Please, Please Get Us Some Automation!

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April 19, 2021
Revenue Professionals
Kelly McGuire

HSMAI and ZS recently surveyed 145 North American property revenue managers to better understand how they were allocating their time across various areas of responsibility. Between pandemic impacts, the growing visibility and responsibility associated with the role and increasingly blurred lines across commercial functions, we felt it was crucial to understand whether revenue managers were able to prioritize tasks that directly impacted revenue.

There’s been a lot of talk about revenue management evolving to a more strategic, analytics and systems-supported discipline. Unfortunately, property revenue managers’ activities don’t seem to align with this vision. Revenue managers spend more time on non-revenue generating activities (51%), like internal admin work or collecting data and reports than they do on revenue generating activities, like RFP response, identifying future revenue opportunities and analysis. Even within revenue generating activities, highly manual processes like RFP response and group leads take up a disproportionate amount of time (21% of weekly activities).  
   It’s difficult to separate the devastating impacts of the pandemic from the results of this survey.  However, the survey was conducted from October to December of 2020, well after the initial crisis passed, and, presumably, after teams had settled into the routine (if it’s possible to call it that), of managing through “business unusual.” In fact, I would argue that the pandemic just exacerbated conditions that already hampered revenue management’s ability to focus on revenue opportunities. In particular, the pandemic has brought into dramatic focus the highly manual environment and lack of automated systems support that most revenue managers operate within.

REVENUE MANAGEMENT SYSTEMS
In a 2019 survey, Skift found that only about 17% of hotels globally even used an automated revenue management system (RMS). Despite significant innovation in revenue management systems’ analytical and deployment capabilities, and a nearly ubiquitous awareness of the need for and benefits of these systems, companies just aren’t acquiring them. This is a problem.
   An even bigger problem is that in many cases, companies aren’t getting the full benefits from their system investments. Sometimes, the system doesn’t quite match the needs of the market or the company, so its recommendations aren’t quite right. In many cases, proper usage has slipped over time. Users aren’t consistently trained, the company doesn’t take advantage of new features or functions, and configuration isn’t updated regularly. As users override recommendations more and more, the system becomes a huge, expensive rate loading tool.
   This was evident in our study. Participants reported they were overriding the revenue management system’s pricing recommendations about 39% of the time. Brands and management companies were overriding anywhere from 10% to 63% of the time. Granted, the pandemic did temporarily impact revenue management systems’ effectiveness, but they had six months to equalize before we deployed the survey. If that doesn’t convince you there’s a problem, at least 4 brands represented in the study said they overrode systems less than 18% of the time. So some systems (and users) have adapted. We suspect this overriding was happening before the pandemic and will continue as things stabilize. Remember, not only do excessive price overrides degrade system performance over time, they take a lot of revenue management time that could be spent, well, generating revenue.
   In the words of one brand, this director of RM who was overriding its system 55% of the time, said, “Improving the RMS will help reduce manual overrides and free up more time for other RM strategies.” 
When selecting a revenue management system, you need to carefully define your requirements. Evaluate how closely each available option meets your needs. Put pressure on your vendor partner to continually improve their system’s outputs by letting them know which pricing is routinely out of alignment. Above all, constantly train your revenue teams to properly interrogate the system, interpret the results accurately, and intervene in such a way that the system learns, not degrades. Making excessive price overrides is the lazy way to handle an RMS pricing question. Check your ego at the door. The system should be better at day-to-day pricing than you are. Understand your market and your strategy, teach the system that and let it do the pricing while you focus on other tasks.
 
Making excessive price
overrides is the lazy way to
handle an RMS pricing question.
 
AUTOMATE ROUTINE PROCESSES
The benefits of automation for revenue management extend far beyond RMS. Study participants reported spending a significant amount of non-revenue generating time on system maintenance, pulling data and generating reports. 
In the words of one of participant, DoRM (Luxury), “We use a lot of systems; streamlining systems could definitely assist in daily tasks.”
DoRM (Independent) said, “Manual reporting and distribution system maintenance could be automated or outsourced to make better use of time – [think] strategy and analysis versus compiling information and mapping.”
 
Automating these highly manual processes
may be more accessible than you think:

 
  • Robotic Process Automation, which I wrote about in a previous article, wraps around existing technology. The bot exactly matches  keystrokes and steps a user would take to execute the same process. For high volume, highly manual activities, this technique can dramatically reduce the human effort. These solutions have a fast time to value, and a pretty strong ROI.

  • Visualization Tools can speed time to insights and reduce time spent formatting data for multiple consumers. Access to a more flexible, dynamic reporting platform gets the entire organization closer to self-service. This takes the burden off revenue management to create and distribute reports. These tools are easy to learn, and not expensive to acquire.

  • Smart Reporting ensures that rather than having to hunt around a spreadsheet or RMS interface for opportunities, revenue managers get a series of threshold-based alerts or a workflow that guides them to business areas that need the most attention. I’ve seen these reports in everything from Excel to a commercial RMS. Anything that can proactively support action saves time and boosts productivity.  

  • Delegating Tasks to other less-specialized resources. Pandemic-related staffing cuts placed extra burden on revenue management. But this shouldn’t remain part of the job as you roll into the recovery. Adding extra time for identifying revenue opportunities to a revenue manager’s day will have a direct positive impact on revenue. 

NEXT STEPS
In summary, there are three things leaders need to consider to improve the revenue generating potential of their revenue management function.

1. Get a revenue management system and train users to use it correctly.  Any system is better than no system, but some will be more suited to your specific brand, chain scale or property than others. That’s the first step. Make sure users know how to interpret outputs and how to help the system adapt to market conditions without excessive overrides. 
 
2. Automate where you can. Techniques like robotic process automation, or technology like visualization software and smart reporting, can reduce the amount of time users spend on manual processes and surface important actions.
They also streamline access to data and reports.
 
3. Reallocate tasks where you can. You’re paying revenue managers to manage revenue, not configure the reservations system. Granted, pandemic related staffing cuts forced many folks to take on extra responsibility,  but as you bring folks back, consider reallocating nonrevenue-generating tasks.  Let your revenue team focus on their area of expertise – making money.


You can find more details and full study results at
https://americas.hsmai.org/insight/the-voice-of-revenue-managers/



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