Why I Love Revenue Management as a Career
Most people, myself included, have questioned their career choices or doubted the value of their profession. I believe that if you don’t question why you do something you are probably not very good at it. Through questioning your job, you are able to think deeply about it and this prompts innovations and breakthroughs in your career. In many instances, developments in any industry are driven by people who are somehow frustrated by their work. Whenever I find myself pondering on what is the significance of Revenue Management, I often have to remind myself of the reasons why this is the best profession not only in the hospitality industry but also in most industries, if not all. Revenue Management is the glue that keeps the hotel together and focused on revenue optimisation.
Below are some of the reasons why I love Revenue Management.
Pricing is King
“The moment you make a mistake in pricing, you’re eating into your reputation or your profits.” – Katharine Paine
The most effective and easy way to create more profit is through pricing tactics. Studies have shown that a 1% increase in price can lead to a 10% increase in profit. This is not only applicable in hospitality, but for many other businesses as well. While the costs of running most hotels are very static, most hotel companies have locked down their cost structure during this Covid-19 pandemic. Pricing is therefore the most powerful tool for creating wealth/income for hotel owners and that puts Revenue Management (in collaboration with Finance, Sales, Reservations, Marketing, Operations) at the focal point of every important conversation. A key dilemma that RMs are facing during Corona pandemic is to lower rates or not to lower rates – does a rate reduction translate into more business? Will this business lead to a positive bottom-line? Alternatively, is it better have fewer guests with higher ADR and less wear and tear? If your competitors have dropped their rates should you also drop your rates?
Data Analytics is the New Black
“Information is the oil of the 21st century, and analytics is the combustion engine.” – Peter Sondergaard
Many successful organizations have turned to data analytics as an integral part of their growth strategy. In this data-driven world, the limited number of people that have the skills to find patterns in numbers are not only becoming indispensable but also admired. Today, the data sciences are permeating every profession, especially Revenue Management.
In the hospitality industry, data analytics makes it easy to identify, differentiate, and recognize each separate client group and also help give a clear understanding of the market segments by providing a 360-degree customer view. These analytics also aid hotels in discovering the interests, likes, needs, expectations, and wants of their guests. This knowledge is a prerequisite for providing tailored customer experience, which drives the business entity to customer excellence. Subsequently, happy customers always result in a great reputation and a sustainable revenue stream.
Every Revenue Manager worth their salt will pride themselves on their analytical skills. They love data and devour reports on a daily basis. They can quickly detect trends, spot anomalies and identify opportunities based on the data in front of them. These skills enable them to achieve profitability in the hotel/s hence making their profession quite fulfilling.
A Master of all Trades
Revenue Managers can’t do their job effectively without understanding the major business functions of the hotel, they therefore have to constantly interact with other hotel departments. From Sales, Front Office, Marketing, Operations, Accounts, Revenue Managers are exposed to the entire hotel management playbook. The Sales team is a crucial partner for any Revenue Manager, since these two departments must work together to decide on rates and availability. Revenue managers also work closely with the Marketing department to create promotional offers and campaigns targeted at the defined business segments. Operations ensure the hotel departments perform according to standard in order to support revenue optimization through positive guest experiences and cost controls.
The Revenue Management department is most effective when it involves a wide breadth of perspectives, ideas, analysis, and even opinions. This “crossroads” nature of Revenue Management is what makes it quite interesting.
Change is Constant
“The only constant in life is change”- Heraclitus
Revenue Management is one of the department in the hotel business that has constantly been bombarded with innovations, this is because it is rooted in technological capability and evolution. As Revenue Managers search for ways to be more competitive, many Revenue Management vendors are continuously inventing new systems and modules to improve on the existing systems. Surprisingly, the Revenue Management function is never dormant, someone is always developing something to make it more effective or efficient. Whether that is new software, new tactics, or new processes. It is exciting to see how this will evolve further with new technologies, customer trends and industry innovation.
Therefore, those that are in Revenue Management right now are, by default, active players in the development of the nature of the profession itself.
The future is bright
In Kenya, Hotel Revenue Management is just in its crawling stage. This means that there are plenty of opportunities in the field. Think about it, most hotels do not have a Revenue Manager, it is the Front Office Manager, Sales & Marketing Manager, Reservations Manager or the GM who create/drive revenue tactics. This means that the Revenue Management profession will continue to expand and evolve for decades to come. Furthermore, as the existing Revenue Managers become more skilled in the data sciences, more advanced analysis in Guest Analytics will give birth to new approaches in pricing tactics. That will cause channel structures to be redefined as there will be need to cater to both evolving customer needs (the Corona pandemic is a good example of how business has had to be redefined to a new normal) and to meet income targets set by owners and investors. Regardless of what happens, there is no doubt that the next wave of market changes in the hotel industry will probably come from innovations created by Revenue Managers.
During this Covid-19 crisis period and going forward the role of a Revenue Manager in a hotel is critical in ensuring the property sells the right rates to the right customers at the right time and via the most efficient and least costly channel. A property can consider promoting from within, hiring a Revenue Manager, undertaking RM training to grow the Revenue culture across the hotel and lastly the hotel could have outsourced Revenue Management services through Barefoot Consultancy Ltd – the leading Revenue Management advisory firm in Kenya, with a combined team experience of over 20 years in Revenue Management.
By Fridah Kariuki | Revenue Manager | Barefoot Consultancy Ltd