrated throughout the organization, the business processes, and the mind-set of employees. Hotels and hotel companies must ensure they Goal Alignment Contributing significantly to departmental integration is have a collaborative approach to revenue optimization and goal alignment. Too many companies create individual goals not practice it as a stand-alone discipline. in a silo, which creates a culture of individuals focusing on what is best for them versus a revenue team that acts in Key to integration and a collaborative approach is having the best interest of the enterprise. Instead, everyone should a revenue optimization culture that is infused throughout be incentivized to work toward the same objectives — by every department and embraced by every team member. aligning individual and departmental goals with the overall The importance of building this sort of corporate culture revenue goals for the hotel or company. has become widely understood and recognized by CEOs, managing