An inside look at revenue management from a CCO’s perspective - Insights

An inside look at revenue management from a CCO’s perspective

I had the pleasure of speaking with Kym Kapadia, chief commercial officer and head of hotels for Aprirose Real Estate Investment. With nearly 30 years of hotel experience, she is one of the most accomplished revenue management, sales, marketing, and distribution specialists in the European hotel sector.

Kym’s impressive track record within several major hotel companies and independent organizations includes serving as revenue director for IHG, Marriott, and Hilton. More recently, as Michels & Taylor’s commercial VP, Kym was instrumental in building industry-recognized and successful commercial disciplines for a variety of investors, banks, and finance houses.

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?

Kym Kapadia (KK): Revenue management and the role of the revenue manager has changed dramatically over the past 10 to 20 years, and pre-COVID, it supported an array of strategic decision-making within hotels, management companies and ownership groups. It’s well known the role itself has been continually evolving since its inception in the 1980s, now supported with more automated and structured technology than ever before. Data-driven automation has allowed hoteliers to leverage sophisticated algorithms to develop forecasting and pricing strategies.

Previously, reporting lines and “final say” went to the sales and marketing function, not the revenue manager, and it’s true 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. Having been one of those first-generation revenue/yield managers, my view is still that—pre-pandemic—the general understanding of what a revenue manager should be accountable for, and should do, was far from clear, and varied across many brands and operators across the globe.

This lack of clarity led to a sizeable challenge when trying to progress the role into a strategic leadership position within a hotel or organization. Some companies made huge progress, where revenue management appetite came from the top of the tree, and others were less open to relying on a role that simply carried too many unknowns.

Here are some key reasons for the revenue manager’s continued struggle:

  • Falling into the role without adequate training and development (e.g., a front-office manager)
  • Perceived as systems or numbers people who perhaps lack the ability to translate complex data into simplified reasoning
  • Had a reputation for hiding behind the screen
  • Huge range of RM skills depending on the company
  • No definitive guidelines or generic understanding of what the role should do
  • They became data-gatherers, rather than interrogating the data and responding to insights
  • In many cases, less confident and therefore less assertive than their sales or marketing counterparts
  • Fell into a comfort zone without any necessity or inclination to continually adapt to constant change
  • Titles denoted less senior roles than other commercial counterparts
  • Lack of senior support and trust (such as the hotel GM)
  • Information overload, without the necessary “thinking time” to make good use of it

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?

KK: As we all come to grips with reopening during this global pandemic, all roles within the hotel structure have been readjusted. COVID-19 seems to have specifically reoriented the revenue manager role as they now must try to “de-automate” and “re-humanize” their methodology with technology’s support. In an instant, all our paradigms shifted; flexibility and adaptability have become the most valuable attributes for any job, and the position of revenue manager is one of the most affected during this time. Automation will of course always be key, especially during times of limited resources, but what we’re seeing is an increased need to add that human touch on top of the usual revenue management systems.

There is indeed a unique opportunity for revenue managers to now be more engaged with the recommendations created by their systems and be prepared to tweak and shift strategies based on additional factors. With almost no historical data of relevance, technology systems that focus on rigid rules have struggled to adapt without human intervention. So far, we’ve seen that revenue managers who can adapt, interpret data, and make quick decisions are the most likely to succeed.

Collaborating with their peers, and other departments, to shift expectations to leverage additional revenue streams, might—just might—put revenue managers in their rightful place (the place they’ve sought for so long) at the forefront of commercial decision-making. The trouble is when I hear examples like I did just today of a relatively experienced revenue manager say to a sales manager: “…but I just don’t like wholesale rates.” It reminds me that the success of this transition is, like many things, dependent on its weakest link.

No shift change is possible without data available at our fingertips. While current demand is focused on leisure, business travel will slowly return. In the meantime, it’s time for the revenue management role to ensure hotels keep their finger on the pulse, embracing all data points to paint as clear and accurate a picture as possible. Rebuilding or reconfiguring systems from the ground up will be essential, and revenue techniques should become the playbook that helps hoteliers achieve the highest profits possible. All of this headed up by a more flexible, adaptable and innovative revenue manager…who else?

Question 3: Will the commercial structure in the hospitality industry change after COVID-19 and if so, how?

KK: The commercial structure was already under scrutiny, and now we have a perfect opportunity to refine it. The pandemic will unquestionably change how hotels are run and, in particular, how all commercial operations are planned and implemented. In an era of convergence, many traditional roles like sales, marketing, distribution, and revenue management are under review, with the lines being blurred between commercial disciplines and the desire (and necessity) to move the needle from “revenue” to “profit,” to TRevPAR and guest-journey optimization.

With general demand being down over the coming months, it’s likely the commercial team will be smaller than it used to be, with some specialisms of the commercial function being either less extensive or replaced with technology. Roles and jobs to be done will look different, just as demand from various sectors and segments will look different. The silos between sales, marketing and revenue management will disappear in the more effective structures, and the new normal is set to focus more on “revenue generation,” which will in turn lead to a one-fluid-unit, a streamlined team working more toward creating profitable revenue streams for the hotel.

The one pivotal role will be that of the person leading the commercial remit—someone highly data-driven with extensive motivational leadership skills and who turns from strategic to hands-on whenever required…somewhat bionic, although very possible. With those skills and qualities, I wonder if having a typical revenue management grounding (pre-COVID style) will be the magic required to create the very best future for the commercial function going forward. I’m excited to see how this will progress.

By: Damiano Zennaro – Head of Advisory Services, EMEA, IDeaS Revenue Solutions

Damiano Zennaro

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.

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