Sunday, August 15, 2010

Revenue Management

I was recently asked to consider teaching a course in Revenue Management and it got me thinking about the topic, obviously, as well as the “state of the union” as it exists today.
I consider revenue management to be akin to a great game of chess, only in this case, you are playing simultaneously against multiple opponents, and as far as I’m concerned, that just makes the game more fun.
It’s also a game that I have always enjoyed playing. One of the nicest compliments I ever received was from another General Manager in a particular city, who, upon hearing that I was relocating to another city, said; “Thank God, now I can get some of my market share back.”
My relationship with my Revenue Manager is always very strong, and always a top priority. I believe that regardless of how strong your Director of Sales & Marketing is, and maybe in spite of that, the Revenue Manager should report directly to the General Manager.
How else can they do their job as effectively as we demand of them?
The job of the Revenue Manager ultimately comes down to having “the right guest in the right room at the right price (on the right day).”
That’s no easy task, at any time, and it is certainly made more difficult if the Director of Sales is breathing down their neck to take a piece of business that the Revenue Manager believes is NOT in the best interest of the Hotel.
I have had to “mediate” on a number of occasions over the years when the Revenue Manager and the DOS were at odds, and both of them had dug in their heels with respect to their respective positions, but, that is the job of the General Manager.
Conversely, I have inherited situations where the Revenue Manager reported to the DOS and I would be reviewing a booking recap, spot a questionable piece of business, ask the Revenue Manager what they were thinking in taking this piece of business, only to have them look back at me and say; “I told the DOS I didn’t think that we should take it, but she said to do so anyway.”
Ultimately, one of the most important jobs of a General Manager is to ensure the best possible returns for the company and the Owner, and you can’t do that as effectively as you should be if you are not in the drivers’ seat when it comes to making significant revenue decisions.
Bottom line: If we don’t take responsibility for generating maximum revenue, which in turn should generate maximum returns for our stakeholders, then it’s time to turn in the keys.
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  1. Does this mean that you don't have to take this class next term?

  2. Excellent piece of wisdom. Agree with you fully. I work as Yield manger for a large organisation and have had situations where the pressure from the sales was to take a piece of business regardless of the yield considerations and thanks to the independent nature of the yield function in my company we have the right decisions taken keeping in view the best interest of the organisation.
    Mohammed Raza

  3. How important the revenue manager position has become, I am a F&B person and a few years ago I did not see the great importance of a revenue manager, maybe at the time I did not know what the person would actually do, I think if my son decides to become a hotelier (which I would love to) I would try to push him into revenue management field... yeah looks weird to have a foodie pushing into that direction but I think its a great area...

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