Hotel revenue management (RM) is not new and has been around for 30+ years, yet only 3% of hotels globally use revenue management technology today.
While the adoption of RM tech is not the only measure of the pervasiveness, it is a good reminder of how far we need to go as an industry.
The main goal of sharing these uncomfortable truths is to elevate the dialog around the importance of RM and why, as an industry, we must strive to do better in driving revenue performance using data driven insights.
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These truths have been compiled because of learning and working alongside many smart collaborators and thinkers in our industry.
As a community of RM practitioners, I believe, we need to share more and share often (Heads up: that’s #10) and hence this list.
Let me know if these resonate with you and what are the other RM opportunities we should be talking about.
1. What’s in a name?
The number of terms used to describe RM are out of control – revenue maximization, revenue optimization, revenue strategy, revenue analytics, profit optimization, etc.
Marketing teams at the RM tech companies are partially responsible for the confusion, but there is a need to go beyond the labels and focus on the core objective – using predictive analytics and data-driven insights to inform strategy and meet predetermined goals.
If you are doing this, you are probably engaging in revenue X (management, optimization, strategy, insert your label of choice here).
2. Team sport
RM is the purest form of team sport.
- it is competitive
- can be brutal and unpredictable
- there are bragging rights
- every day you reset the clock
- it’s about execution, execution, execution
- you cannot do it alone
The last part often is the one ignored the most – RM is not the responsibility of just the folks in the RM function.
Success in RM is the team effort of RM, sales, marketing, distribution/ecommerce, loyalty and alliances.
Unless we are thinking of RM in this way organizationally or while setting up team incentives,we are ready for game day.
3. Data
It’s the individual spices you masterfully combine to come up with the perfect Masala. But it can also be lethal if we are not deliberate.
Ensuring data is relevant, available, accessible, recent and scalable will help you validate whether it meets the sniff test (I agree, not a good analogy that goes with spices!).
With the advent of real-time data, APIs and the affordability of cloud infrastructure, there is literally no excuse today for hotels to use stale data to make decisions.
The norm today for most things in life is that they are on-demand and we get to choose when we are ready to consume them; we should have the same standard for data we are going to use to make decisions.
4. “Great insight! Now What?” definition
The moment when folks look at a dashboard or report and wonder what they need to do or how they need to act.
If the tools, tech or data is not enabling action at the time of insight – then it is time to look elsewhere.
Similarly, as RM practitioners, if we are not using insights to enable action and help our leadership team foresee the results of those actions – we are failing them.
5. Cross-functional ninja
The role of the RM practitioner has changed. We must hire for influencers, catalysts and connectors – ninjas that look at all aspects of the commercial operation and help us see beyond the data and the initial hypothesis.
They are grounded in data, are relentless, but have the heart and passion for the business.
Yes, it is a rare find but when we get it right, it shows!
There are many examples of individuals who started in RM and have expanded their influence, moving into chief revenue officer and chief commercial officer roles.
6. RM tech is not the silver bullet
RM Tech has come a long way and you cannot do RM effectively and efficiently today without tech.
But it is far from the only thing that should be the focus. Tech is the enabler and one that will help you leapfrog ahead of your competitive set.
However, it is talent, teamwork, consistency and sound strategy that will get the job done.
If you do not "contain" tech then it is bound to be an expensive distractor (the perennial ROI question) and something that will only encourage the detractors.
Yes, unfortunately they are still out there.
7. Buying RM tech and tools
Look beyond the label. The product marketers (I am not making any new friends here!) are not helping with jargon, buzz words and infographics.
Be honest with yourself and your team on what you really need – it is humbling to conclude early on that you would like to walk before you learn to run or fly. It will save you a lot of heartburn and money.
We need to share more best practices as revenue practitioners – I do not buy the argument that it risks competitiveness.
Vivek Bhogaraju
Just like the food you eat – understand where it comes from, how it is made and who else is consuming it.
Make sure you fully understand what you buy - there is no perfect RM tech solution (there will never be one).
Understanding what tools can and cannot do is important; understanding which tech is a better fit for your organization is paramount.
Tech should not only help you with what you need today, but also grow with you as the data complexities and the revenue opportunities grow.
Buy into a platform (buzz word alert!) not just a solution. Like all things, how tech providers respond to adversity and failure is a better litmus test than how perfect they appear on paper.
8. Experimentation
It is probably the most under-utilized mechanism RM practitioners use today.
Partly because there is an acknowledgement that we do not know the answer. Also, because the technology ecosystem and the associated integrations do not make it easy.
If we are able to rise above these challenges, then controlled experiments are the purest form of influence.
They help us answer the "What If?" questions. Use them to your advantage in further understanding the power of RM.
9. Flow of RM insights = RM influence
Refer to #2 - the more number of teams within your organization that use RM insights to make decisions, the more the influence the folks in RM have, to shape the strategy and outcomes.
Do not hold back. Being a custodian of RM Insights also means sharing them freely across the organization.
Simple as that sounds, you will be surprised how rare this is within companies even today.
10. Diversity in RM = RM leadership = RM excellence
Steal talent from other industries and not just from your competitors (I know it is easy and quicker to ramp up resources when talent comes from another relatable organization).
However, there is a downside – very rarely is the status quo challenged. Our industry may be special to us, but it is not unique.
It can be learned. We have all seen job descriptions for RM practitioners that state the preference for users of a RM tech or experienced professionals with prior experience with a tool/technology.
Why? How would you ever know what you are missing in your arsenal of capabilities if you do not stress-test the system with someone with a fresh perspective?
Strive for gender balance within the RM team – you will be surprised how different work and life experiences shape interpretation of the same data set.
Use rotational opportunities in the company to find new talent.
It is a great way for you to expand the influence of RM; and you never know – there is a Ninja waiting to be discovered!
11. Celebrate and share
Revenue Leaders need to be celebrated for what they contribute.
They need rock star status alongside the brand marketers and hotel developers (again, happy to be biased); as an industry we should do more.
Also, you do not have to lead the RM function of a hotel/company to be a Revenue Leader.
We need to empower every team member working in our commercial and go-to-market teams to be a revenue leader.
We need to share more best practices as revenue practitioners – I do not buy the argument that it risks competitiveness.
We can and should foster this community with smart sharing and tangible sharing.
Go beyond the buzzwords and powerpoint bullets – let’s make a difference and help another industry colleague see how predictive analytics can transform their business and our industry.
You would have nurtured a ninja and you will sleep better at night!