HU Time Capsule: Robert Cross

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June 18, 2018
HSMAI
Fran Worrall - fran@hospitalityupgrade.com

Bob Cross has enjoyed a long and distinguished career in the travel and hospitality business, beginning in the 1970s when he worked at Delta Air Lines. In 1984, he started Aeronomics Incorporated and later founded Talus Solutions, which eventually sold for $366 million. After a brief “retirement,” he started his current company, Revenue Analytics, in 2005. Over the years, his travel and hospitality clients have included Delta, Four Seasons, Hilton, Hyatt, InterContinental Hotels Group, Holiday Inn, Marriott, Royal Caribbean International and Carnival. Hailed as the “guru of revenue management” by The Wall Street Journal, Bob is a frequent lecturer on the topic. He also has written a New York Times business bestseller entitled Revenue Management: Hard-Core Tactics for Market Domination. At this year’s HSMAI Revenue Optimization Conference, the organization will present him with the Vanguard Award for Lifetime Achievement in Revenue Management for his accomplishments and contributions to the hospitality industry and the discipline of revenue management.
 
Hospitality Upgrade recently sat down with Bob to talk about his career and a few other non-business topics.
 
HU: You didn’t start in the revenue management business. What was your first job?
 
Bob: My first job was cutting up chickens in a local fried chicken restaurant. Later, in high school, I got a job as an assistant for a pathologist, where I helped with autopsies, which was way more interesting than cutting up chickens! At the time, I was planning to go to medical school to be a thoracic surgeon.
 
HU: So, did you go to medical school?
 
Bob: No. It was during the Vietnam War, and I was drafted. I enlisted in the Air Force and went through medical lab training, officer’s school and pilot’s training. When I finished my pilot’s training, the war ended, so I didn’t have to fly overseas. By then, I had decided to go to law school. I didn’t really have a passion for the law, I just wanted my own business.
 

HU:
How did you get started in the revenue management business?
 
Bob: I was practicing law for Delta, and I did a couple of things that caught the attention of the CEO. He thought I was a problem-solver, so he orchestrated my move into the marketing department. I was placed in a relatively senior position, even though I’d never taken a business course. (My undergraduate degree is in chemistry.)
 
I would walk around the halls of Delta with my yellow legal pad asking questions, like: If you could do anything to make Delta more profitable, what would you do? What would you change? Because we were losing about $200 million a year at that time.
 
During my wandering, I came across about 50 people in the basement of the building who determined how many discount seats to put on flights. The department was called Reservations Control; and, at the time, it was all gut feeling. The thing that really bothered me, though, was that we were doing 1,500 flights a day, and these 50 employees were responsible for the next years’ worth of inventory. These guys were managing 550,000 flights a year, which was 11,000 future flights per person.
 
I remember thinking, No wonder we’re losing money. I wrote a memo to the CEO telling him we needed to do three things: change the fleet mix; revamp the advertising; and get control of the discount seat mix. I became really passionate about the latter. I loved it because of the instant gratification. If you change your seat mix today, you see the results immediately. 
 
One of the first things I did was to start referring to the reservations control department as the yield management group. I also reorganized the staff and made them responsible for revenue on each flight, not just seat mix. I then brought together some yield management and IT staff, and we came up with the first yield management system at Delta. That system made $300 million in incremental revenue the first year. It was written about in magazines and newspapers. After that, I decided to start my own company.
 
HU: Did you ever imagine revenue management would become as important as it is today?
 
Bob: No. I was so short-sighted. I called my first company Aeronomics Incorporated, thinking revenue management only applied to airlines. I was also thinking I’d better make a lot of money quickly, because everybody will have this figured out in a few years, and I’ll have to come up with another schtick. 
 
HU: What frustrates you most about the revenue management business?
 
Bob: My biggest frustration is how hard it is to convince some clients that we’re going to help them make money. Some people just can’t believe that by making better business decisions, you can make more money.
 
HU: Which industry does the better job of revenue management? Airlines or hotels?
 
Bob: Definitely hotels. The airlines are stuck in the ‘90s. Hotels are way beyond that, especially the big brands. Even smaller or limited service properties employ RM. These hotels have to be just as competitive as anyone else.
 
HU: What would hotels be surprised to learn about revenue management?
 
Bob: There’s more to be made for everybody, even the hotels at the top of the food chain.
 
HU: What’s the future of hospitality revenue management? 
 
Bob: Revenue management is moving from being a tactic to a strategy. The precepts of revenue management – predicting customer demand and optimizing a response to that demand – will eventually touch every aspect of hospitality. Insights gleaned from revenue management principles will determine everything from where new hotels are built to the optimal structure of loyalty programs. Every decision made – from staffing to guest relations – will be data-driven and optimized using revenue management-type principles. To succeed in hospitality, everyone will need to be revenue management-literate.




Bob's Best
 
Go-to Magazine: Well, aside from Hospitality Upgrade, it would be The Economist. The London-based weekly gives a global perspective on world events, politics, finance and technology. I especially value its objective view of the U.S. – something that’s difficult to find locally.
 
Family: Married, three grown children and five grandchildren. My two sons are in business with me; in fact, starting Revenue Analytics was their idea.
 
Coffee With: Alexander Hamilton. Since the Broadway play Hamilton has come out, I’ve been fascinated by him. He was a true Renaissance man.
 
Jams: My playlist has everything from Gregorian chants to Psychobilly (a music fusion genre that mixes elements of rockabilly and punk rock).
 
Required Reading: The 7 Habits of Highly Effective People by Stephen Covey. I gave it to my son Dax when he graduated from high school, and I wrote a long inscription in the front of the book telling him the hopes I had for his future. 


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