Hotel revenue managers and general managers share a common goal: driving their hotel to achieve optimum success. Revenue managers work toward achieving this goal by making strategic decisions focused on maximizing hotel revenues. General managers typically take a broader approach, with their keen eye on revenues being just one portion of their big focus on success.
However, there may be times when a general manager might place value on a performance metric or a demand situation that doesn’t actually drive the highest possible revenues for the hotel. This type of misalignment between the general manager and revenue manager has the potential to not only cause disconnect within their relationship, but ultimately cost the hotel valuable revenue.
Let’s take a look at a couple of common hotel scenarios that revenue managers may face with their general managers, what skills revenue managers need to be effective, and what general managers should be looking for in their revenue managers.
Consider this situation: The hotel is in high demand for an upcoming Friday night. This scenario presents a revenue opportunity to convert some of that peak demand into higher shoulder night occupancy. Rather than accepting two nights (a peak and a shoulder night) at 85% occupancy, the general manager requests the revenue manager to release any stay restrictions for Friday. This results in a sold-out night on Friday, but causes the hotel to run at 50% occupancy on Saturday. Not only was an opportunity for higher occupancy on Saturday missed, but it also results in a loss of potential revenue over the two-day period.
There’s also the opposite end of the same revenue management spectrum: A general manager at a premier hotel property wants to force a two-night minimum stay on one of their premium public rates. Week over week, the pair of days are not forecasted to sell out and the minimum stay restriction results in the hotel achieving only 75% occupancy for each day. The revenue manager wants to remove the stay restriction – increasing the rate on the first night and offering a slightly lower rate on the second. While a few weeks of testing this new strategy results in higher revenues, the general manager still wants to revert back to the original two-night minimum strategy.
It’s important that revenue managers are aligned with their general managers on what their hotel is trying to achieve in the long run. Revenue managers need to possess the necessary skills to not only analyze the business and make informed revenue decisions for the hotel, but to also inform, educate and align the revenue goals of the hotel organization.
General managers should be looking to their revenue managers as internal leaders who do far more than forecast and optimize room rates. The decisions that revenue managers make affects the hotel’s total profitability and it is important that general managers are looking to their revenue managers to execute strategies that drive total revenue performance. If the revenue manager and general manager find themselves at odds regarding which strategy to take, it’s often the right time to have an open conversation regarding the objectives each one is trying to achieve.
Before the hotel can pull back and shoot their strategic revenue arrow, they need to make sure it’s aimed at the appropriate target.
About the source
This article comes from the folks at IDeaS Revenue Solutions. IDeaS offers revenue management solutions for business of all types and sizes in the global hospitality and travel industries. They aim to transform the right data into clear and actionable insight, so that their clients can price, forecast and report with speed and confidence, improving business performance.