August 25, 2012

Bring back the Revenue Manager

Have you noticed the revenue manager are short in supply these days? these are the executives who run analytical reviews, control the leverage of demand vs. pricing, drive the strategy and perform forecast accuracy within their business units.

But in many independent companies in the Gulf, the only true revenue driver is the General Manager. Everyone else, whether the 65 hours a week executive, the credit manager with his 25 calls a day for cash recovery, the night auditor processing 60 reports or the sales team with its 8 sales calls each, runs a piece of business to support their functions.

As a result, a limited number of people have full, end-to-end accountability for business success and there are few opportunities for revenue managers to learn all aspects of a business. This may be one of the reasons why many organization struggle to perform.

In large hotel chains organization, the revenue manager is at the center of action. He is regularly trained by his regional managers, he can create best practices to be shared with his peers or he attends business management courses (Time management, effective leadership, communication skills, project management). In small independent group of hotels, or independent structure (100-250 rooms), the revenue manager seems to be just noted as a "title position" to remain trendy with the hotel market development; however many of them are an extension from the reservation manager position... so the title does not really reflect the functional role. There are no added value when it comes to developing a new BAR pricing vs. competitors analysis, evaluating a piece of business, displacing calculation, seeing their market within a 90 booking window, changing his benchmark competitive set, analysis of historical data, day-to-day forecast, confronting a director of sales on the strategy, constructive feedback to General Managers...

Starting in 2005-2007, many GCC hotel base companies evolved to "functional" structures to cut costs and reduce duplication. Revenue management being the favorite buzz in the General Managers round tables, the main question remain at who will perform the RevPAR growth. Is it a G.M responsibility? Is it a team responsibility? In my mind, the hotel better have the right structure in place to perform. And this comes from a thorough review of the organization functional aspect.

When will the hotel understand that reservation department is an extension to sales department (clients relationships, selling what is on the Property Management Screen,  entering rooming list, managing extranets distribution channels and many more functions...) and therefore cannot be performing at Reservation and Revenue Management. It can be a short term solution to evolve a reservation / revenue manager, but the organization needs to go deeper in defining the roles and responsibilities of each. The reservation executive answers the phone and sell, while the revenue executive review hundreds of data every day, perform reports, and follow the guidelines of the hotel revenue management policies to extract data that will support the strategy.

I meet dozens of revenue managers in the market, who are great in their roles, however unable to perform great numbers, because their position is a result of a mix functional roles between a reservation role, a extranet/e-commerce role, a yield manager role even in some cases a sales manager role....This become very complex for their understanding and development, they feel there are doing a bit of everything, but not to the expert level; so when an opportunity comes for another position within the market, they switch for it....

As a result of this shift, career paths today are less geared towards filling the few revenue manager position, and instead focus on functional specification.

Obviously we cannot reverse the structural trends of the past 5 years in the region. However, companies can take steps to give their people more management, business skills and accounting/finance experience, which may help them avoid the narrowness of functional specialization.

Given the difficult nature of business today, having people with broader perspective may be critical to developing successful independent hotel establishments. So it just might be time to bring back the Revenue Manager.

To what extent does your independent hotel company have opportunities for true revenue managers?

Romain Saada @ RSVP Hospitality
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