Who cares about revenue management?


Nearly 30 years after its debut, we can now safely say that revenue management is an important hospitality discipline. Therefore, the role of a revenue strategist has evolved greatly. The revenue manager is no longer a team of one, relegated to a dark office in the corner. At the most innovative hotel companies, the revenue team is a central part of operations that drive many decisions and actions in adjoining departments.

Ultimately, the revenue team is responsible for delivering the top-line results of a hotel’s room revenue, and more hoteliers on the periphery are becoming keenly aware of the heightened responsibility.

Which departments should use revenue management tools?

When the revenue team is at the hub of operations, it’s important they keep the rest of the hotel in tune with both performance data and goals. Of particular importance is the revenue team’s relationship with the hotel’s general manager and director of finance. The general manager will want to track key operating metrics, such as RevPAR and RevPAR Index, specifically interested in performance versus the previous year.

For the finance department, however, revenue management is more of an operational expense tool. They want to know whether it’s going to be a good year or a bad year so they can prepare more or less staff. If the revenue team misses budget or forecast, payroll is affected.

The revenue team should be actively involved with sales and marketing departments and initiatives if only to ensure the hotel is stimulating demand during need periods. A revenue manager is often the one to keep sales managers in check by challenging actions like negotiating discounts and filling the hotel with the wrong guests.

What data should be shared?

A daily morning report will inform key stakeholders on the forecast and how actual pickup is replicating the forecast. Managers on the property need to know what’s on the books for the day. Additionally, any demand weaknesses or risks will be identified.

Historical performance reports have always been a success measurement for the revenue team. New data sets that show your hotel’s performance against the market or competing hotels are increasing in availability and as solid measurements of success.

New metrics like Total Revenue Per Available Room (TrevPAR) and Gross Operating Profit Per Available Room (GOPPAR) are valuable data sets when available.

In the end, an open revenue culture is critical to having a truly successful Revenue Strategy. By involving all staff of the hotel in the goals, including front office and reservations staff, revenue managers can create a sense of team and that helps the overall effort.

ED for hotels has extensive consulting experience in Revenue Management and we have a training program for hotels that can be customized according to the hotels’ specific needs. The program includes concrete examples of procedures and simple guidelines on how to implement the Revenue Management in the hotel.


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