The changing role of revenue managers during and after Covid19
Pre Covid19, revenue management where all about maximizing bookings at the most profitable rates, even if that may have meant turning away business and picking the occasional fight with the sales team.
Now that Covid19 has flipped the travel industry upside down, revenue managers need to rethink their approach and their position within the hotel.
That doesn’t mean throwing all best practices out the window. Instead, now is the time to revise past strategies, adopt new ways to attract business and revisit the revenue manager’s role.
How the revenue management role could change moving forward
The position of revenue manager is one of the hardest hit by Covid19. This means it’s likely to go through significant changes soon.
Below are three key shifts we can expect.
Stronger focus on current and forward-looking data
While historical data currently doesn’t offer the guidance it once did, gathering and evaluating past performance data will always stay important. But for now, revenue managers must focus more on current and forward-looking data to predict demand and adjust pricing at the right time.
“We quickly realized the need to adapt Atomize to the new reality. It immediately became clear that the need for real-time capacity had become stronger than ever. It’s the only feature that helps hoteliers react to sudden demand bursts that can’t be foreseen now that historical patterns aren’t useful anymore,” says Alexander Edström, CEO at Atomize.
For example, business travel collapsed, and leisure became the key revenue driver in 2020. Now hotels need to keep a keen eye on their market to catch the first signs of corporate travel picking up again. They also need to monitor how new and existing leisure segments are developing, to respond appropriately. Additionally, hotels need to rethink how they can find new demand pockets and revenue streams which might require developing new business models and/or new concept offerings.
“Hoteliers do not have an easy job ahead. They will have to re-open hotel(s) and provide a safe stay for guests. To meet these challenges, hoteliers will need to adapt to the current market conditions and use resources for the recovery period and beyond,” says Thierry Collard, Global Commercial Manager at OTA Insight.
“Ensuring that early interest converts is a key opportunity. Top-of-funnel data will revolutionize the industry, providing hoteliers with the capability to better predict true demand — before a decision has been made, before it is on the books (as intent to travel, which hotels can work to convert).”
Need for new systems and new revenue management approaches during Covid19
Revenue managers need to reframe their techniques and procedures to make the most of the available data and achieve the highest profits possible. The importance of having adaptable systems which provide a live overview of market changes and make accurate forecasting easier has skyrocketed.
“Understanding true demand trends and when lookers will turn into bookers builds confidence. This will allow revenue managers to create realistic forecasts – no longer based on historical year-over-year comparisons or on-the-books data as the only indicator of demand. The future of revenue forecasting is not just OTB. The future is intent to travel that anticipates demand ahead of the curve and brings an extra variable to factor into your budget and forecast,” Thierry Collard concludes.
Increased need to leverage the right automations for decision-making
While technology will continue to save hoteliers time on tedious tasks such as data collection and collation, a trend to de-automate and re-humanize revenue management has developed.
The reason is simple: if your revenue management system (RMS) relies heavily on historical data, you will need to intervene and manually adjust rate suggestions.
Not so with a powerful RMS like Atomize. It tests various price points and supports revenue managers with real-time price suggestions or automatic rate updates without engaging in a price war.
By evaluating future arrival dates, comp set data, price sensitivity, unconstrained demand and prices by room type, the system responds to sudden demand bursts in real-time. This allows hoteliers to capture small yield pockets that sometimes last for just a short time.
“The current situation will set apart the good revenue managers from the outstanding ones. The best ones will be very agile and creative in their approach to leveraging existing demand and finding new ways to generate revenue (by focussing on ancillary or F&B revenue, for example) along the way. They will probably also shift their attention to a new set of KPIs (e.g. from RevPAR to GOPPAR – gross operating profit per available room) to ensure they optimize profitability,” explains Thibault Catala, founder of Catala Consulting.
“This will continue to speed up the shift from descriptive revenue management to prescriptive revenue management which leverages technology and automation to capture even the smallest opportunities in the market while helping revenue managers to focus on their hotel’s vision and strategy.”
More interdepartmental collaboration
More hotels are starting to track TRevPAR (total revenue per available room) as well as RevPAR (revenue per available room). This shows that revenue managers are looking more closely at revenue generated in departments other than rooms.
This change could lead to revenue managers moving away from the common role of managing systems and data to taking a more important position in commercial decision making across departments.
As a result, revenue, sales and marketing teams will have to work together more closely and focus on the following four aspects:
- Identifying and converting new demand
- Driving profit rather than revenue to increase profitability
- Optimizing the guest journey
- Creating more profitable revenue streams for the hotel
A stronger concentration on a strategy that includes all three departments and offers increased flexibility in unexpected circumstances will lead to a more holistic approach and better results during the crisis, the recovery period and even afterward.
“There could not have been a bigger catalyst for the role of revenue management to change than Covid19. And that change is needed. Unable to rely on historical data, the revenue manager has to identify micro-trends (hopefully with the help of technology) in real time and then collaborate with the sales and marketing department to capitalize on these trends, e.g. uptake in staycations, domestic and regional travel,” says Stefan Wolf, Chief Commercial Officer at inHovate Solutions.
“Moving from revenue maximization to profit optimization also requires close cooperation with the finance manager, who will be cautious about spending money during the current times. If a revenue manager together with a marketing manager can show a return on investment, the finance manager will find the required funds to support marketing spend. Working together is the key to overcoming this crisis and becoming stronger as a team.”
Revenue Management approach Covid19 – let us help you!
Revisit the role revenue management plays at your hotel now. This will help you get your property through this crisis and ready it for a competitive and dynamic future.
Get in touch with us now to see how Atomize can help you face these challenges head-on.