TECHNOLOGY : REVENUE MANAGEMENT
The currents have begun to profoundly shift in hotel revenue management , and the profession is heading into uncharted waters . Of course , revenue management has seen steady evolution over the past few years , but now the profession ’ s pace of change is set to be accelerated by hotel ownership groups that are dissatisfied with seeing more revenue but less profit as customer acquisition costs have increased at a higher rate than revenue . At this year ’ s HSMAI Revenue Optimization Conference held in June in conjunction with HITEC , revenue managers discussed how this will usher in new metrics for benchmarking , new pricing strategies and new responsibilities for revenue managers , possibly including a new job title for the position .
“ There has been a lack of willingness to closely examine costs — in the aggregate and by channel — and to recognize that the rate at which costs are increasing is unsustainable ,” says Brian Berry , vice president – revenue management , Host Hotels & Resorts , Bethesda , Maryland . “ Owners are placing increased emphasis on understanding the drivers of acquisition cost growth and are calling for increased scrutiny on not only external channel costs , but on internal acquisition expenses as well .”
New benchmarks Instead of new ways to measure revenue , revenue managers are now seeking out the best methods to calculate acquisition costs and profit , but an industry standard for determining those figures has not yet been decided .
“ When acquisition costs are 15 % to 25 % of room revenue , the revenue numbers that are monitored should be the ones net of these costs , and management teams need to drill into these performance metrics to identify which accounts are delivering higher profit business by day of the week , lead time and other key variables ,” says Cindy Estis Green , CEO of Kalibri Labs , Rockville , Maryland . “ The management can turn the dials to refine how they deploy the limited resources they have . How these resources are deployed can make the difference between a profit and a loss for the owner and affect profitability much more than tweaking prices .”
Revenue managers say ideally , a benchmarking system akin to STR ’ s STAR reports could be set up , and there is certainly a business opportunity there for a vendor that can successfully implement such a
www . hotelsmag . com September 2014 HOTELS 55