The role of revenue managers has evolved in the recent years to encompass big picture strategy and less systems support. My Place Hotels Revenue Manager Bryan Gatzemeyer, CHRM, reviews the basics of his discipline and focuses on its most critical component.
Technology has provided us more automation in reporting and algorithms to dissect the most complicated decisions allowing the revenue manager to direct the strategy conversations as they extrapolate big picture ideas out of these complicated systems. It’s been an exciting shift for our discipline, allowing us to expand our collaboration and communication throughout our organization. While revenue managers are operating and implementing new tools to help inform the hotel’s overall strategy, communicating and educating on the fundamentals remains key. Regardless of what systems or technology a property uses, the four fundamentals of revenue management are:
- Demand
- Supply/Inventory
- Rate Management
- Yield/Channel management
With budgets top of mind for many, let’s focus on demand theory. Demand is the most important and most difficult piece to accurately forecast. Most of the revenue management process is spent in this phase as everything we attempt to optimize must first be accurately forecasted to occur. Demand should always be analyzed by segment as each segment will be unique and provide a small piece of the overall large picture we are hoping to develop. For example, high group demand might not be a strong enough catalyst to drive a change in yield or rate management for a given set of dates while high transient demand will almost always result in your ability to leverage some sort of strategy change.
Did you have dates that you could have sold your hotel at 150% occupancy if inventory wasn’t a restriction? This is called unconstrained demand and is where I would start the process to identify opportunities for your property. It is how we use historical data to help identify future trends, combine these dates with your special event list, pacing reports, marketing/sales strategy, market analysis and you have a rough draft of dates you can easily make a major impact on. Apply the same principles to each day of the year on a daily or weekly schedule to ensure you are pinpointing dates that are prime for change. Although developing a demand forecast can feel overwhelming, the only way you can fail is by not trying.
The My Place Hotels Revenue Management team is a resource available to all brand owners and operators. Contact Bryan at bryan.gatzemeyer@myplacehotels.com.
Please click here to get up to date with all of the latest news from My Place Hotels!
