HABITS OF HIGHLY SUCCESSFUL REVENUE MANAGERS RAMPED UP FOR 2008!
Life used to be relatively simple for hotel revenue managers - the daily disciplines were relatively straightforward - check the reports, balance the inventory, check the channel contributions, review fences and hurdles, etc., etc. In most hotels, the process has become more complex and the disciplines are multiplying almost exponentially due to the complexity prompted by the impact of Web 2.0 on the competitive hotel environment.
As if that were not enough, the new PKF econometrics model that estimated the impact on the industry of a potential economic recession was released this past week. "A recently released analysis by PKF Hospitality Research (PKF-HR) found that if an economic recession were to occur in the United States during 2008 - 2009, it would result in a 6.1 percent decline in rooms revenue for the U.S. lodging industry through 2010."
Both of these developments have intensified the ‘habits' of revenue managers at the property level and beyond. In many properties the revenue manger is also the sharing the ecommerce role with sales and marketing. Independent hotels that often don't have resources available to them that some of their franchise competitors do, will have to stay on the cutting edge of both of these developments if they are to be successful.
While a recession may or may not happen, the competitive impact of user generated content or Web 2.0 on the hotel industry is a definite reality that is not going away. If the hotel does not have an ecommerce manager or a large sales department, the monitoring function of the hotel's online presence and ecommerce initiatives often falls to the revenue manager.
Highly successful revenue mangers are motivated by the challenges of both opportunities. Some of the new Habits of those Highly Successful Revenue Managers are:
- Monitoring the hotel's online presence. User generated reviews sites are multiplying rapidly. As a recent survey showed, the reviews play a larger role in the decision making process for the consumer than price (Yahoo Travel Survey 08/07). How the hotel is presenting to the travel community through the various sites upon which it appears and is reviewed is critical. There are third party monitoring programs at various price points and levels of complexity that can assist in this but properties with small budgets can set Google alerts for the property name so that every time something is posted on the internet about the hotel, it is directed to the Revenue Manager's Inbox. This may be the ‘rawest' of data but it beats no data at all!
- Monitoring all links to the property. A recent study attempted to direct an online RFP through various property web sites and found that nearly half of the links on the property web site for RFPs either didn't work or were directed to an email address that was no longer valid. Links on various directories on which the property is listed may also be old and directed to email addresses that are no longer valid -- this was a finding in recent research for a client. It would be nice to believe that the web master would check the links on the web site but the reality is that it is not their job. People leave the company but there is no audit of everywhere that links to their email appeared in the hotel's link strategy.
- Managing the relationships with the OTAs. Expedia estimates that for every dollar spent on this web site there is another dollar spent on the hotel's web site or other direct contact such as phone. The implication of this is that the OTAs have now become hotel ‘search engines' used by consumers to research the hotel options at their destinations. Couple this with the fact that the OTAs now also have increasingly robust review functionality, and their influence is growing. This makes those Merchant Agreement agreements for exposure and page placement even more important. However, merchant agreements proliferate in some markets. This may prompt the OTAs to establish levels of Merchant Agreements such as Gold, Silver or Bronze or some variation, in order to manage the increasing demand for Merchant Agreements. It makes it even more important to establish and maintain close relationships with the Market Managers, ensure rate parity and explore opportunities for greater exposure though packages, for example.
- Contingency Revenue Management Strategy. No one, not even PKF, can predict with any certainty the implications for the hotel industry of the current ‘nervous' economic climate . Therefore, smart Revenue Managers and Directors of Sales, for that matter, will take the time to develop contingency plans in case of the worst possible case scenario mentioned in the PKF study earlier. The contingency plan should include market specific hotel intelligence as well as micro economic information with regard to how vulnerable the local market is to downturns in the various sectors of the national economy. The contingency plan would include certain developments that would ‘trigger' pre determined adjustments in the RM strategy. For example, if a current RFP account announces production cutbacks or layoffs at a facility in the local market, this triggers certain actions in the allocation of inventory and rates given the anticipated reduction in that account's room night production at the hotel. It is far better to have a contingency plan that is not needed than to need an alternate strategy and have to develop it at the last minute when it may be too late.
The habits of highly successful revenue managers have become more complex in just a short period of time. The truly good RMs will embrace the change - those who fail to adapt to change risk the fate of all who fail to ‘read' changes in the environment and adapt. Anyone remember the dinosaurs?Happy Turkey Day!