Gone are the days when general managers, marketing representatives and sales leaders all sat around a conference table debating how to price and where to distribute inventory. Today, Revenue Strategy has become such a critical part of hotel operations and profitability that hotels need at least one person solely dedicated to yielding and channel management.
If you don’t have a Director of Revenue Management on property, it’s safe to say in today’s world you’re leaving money on the table. Bigger hotels or management companies with complex demand generators might require a whole team of revenue strategists.
So what kind of person can handle the tremendous responsibility of making daily pricing decisions, and where can such a person be found? A panel of Revenue Strategy experts at the recent HSMAI Revenue Optimization Conference in New Orleans discussed five steps for developing and retaining top Revenue Strategy talent.
1. Build an attractive culture
Revenue Strategy is more than bringing reports to a weekly meeting, says Tyler Williams, VP of Revenue Strategy for Destination Hotels. He said one word that jumps out to him is “culture.” Hotels need to put their new-hire DORMs into a position to succeed.
“DORMs need to participate; they need to be involved in the process,” he says. “The only way to develop is to be fully entrenched.”
Williams said it is not enough for DORMs to be able to pull and read hotel performance and market data. He or she also must know what to do with the data and how to turn it into profitability.
“It’s very easy to repeat back what the data says, but the missing link in taking the next step is determining what to do with the data,” he said. “DORMs need to be at the daily, weekly and monthly meetings, and they should also find time for continuous education.”
2. Find future revenue managers
Williams said attracting young Revenue Strategy talent is complicated.
“It’s a very real challenge,” he said. “There are top hotel schools in the country that don’t even have revenue management programs. How can we educate those who are interested in the career and have the aptitude to do this but don’t have the resources to learn?”
Williams and Calvin Anderson, VP of managed services at Duetto, agreed that an incentive program to find and recruit revenue management talent is a must.
“There is no better recruiter than someone who’s happy on your own team,” Williams said.
Anderson said hotels should take a two-pronged approach to acquiring talented individuals: leveraging young professionals coming out of college and looking within your own team and incentivizing referrals accordingly.
3. Set up the appropriate reporting structure
Who the revenue manager on property should report to remains up for debate. Some panelists said revenue management should report to marketing, others said the setup should be vice-versa.
At Highgate Hotels, DORMs have a direct line to the GM, but their real direction comes from the corporate revenue manager who oversees Revenue Strategy for the entire portfolio of hotels, said Kerry Mack, executive VP of revenue and distribution for Highgate.
“For us, pricing decisions, market decisions, rates – each of those things are discussed at a corporate level,” Mack said. “General managers, sales staff and marketing staff are invited to the meetings, but on a day-to-day basis you can’t have everyone involved. The revenue people need to be making strategy decisions.”
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4. Use resources for continuing education
Prior to joining Duetto, Anderson oversaw Revenue Strategy at the New York Hilton Midtown, Hilton Worldwide’s flagship property. He said people are surprised when he tells them the revenue management team at that property was responsible for $1 million in annual payroll.
Compensation is an important factor in getting the most out of revenue employees, Anderson said. But it isn’t the only factor.
“Everyone in my department had a mentor and a mentee that changed every six months,” Anderson said about his organizational setup at the Hilton. “Every mentor has a specific task that they’re excellent in, and they are required to teach their mentee that task in six months.”
Anderson requires his subordinates on the revenue team to create a list of roles that would make sense for the next steps in their career. And it’s recommended that they add a new bullet point to the experience section of their resume every six months.
“These are the items I need you to achieve to be qualified for that next role,” he said. “My commitment is if you can handle these roles and something comes available, you will get my absolute dedication, even if it’s outside of my company, I’ll be your biggest advocate.
“I like to go to bed at night knowing I’m doing something more than just making a REIT a little bit more money,” Anderson said.
5. Prepare for revenue management innovation
Revenue management as a field is evolving so rapidly that practitioners need to be nimble and always ready to switch gears, the panelists said.
Those willing to blaze new trails in the way hotel rooms are priced will stand out and have better chances to advance and succeed, Anderson said.
Williams added that revenue managers must be able to not only find and analyze numbers, but also explain them to non-revenue folks.
“Today, there are not many property-level RMs out there capable of sitting across from table with owner or REIT and fight for their strategy,” he said.