Revenue Management and Finance

The subtle borderline between the two

I still remember when not more that 10 years ago, the separation line between finance and revenue management was set and clear. I still remember sitting at my desk managing rates, availability and promotions and trying hard to make a budget or forecast that had been set by the Director of Finance + GM team.

I remember having struggles to cope with someone else’s objectives and predictions to match and possibly overcome; and I honestly found myself in frequent bad times trying to explain why we were under or above (not my) forecast.

Then came a time when finance and revenue management started teaming up together and leverage on each other strengths. The need to keep up to the speed of the market was crucial and an accurate prediction of what would come next, followed by a real time adjustment of the strategy for both revenue and costs, was determining on the bottom line. Little by little revenue management took over the strategic part of the forecast, providing real time guidance on the revenue predictions and giving to finance a solid revenue forecast base to build on its costs assumptions and reconciliations.

Revenue management started providing the forecast for any revenue stream at the Hotel: it first started with rooms, then moved to food and beverage to end up to total revenue predictions.

These days revenue management and finance team up together to build the perfect forecast on a regular basis. However as long as it is a common practice in most properties, it is still not totally acquired in others.

There are still some grey areas where each other’s responsibilities are in the twilight zone, causing an overlapping of activities. I am talking of those properties where revenue management has still no forecasting responsibility and acknowledgment and the forecast is merely based on historical data without considering the future trends, pace and long term view of revenue management.

Or worse, the “political forecast” ( we all have or will all go through that sooner or later!) with an apocalyptic impact on the bottom line!

Or, from a different perspective, any development or new building project rolled out in excel without any revenue insight on the market and competition.

To wrap up, I believe that a perfect team work between finance and revenue management is key to success. It is like a two-lane road but you are both driving towards the same direction. Leverage on each other strengths, question yourselves when needed, fight and discuss (but always with respect) and stay focused on the goal of reaching an agreement to get to the best profitability for your hotel.

[Originally posted on LinkedIn. June 26th, 2017]

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