Technological Disruption Drives Evolution of Hotel Revenue Management


BERLIN — The modern hospitality industry had never faced a demand shock at the level of the COVID-19 pandemic, and neither have the automated revenue management systems increasingly deployed in the industry. had no frame of reference.

That’s why, according to experts speaking at the 2022 International Hotel Investment Forum, revenue managers have had to go back to basics and evolve their thinking during the pandemic.

Speaking at the ‘Evolution of Revenue Management’ session, Konstantinos Santikos, Managing Director of Santikos Collection, said such automated systems had become “completely irrelevant at the onset of the pandemic”.

“We had to go back to Excel, basically, which is sad,” he said.

Joe Pettigrew, commercial director of hotel asset management at Starwood Capital, said revenue management systems are “built with a stable environment in mind.”

“The system has to look at the past to predict the future. That’s the whole purpose of their existence,” he said.

When past patterns are completely decoupled from future demand, revenue managers have had to relearn how to be entrepreneurial, he added.

Pettigrew said that in the depths of the crisis, revenue management systems, which are designed to forecast demand and set prices based on that demand, have been relegated to being primarily a reporting tool that revenue managers human incomes then used to manually analyze and forecast.

“We’ve developed some really good Excel templates over the last two years,” he said.

Judith Cartwright, founder and managing director of Black Coral Consulting, said that much like how systems lost reliability during the recession, they could not accurately measure and predict the recovery.

“With the last minute demand that happened initially when the markets opened up, no revenue management system can keep up with that,” she said. “When you look at destinations like the Maldives, 70% of the month’s total occupancy was booked within five days.”

Without automated price feedback, revenue managers have had to innovate over the past two years, panelists said.

Pettigrew noted that the inability to rely on automated systems made it clear which revenue managers were in tune with their markets and which weren’t. He said the crisis has taught Starwood the importance of “instilling that culture of revenue leadership” throughout the company and treating directors of revenue management as key members of the revenue team. management of a hotel.

“In fact, raising incomes to the same level as [general managers] and [directors of sales] sets the right tone,” he said.

Santikos said the crisis has spurred a shift in exactly what revenue managers value, shifting focus from the top line to the bottom line.

“It’s about understanding what keeps the hotel alive, and that’s profit,” he said. “The goals have to change because revenue managers were looking for occupancy, then pricing, then [revenue per available room]and sometimes the occupation can end up being negative.”

Cartwright pointed out that the discipline of revenue management has become more sophisticated, beyond simple inventory management, to ensure that highly trained revenue experts act as “profitability gatekeepers” to ensure they find not just demand, but the right type of demand that gets the most out of a hotel asset.

She said a good revenue manager in today’s environment is the backbone of a hotel’s various departments.

“They liaise with sales, marketing, liaison with operations and the general manager, and they need to have the same voice at the table,” she said.

Rainer Willa, CEO of HotelPartner Yield Management, said the role has evolved beyond the “head of revenue” box. He said that in many circumstances that means not only working closely with other departments, but overseeing them.

“The role of the chief revenue officer is evolving towards being a commercial director – having revenue management, marketing and sales and bringing them together,” he said. “Because they fit together and the results are much, much better.”

Cartwright noted that someone in a sales role, rather than versed in revenue strategy, will often by default prioritize occupancy over everything else.

“That’s when that balance gets off balance,” she said.

This newly evolved role for revenue strategists and experts requires more skilled and analytical workers, panelists said, and it has been one of the hardest things to manage in an environment where a hospitality career is perceived as less attractive. .

“It’s very difficult because the whole industry was like a seasonal hotel [during the pandemic]”, Santikos said. “People left and had opportunities elsewhere while they were on leave.

He said the pandemic has prompted many workers, especially millennials, to seek workplaces where they could have a better work-life balance, which is a challenge in an industry where many roles are not not offer a traditional work week.

“As managers and owners, we have had the time [during the pandemic] to sit down and review things,” he said. “The same thing happened with everyone. They reviewed their lives, and that’s why they left.”

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