TECHNOLOGY : REVENUE MANAGEMENT
Kurien Jacob , senior vice president , revenue and distribution , Highgate Hotels , addresses the audience during a 2012 HSMAI Revenue Optimization Conference panel discussion .
discipline of managing by channel mix is relatively new , and the metrics to make that determination are evolving . The focus is moving from top-line revenue to profit contribution .”
Filling the data and analysis gaps To accomplish this , revenue managers need to be able to work with the right data . Many independent or smaller hotel management companies have still not adopted the technology needed to determine which segment is the most profitable for their properties .
“ The rate of implementation of revenue management assistive technology , beyond Excel spreadsheets , remains inappropriately low ,” says John Burns , president of Hospitality Technology Consulting , Scottsdale , Arizona .
Meanwhile , the major brands have implemented such technology but still have difficulty finding qualified personnel for revenue management . Hotel companies worldwide are on a revenue
manager hiring spree , and hotel management hiring agencies report a shortage of qualified candidates given the unique skill set required .
“ The real enemy is not the competitive set ,” says Greg Cross , senior vice president , revenue management , Hyatt Hotels Corp . “ The real enemy is employee turnover and the frequent inability to find trained , qualified people to interpret the data and make decisions . It ’ s a geeky profession , but that ‘ lights are on but nobody ’ s home ’ look is still out there to be found .”
Even with the latest technology , revenue management remains an imperfect science . Guests can be assigned to the wrong segments because as an increasing percentage of reservations are made via digital channels , the accuracy of the segment designations decreases . Also , guest spending at a hotel remains difficult to track when guests use cash or a credit card instead of billing to their rooms .
“ THERE IS NO QUESTION THAT REVENUE MANAGERS WILL BE REQUIRED TO FOCUS ON THE PROFIT LINE MORE AND MORE .”
– Bryan Mulliner , Protea Hotels
“ Attendees on a conference package which includes meals , meetings rooms and A / V will seem disproportionately profitable simply because their spend is so much more reliably tracked ,” says Eric Orkin , a hotel technology consultant based in Fort Myers , Florida .
To better quantify guest spending on property , resorts such as Sea Island in Sea Island , Georgia , issue charge cards to guests upon check-in to use for all purchases . “ It ’ s essentially a requirement ,” says Alex Gregory , director of sales and marketing at Sea Island . “ We ’ re a private resort , and you have to be staying on property to use the facilities . I can pull that data about who is the highest spend and push a high sales drive for them .”
Beyond RevPAR The next step in the evolution of hotel revenue management is shifting the focus of the revenue manager from analyzing and maximizing top-line revenue to profit contribution . However , this shift is currently hampered by a lack of software tools to collect and analyze profitability data .
“ The optimization of profit contribution by revenue managers is in its infancy ,” says Bryan Mulliner , strategic development and revenue director , Protea Hotels , Cape Town , South Africa . “ There is no question that revenue managers will be required to focus on the profit line more and more . As this discipline evolves , so will the analytical tools that are available .”
The challenges of this approach include measuring variable costs on an ongoing basis and creating cash-flow forecasts for every customer segment . “ To evolve from RevPAR to GOPPAR , the trick is to understand the contribution margin of each revenue dollar ,” says Vish Bhatia , corporate director of revenue optimization , Aston Hotels & Resorts , Honolulu .
This will diminish the importance of the RevPAR metric . Hotel companies have essentially the same criteria to measure a revenue manager ’ s success — how the hotel ’ s RevPAR , total revenue and profitability compares to its competitive set — and the ranking often determines the revenue manager ’ s annual bonus .
56 HOTELS September 2012 www . hotelsmag . com