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HSMAI | Five Revenue Management Pet Peeves You Need to Fix Now by Kelly McGuire

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March 16, 2023
Revenue Strategy
Kelly McGuire
Matt Guglielmetti

As a whole, revenue management teams got a lot of well-deserved credit for navigating the pandemic related business impact on the hospitality industry. They’re to be applauded especially for holding — and even pushing — rates in the immediate post-pandemic recovery period.

BETWEEN PANDEMIC PIVOTS and successes during the recovery period, revenue management is riding a pretty good high in the hospitality industry. Now that things appear to be stabilizing (economic and political conditions notwithstanding), many in the industry are looking forward to returning to something that feels more like normal. While this stability is certainly earned, we’re concerned that revenue managers might slip a bit too far back and pick up some old habits instead of continuing to build on the momentum we found during the last three years of disruption.

These five bad habits described below are our personal pet peeves– behaviors that hold revenue management back from delivering the full value it could bring to their hotels. It’s time to fix them, and we’re offering solutions!

1. Overreliance on gut instincts rather than data driven decisions:

Revenue managers have a bad habit of relying on their owninstinct or experience over demand signals from systems or data. While an experienced revenue manager can have a good sense of their market, they can’t give equal attention every day across the booking horizon. Further, with changes in consumer behavior and the complexity of market dynamics, doing what we always do when a competitor adjusts their price is no longer a winning strategy (if it ever was). It’s time to stop using the rules of thumb and start relying on the indicators analytics provide. Revenue managers need to shift focus from daily pricing to strategies for understanding and managing demand based on a data driven analysis of market opportunities.


How do we fix it?

First of all, if your company hasn’t invested in a revenue management system (RMS), now is the time. If you have one, it’s time to provide refresher training on it and any tools or data solutions in the revenue managers portfolio. You’ll also want to build a plan for continuous learning. Invest in visualization tools to make it easier to consume and share data. Enforce the concept that every strategy the team proposes must be backed by data.

2. Blaming the system instead of taking responsibility for the strategy:

We’ve all heard it – and maybe we’ve even done it. When questioned about the strategy for a particular period, a common response is “Well, that’s what the system said.” We use it as a way to absolve ourselves from owning the decisions. The broader problem is that it perpetuates the notion that the person and system are fighting each other, instead of working together toward the right strategy. This erodes confidence in both the system and the revenue manager. No one except the revenue manager needs to know or care what the system says. They should care what the revenue manager says. It’s time to get out from behind the system and take responsibility for the strategy.

How do we fix it?

We need to view the system as our partner, jointly responsible for setting and deploying the hotel’s strategy. As in all good partnerships, it’s important to exploit each other’s strengths and fill in each other’s gaps. The system is designed to manage routine dates and decisions, using complex analytical processes that can pick up trends faster than a human. It’s there for decision support. It frees up the revenue manager to plan for exceptions and implement the system’s recommendations in the context of their overall strategy. The next time you’re questioned about a strategy, why not say, “Yeah, I know that upon first glance it may look unusual, but I’ve dug in and here’s why I made this decision.” (And make sure you know why!)

3. Analysis Paralysis:

We get it. Many of us love sitting behind the desk, running and analyzing reports and digging dig into Excel worksheets. This has been perceived as a core competency of revenue managers for many years. For some of us, this is our happy place. In fact, it’s a much happier place than communicating (or defending) our strategies to stakeholders. Yes, we do need to do a certain amount of analysis, but if you’re spending most of your day performing and re-performing analysis instead of collaborating and communicating with stakeholders, you are likely not being as effective as you need to be.

How do we fix it?

First, we need to learn to trust the systems that provide both data and recommendations. You shouldn’t have to double check all the dates and recommendations, just the ones that appear to be out of alignment with your understanding of the market. Invest in some visualization tools that quickly uncover patterns, replacing those rows and columns of data that require more digging to evaluate. Prioritize spending time with stakeholders discussing the strategy and implementing it.

4. Strategy Meetings That Don’t Cover Strategy:

Are you still having strategy meetings that are primarily focused on historical performance or Smith Travel Research (STR) results? If so, that’s a recap meeting. Does your strategy meeting review day-to-day pricing for the next however many days? If so, that’s a pricing review meeting. If your strategy meeting isn’t covering long- and short-term strategy, management of special events and periods and broader objectives, we would argue they aren’t strategic at all.

How do we fix it?

Revenue managers should create and socialize an agenda that’s focused on driving collaboration across the commercial team to strategize things like special event periods, long-term planning, marketing initiatives and needs and group prospects and their impact. If your stakeholders aren’t quite ready to fully eliminate the nonstrategic items, at the least set a time limit for the discussions and continue to strive for removing them from the agenda. During the meeting, have the discipline to resist getting dragged into performance readouts or tactical pricing reviews.

5. Manual Work Consuming More Than Half the Revenue Manager’s Day:

Our discipline has way too many homegrown spreadsheets, many of which are created by copying and pasting from various source files into a master spreadsheet. We’re asked to create multiple reports with the same data for different stakeholders, provide email updates and adjust the property management system (PMS) and central reservation system (CRS). All the time spent on this manual, routine work is time taken away from generating revenue.

How do we fix it?

Take an inventory of the routine, non-value add work you and your team are completing. Question whether the tasks even need to be done in the first place. Insist on better tools and visualizations from your partners. Look into tools like robotic process automation or even visual basic for applications (VBA) macros to automate necessary tasks. When all else fails, make sure you have the right resources completing these tasks. To say it another way, the person with the most revenue generating responsibility on the team probably shouldn’t be the one running system updates or moving data around. It's time to use all the momentum we’ve gained during the pandemic and recovery to make some real, meaningful changes in revenue management. Eliminating these five pet peeves will go a long way toward transforming the discipline, enabling revenue management to continue to drive value for their organizations– and probably have a lot more fun doing it!

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