Today, Charles Darwin’s insight is more auspicious than ever before, “It is not the strongest of the species that survives, nor the most intelligent—it is the one most adaptable to change.”
When we could still enjoy global travel freedom and share our opinions in front of live audiences in fully booked meeting rooms, discussions about the expanding role of the hotel revenue manager and the evolution of the discipline of revenue management inside the commercial area was a key topic of discussion.
The conversation in the pre-pandemic days generally arrived at two conclusions:
- In an era of convergence, many traditional roles like sales, marketing, distribution and revenue management are under scrutiny with the lines being blurred between commercial disciplines and the desire (and necessity) to move the needle from “revenue” to “profit” and from guest rooms to total property and guest journey optimization.
- The continued advancement of automated revenue management systems enables revenue managers to become more strategic leaders and focus on their soft skills (e.g., communication and team building).
Those of us who are first-generation revenue/yield managers (those of the “Excel Guru” era), we understand the growing pains one must endure to develop a more strategic leadership role in a hospitality organization. To help visualize the process, one can follow a direct correlation between the advancing technology landscape and the revenue manager skillset, moving from being reactive to proactive, from “knowing” to “personalizing.”
This evolution was in full swing until COVID-19 forced everyone in the industry—from the smallest independent property to the biggest chains—to rethink their organizational assets up to the commercial level. With the pandemic, the (re)positioning of revenue management as an integral part of the commercial area is again under examination. There are many questions about what the future holds, and no one knows for certain.
To better understand the impact of COVID-19, we posed three questions to a series of experts in the field to pulse their sentiment. In this series we will examine how hoteliers respond to these key questions. This month, Gabriela Cojocaru, the director of revenue and business strategy at Bürgenstock Hotels & Resort, took the time to let us know her thoughts.
Question 1: When we look at the discipline of revenue management and the role of revenue managers before COVID-19, why were they struggling in securing a leading spot in the commercial area?
Gabriela Cojocaru (GC): The role of revenue manager hasn’t changed too much in the last decade, and many of the capabilities and skills these individuals possess continue to remain overlooked.
One could question the hierarchical organization in the industry, struggling to keep up with the latest trends of more agile domains where more plateaued structures allow both the individuals and the organization to grow organically. The industry remains still less dynamic in its structure, less nimble, with not enough empowerment at lower levels to act.
Yet revenue management professionals have found ways to develop new skills despite the static structures, and many have become accomplished tacticians, while not really managing to take a leading seat. There is still a lot of reluctance when it comes to the profile of this function, and many still believe a hotel can be operated successfully without or with limited revenue management.
In many cases, the reporting lines and “last say” go to the sales & marketing function, not the revenue manager. The industry will never know the extent to which revenue opportunities were diminished simply because revenue management recommendations were ignored or not actioned as advised.
In slightly more evolved environments, the revenue manager is a direct report to the general manager, but they’re still viewed as regular system administrators with little or no control over any commercial decision-making processes, similar to a consultant function but with no responsibility to lead or influence teams.
Others could leave it to the origins of these professionals’ expertise, many prior reservations managers or supervisors who easily and unceremoniously were given the title of “revenue manager” one day, asked to complete tasks and responsibilities beyond their prior roles. Many of these professionals proved to be great at the people part of the role, being extremely empathic and service-oriented individuals, but lacked the analytical skills and strategic visionary thinking the revenue management discipline requires.
Those who succeeded in overcoming this phase became the professional revenue management generation of today. They lead the way and are finally earning some of the respect the role deserves. They drive the industry leaders’ attention to the discipline needed to be established as a science itself with ascendant implications in the success of one organization.
Usually self-taught and well-educated, this generation of revenue managers have become the increasingly collaborative ones who could, if recognized, lead the way in defining the new, more agile norms of the industry where strategy, structures, processes, people and technology come together to define new organizational forms.
Question 2: Will the pandemic threaten the existence of revenue managers and the revenue management discipline as such, or will it offer a unique opportunity to gain the position they’ve sought for so long?
GC: The need for business to adapt and innovate, to float and remain self-cash sustained while being able to maintain prior structures, raises immediate questions like which functions warrant greater protections? In an environment where there is no demand to capture or, if any, very marginal and insignificant, it is questionable whether the revenue management role becomes obsolete or could be merged with other functions.
As a new norm emerges, we could start to see a transformed commercial function as hotels enact revenue recovery plans. Such a complex role would require fundamental skills and capabilities like:
- Identifying and understanding data sources
- Owning the data interpretation process and mastering the analytics
- Being a market insider and auditing competitor products, distribution and pricing models
- Driving strategy and processes for execution
- Displaying conceptual and creative behaviors
- Mastering distribution and systems management
- Leading people
It will be paramount after a post-COVID relaunch to attribute the strategy definition as a key sequence to this newly emerged function. The excellent skills of data interpretation into information, information into knowledge and knowledge into business decisions would allow these leading individuals to identify trends and opportunities for development and optimization at any stage throughout the recovery window.
From here, considering the massive data available at their end, the products’ definition and the pricing models, aimed to market their value, become genuinely the second main area of impact for this function. The demand segmentation would then require a value proposition and a unique product price-positioning tactic that should follow the segment profile and characteristics.
A third key step relates to the overall distribution and tactics to optimize this process. It is critical to ensure a less costly, more prevalent reach of the targeted audience. To have in-depth knowledge of both offline and online distribution becomes paramount. These professionals should be the ones with the tools and skills to identify the key elements of your customer value pyramid by market segment and how they qualify choosing your product over your competitors.
Fourthly, a separation between the classical marketing function and the more competitive and agile e-marketing process has gained importance in the total revenue generation discipline. These individuals should be the ones owning the distribution, its costs, management and optimization as well as the analytics from which the product definition with its value and pricing attached is obtained for development.
The newly emerged function will require outstanding and inspirational leadership as well. They should be able to create value quickly, collaboratively, and effectively by fostering passion, entrepreneurship and skill-building needed for agility to occur. These leaders should serve the teams and deliver guidance, be visionary, true business architects, and coaches that empower the people with the most relevant competencies so they can lead and collaborate to deliver on the expectations.
Now, when assessing the profiles of the on-site commercial team representatives, who would be the best fit for such a role? Many would find the revenue management professionals’ skills and expertise would qualify them as the ones to answer this call the best, with maybe one exception—the leading people part.
Here is where innovation is a must for the industry to embrace. Allowing these individuals to escape the stigma of being ‘’numbers persons’’ versus ‘’people persons’’ is the key for success. The industry has not provided yet the space and time to be otherwise.
Question 3: Will the commercial structure in the hospitality industry change after COVID-19 and if so, how?
GC: Any marketing dollar spent, offline or online, any social media representation, any website development task, any partnership, any capture of a new distribution channel, etc. cannot be simply made subjectively following design and figurative visual elements which we think might appeal to the end user.
Instead, if we aim for an educated process to kick-start our businesses, all must be supported by extensive data analysis and traffic interpretation which leads to the right product generation with its own value attached, priced accurately to answer the demand level and have its visual and design customized as a last step before deployment to live sales.
These premises would conclude the newly emerging commercial function will encompass strategy, marketing and sales functions under the lead of a highly data-driven professional with excellent analytical skills, an innovator and a fast responder to the market trends, fluidity and competitive dynamics.
It is the responsibility of all leaders out there to find and identify all such highly skilled individuals in their organizations and invest in their strength, nurturing talent development by role mobility. If they have the skills and capabilities to set and define strategies for reaching company goals, they are surely able to set their own dynamic and influential leading strategy.
It is the time we all recognize things have changed and we must now boldly adapt.
Stay tuned for more insights in this ongoing series.
By: Damiano Zennaro – Head of Advisory Services, EMEA, IDeaS Revenue Solutions
As IDeaS’ head of Advisory Services in the EMEA region, Damiano Zennaro is a firm advocate for the power of positive, meaningful and strategic transformations. He’s made it his mission to push the boundaries of revenue science into new verticals while supporting the ongoing success of IDeaS’ existing clients. Always looking ahead, he believes in the importance of proactively embracing change with trusted partners by your side.
Before joining IDeaS in 2019, Zennaro spent 16 years with InterContinental Hotels, most recently as director of revenue leading a large team of revenue managers across Europe where he oversaw initiatives that achieved significant RevPAR uplift. Born in Venice, he has lived in several European countries such as The Netherlands and Spain and is fluent in five languages. He is currently based out of IDeaS’ Italian office in Milan and serves as a driving force across the entire EMEA region. Ever the adventurer, Damiano is an avid reader, swimmer, hiker and mushroom forager.