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Revenue Managers Step Into Spotlight

The importance of this job is soaring, and those holding this job are finding new found respect. Here's why.

Friday, January 17, 2014
Steve Pike
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The most important job in a hotel or resort might belong to the person that few people outside a property’s management team ever see – the director of revenue management. It’s also a job that few people - even inside the management team – fully understand, yet it’s a job that goes a long way to determining a property’s fiscal health.

The director revenue management, said Bob Harter, director of sales & marketing at L’Auberge Del Mar hotel in Del Mar, Calif., “is arguably be one of the top four most important positions on property.”

A revenue manager, Harter said, interfaces with ownership, the general manager, director of sales and marketing, and chief financial officer to discuss strategies and status of booking pace/revenue.

“The Director of Revenue Optimization (as the position is known at L’Auberge Del Mar) coordinates all revenue strategies within the hotel,” Harter said. “While their primary focus is on the leisure rooms segment, they are also involved with the group and corporate room night strategies, as well as ancillary spend at the outlets (restaurants and spa). They continually make adjustments to the day by day strategies to ensure all revenues are maximized.”

Denise Broussard, senior vice president of revenue management and Ecommerce for Interstate Hotels and Resorts, said revenue managers have “found a voice” in front of ownership the past two years, largely because of social media outlets that have increased the scope of a revenue manager’s job.
“It’s a discipline to monitor, manage and drive all revenues, primarily transient, but also ancillary revenue streams,” Broussard said. “And with the group sector struggling the past couple of years, now (a revenue manager) drives 90 percent of all revenue.

“A couple of years ago social media stepped into the hotel arena with guest reviews. Ownership began checking Trip Advisor ratings and making comments, so anything having to do with the computer at the property – revenue management is in charge of that because management is seeking out direct answers to electronics.”

The role of revenue manager, said Darrell Stark, Vice President of Revenue Management for Noble House Hotels & Resorts, changes on a daily basis, particularly in this age in which review sites and meta-search sites provide rates from several points of distribution and social media sites.

“Hotels used to have control over the content that distribution partners published,” Stark said. “Today, through affiliate programs, the reach of the hotel’s inventory has exponentially increased, however it is nearly impossible to control the content. Inaccuracies are often discovered when guests check-in and reference descriptions from third party affiliate sites. This can be detrimental to the guest experience leading to negative reviews.

“Review sites have the potential to, and often do, impact pricing. Hotels with high approval ratings can drive rate by virtue of endorsement while hotels with low rankings and less than desirable reviews often have to evaluate their pricing and potentially adjust it down. Revenue managers are exposed to new technology, trends and tactics daily. The successful revenue managers continuously reinvent and/or realign their strategies adaptively to remain competitive.”

Preferred Hotel Group, which provides sales, marketing and distribution services to independent hotels and resorts around the world, requires each of its revenue account managers successfully complete the company’s RAM Certification program. The RAM Certification program, according to Michelle Woodley, Preferred Hotel Group’s senior vice president for distribution and revenue management, is aimed at delivering its member hotels a more enhanced strategic and consultative approach to revenue account management services.

Woodley said Preferred Hotel Group’s global RAMs offer more sophisticated assistance and a higher level of analysis to member hotels regarding rate strategies and channel management using the most advanced tools and an enhanced knowledge base.

“We don’t own or manage any properties. All of our members are independent hotels,” Woodley said. “They come to us for sales, marketing and distribution in areas of revenue management. So our revenue account managers are an extra set of eyes for hotel revenue managers and for GM’s to do critical analysis and see what they can be doing better. Or if we see things that are going well, we can give recognition to the people behind the scenes who don’t always get acknowledgment.”
On-line booking channels, Harter said, have made a dramatic change to the revenue manager position.

“The dynamic landscape that has been created by on-line channels has required the DORO to be completely engaged in not only the day by day strategies at the property level, but to understand and have awareness of what the competition is doing,” Harter said. “They need to turn on and off ‘levers’ to ensure the property is maximizing the opportunities via these channels to achieve a 100 percent sell out.”

At L’Auberge Del Mar, Harter said, the DORO is required to have two to three years in reservations and revenue.

“They also need to possess an extensive knowledge of the inventory software systems, wholesale/consortia market, as well as discount channel management,” Harter said.

But qualified and successful revenue managers go beyond the simple – or not-so simple – science of numbers, according to Woodley.

“It’s not just pure science, it’s science and art,” Woodley said. “It’s evolved from a position of revenue management to profit management to having to understand all different channels and understanding the right balance.

“So to be successful as a revenue manager, you have to understand what’s happening in all areas, whether it’s food and beverage or sales and marketing. That’s the art because you’re always balancing channels and profitability. It’s not always just about the numbers for that that day. You have to think about the lifetime numbers for a group or a customer.”

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Steve Pike
Hotel Interactive® Editorial Division

Bio: Steve Pike is an award-winning golf writer and author who helped define golf business reporting in the early 1990s as the first Golf Business Editor for Golfweek magazine and later at Golf World and Golf Shop Operations magazines for Golf Digest. Pike further pioneered this genre at the PGA of America and Time Warner as the golf business writer and editor for PGA.com. He started in newspapers more than ...
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