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At
a recent regional General Manager's meeting, I was invited to facilitate a
discussion on the revenue management process and the GM's role. There were
seven General Managers in the room and we had about as many opinions on the
subject. The opening
comments ranged from not quite knowing what the Revenue Manager actually did all
day to viewing the Revenue Manager as setting policy on the rates to be quoted
by everyone in a position to do so -- with a lot of comments in between. Some
viewed the Revenue Manager as a gatherer of data only and the position as being
essentially a part-time function while others viewed the Revenue Manager as
critical to the overall revenue strategy of the hotel.
I would hazard a guess that
the answer is variable, depending upon the company and the hotel policy. What
was evident in this discussion was that some GMs had a higher comfort level with
the Revenue Management process than others.
The relationship between the
sales department of the hotel and the Revenue Manager is another potential area
of confusion. In some situations, Directors of Sales have indicated to me that
there was little communication between the two departments. Many times group
blocks were sabotaged by a lower rate that the Revenue Manager had offered to
the Electronic Distribution Channels, incurring a high attrition rate for groups
whose attendees had located that lower rate for the hotel on the Internet and
booked out of the block.
One DOS indicated that her
staff had to get approval from the Revenue Manager prior to quoting rates for
groups. It was often difficult for the sales person to explain a lower rate
quote for a certain period of time justified by the organization's potential to
book more business in an opportunity period, the need for rate consistency
within a market segment, or a long standing relationship that the organization
had with the hotel.
How does a GM lead the Revenue
Management process to ensure that both the needs of the client and the hotel's
revenue objectives are met, not to mention ensure the cohesiveness of the team?
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Understand the Revenue
Management Process. Many General Mangers are uncomfortable with
the process because they simply do not fully understand it. The discipline of
revenue management has morphed over time with many new systems and programs
available. Take a course on up to date revenue management. There are many
offered on the Internet that are both time and cost effective. You cannot manage
the process unless you fully understand it.
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Develop an open
attitude about the Electronic Distribution Channels. Back off,
take a deep breath and consider the following: 1. These are reservations that
your front desk or reservations staff does not have to process, 2. You have been
paying a commission to Travel Agents since the beginning of time anyway and 3.
You don't have to offer them a dirt bag rate! While recently assisting a client
in the development of the hotel's revenue management strategy, it became evident
that the ADR for these channels in one high occupancy period exceeded the
hotel's ADR by $5 (after commission). Why? Because the hotel had let them pull
the rate from the GDS during a period when all low rates were closed. By
understanding this, you can make these electronic channels a valuable part of
your revenue management strategy.
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Establish a Revenue
Management Strategy. Simply put, this means establishing room and
rate allocations by market segment and opportunity dates and seasonality for the
year, to be reviewed quarterly. This should be an essential part of the
marketing plan developed in collaboration with the Revenue Manager, the sales
department, front office and reservation managers and anyone else whose
department is affected. Be prepared for heated discussions as everyone makes
their case for their "pet" market segments. Make it clear that if sales or
anyone else wants to give a lower rate to a group or segment in a given time
period, the revenue must be made up in other segments.
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Conflict Management.
Expect conflict. As a wise person once said to me "Harmony is vastly overrated."
While I am not suggesting that you tolerate a prolonged battle zone within the
hotel, the dynamic that arises when people have conflicting but justifiable
views benefits the process. Create a framework for managing revenue management
conflicts when they arise and establish a decision making process -- even if
that means that you cast the deciding vote. Leadership is not a popularity
contest!
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Be prepared to take
risks. Revenue Management is not an
exact science. Be prepared to take risks yourself and encourage the "risk
takers" on your staff, provided that they can provide valid reasons to take
them. You will win sometimes and sometimes you will lose. Example in point: A
General Manager I know decided to vote against becoming a host hotel for a
certain group and not to offer the preferred rate with the comp rooms that the
group was asking for. His was the only hotel in the market not to do so. The
"last to fill at the highest rate" strategy is always a risky one. A week prior
to the group's arrival, they were sitting pretty much dead empty, the
anticipated demand no where in sight and the GM was sweating bullets. At the end
of the day, or night in this case, the hotel filled at a rate $25 higher than
the rest of the market but it could have gone either way.
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Leading
the revenue management process is critical to the success of the hotel. It is
not about analyzing the data within the spreadsheet but is ultimately about
creating value for guests in every market segment without jeopardizing the
hotel's revenue goals -- it is that guest value quotient that we often lose site
of in the process! |
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Carol
Verret Consulting and Training is a full service company offering consulting,
training and other services to the hospitality industry in the areas of sales,
marketing, customer service and human resources. Included in their suite of
services are programs on Revenue Management, Leadership and Conflict Management.
Please direct any feedback directly to Carol Verret at
, or by phone (303)
618-4065 or visit the web site, www.carolverret.com.
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