What independent hotels should learn from Chains from a Revenue Management standpoint


Revenue management is not either a technique or a passion, both definitions are far from reality. While on one side it relies on numbers, algorithms, artificial intelligence to drive topline revenue (and profits); on the other side the human aspect and the combination man + machine learning is imperative to succeed and cannot be arbitrary anymore.

Coming from 13 years of hotel chains’ mindset, I have strong opinions about the fact that revenue management is not an option and while I understand the independent hotel’s challenges, I think it is time to overcome the limits and find the right way to fit it into each hotel’s reality in the best and most reasonable way.

There are subtle fails that prevent some Hotels to make the step forward to an effective RM application, and it all starts from challenging your status quo. Even if self-confidence is a super power, it can either make you or break you. It will break you if it prevents to see your limits and discover and embrace new opportunities to grow. First step it to assess the hotel’s strength and weaknesses and overcome the limit of just seeing the opportunities from one side – meaning your own side – and start comparing it to the market. Benchmarking one hotel’s topline performance against the competition is the only objective way to assess the health of the economic performance.

Big opportunities come with big decisions and calculated risks: many independent hotels are not necessarily familiar with the application of the discipline and this can raise barriers. Don’t be afraid of the unknown and embrace the change. If you do things the same way you always did, you will never learn and grow. Learning and growing is a universal opportunity, no matter what the size or location of your property.

Many erroneously think that revenue management can be applied only in big hotels, primary destinations or when there is high demand. Others don’t feel the need to invest in it because their hotel is generating a healthy and stable topline performance year after year (remember to challenge your status quo?). Finally, some assume that an essential condition is to have the right person or the right team in place. Obviously, having a skilled individual on top of the discipline would be ideal but reality is that not all hotels can afford to hire a full-time expert. When that is not possible, it is about building the right culture. Effective revenue management means moving together towards the same direction and stop working in silos.

Procedure sounds like a scary word: hotel chains are full of policies and procedures in place to ensure a smooth management and process alignment when dealing with a mixed variety of properties. For independent hotels, I’d rather change the word procedure into method. I started by saying that RM should not be an option, I herewith add that it shouldn’t be a secondary task either. Operations sometimes take over and leave little time for strategy and analysis but by implementing an effective method, streamlining the processes and introducing smart technology to make life easier, time management will improve.

To achieve all the above, Hotels need to invest mainly in 3 aspects: training, communication and technology.

    • Training – Revenue management it is not about managing the OTAs or calculating the indexes or working on excel sheets; it is about building awareness on the way the market is booking your hotel, when, how, which customer segment, for what rate and length of stay; how you can influence and optimize the demand to drive the best possible revenue and profits. When I ask the question “How is your Hotel’s year to go booking pace and what are you doing about it?”. If the answer is, “Wait, I must check the reservation report” (or worse, the manager report) … there is a lot of work to do.
    • Communication – we talked about breaking silos. Revenue management is not a one man show, it is a cross functional ninja. It touches and influences all departments: from front office to finance, from F&B to digital, from marketing to operations. To use a metaphor, I imagine the octopus: RM is the head and the tentacles are all the different departments that need to move in synch to make the octopus walk. To do that, communication and sharing information in real time is key: results, objectives, strategy, challenges and opportunities.
    • Technology – technology for independent Hotels is still a pain point and the reason is mostly due to fear of the unknown. I started this post by saying that an effective revenue management application is a combination of man + machine learning: there is no way a human can do better than a machine and at the same time no way a machine can fully replace a human. Embrace the fact that technology is here to help, lean and improve the way we drive revenues and profits. Once you start seeing it as friend and you break down the wall of defensiveness, there are only more opportunities ahead. Technology is an integral part of revenue management, like it or not.

The path to an effective Revenue Management is a step by step approach that requires commitment and alignment.  Building a culture needs time, it will not happen overnight but if you start building today, you will see that piece by piece the mentality and the critical thinking will change and evolve. The revenue management approach will install naturally on your team, breaking down silos and positively bring results on revenue and profits.

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