Hotel Profit Discovery

Top 5 Reasons Why Revenue Managers Don’t Scale

On a daily basis, I get the opportunity to ask owners, GM’s, and Managing Directors what they think their biggest Revenue Management issues are. Without much hesitation, most of them say that they need better talent. That’s a real problem that will not be easily solved any time soon. As I’ve said in previous posts, the coming shortage in analytical talent across all industries will hit hospitality especially hard. I wanted to probe deeper into this issue so I asked 80 hotel executives what are the specific weaknesses that  they see in their Revenue Management teams. About 3/4 gave me some feedback. I grouped the responses I received  into categories and here is a brief summary of the top 5 (in no particular order).

1. Can’t think strategically. Strategic thinking is about integrating the future into today’s decisions.  Many hotel executives believe that most RMs lack the ability to look beyond the simple metrics in their 90 day report. They are unable to  anticipate potential opportunities or identify serious problems.  They tend to be myopic thinkers who focus mostly on extranets and distribution issues and spend little time on trying to grow asset value.  Furthermore, most lack the business acumen that it takes to make strategic, long-term plans.

2. Don’t lead change. Many Hotel executives want their RMs to be the people that challenge the norms of thinking that lead to inefficient and ineffective decision making. Properties are often operated by “seasoned” managers who are quick to employ flawed tactics that may have worked in the past, but no longer apply. Today, markets change rapidly, and hotel executives are looking for Revenue Managers take the lead in helping hotel companies navigate the changing tides in consumer income, demand patterns and technology.  The fact that few are able or willing to do so is a major source of frustration.

3. Don’t know how to use data.  Most hotel executives I spoke to believe that, when used effectively, data  can be a powerful tool to educate stakeholders, inform decision makers, and motivate change. Unfortunately, many RMs are not prepared to use data to analyze important problems objectively.  Some don’t know what data to use and even when they do they don’t know where it is or how to get it.  As a result, they often approach analysis very superficially, using the same data from the same few sources that they have been used, often ineffectively, in the past.  There is still too much guessing in RM and that is a concern for top level executives.

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“Thank you for coming up with this powerful RM course. Though I have finished the Cornell Advanced RM certification I felt your course is something I should have learned earlier.” – Abhijeet P.k Reservations Manager at Flora Group Hotels Dubai

4. Can’t draw conclusions.  Merely having good and plentiful data is not enough.  Hotel executives want new ways of attacking problems and they need RM to deliver creative tactics to deal with competitive pressures.  Many RMs lack the skill to draw logical conclusions that flow directly from information.  For that, you need people who have the wisdom to combine knowledge, experience, understanding, common sense, and insight in their analysis.  Above all, hotel executives are convinced that today’s RMs, mostly plucked from Reservations and Front Desk, do not possess the analytical skills to extract insights that actually lift profit.  One executive even described his entire 8 person RM team as too “junior”.

5. Can’t formulate a plan of action. Executing a plan thoughtfully and effectively is at the heart of any manager’s responsibility.  The process involves preparing timelines, allocating resources, assigning tasks, and implementing the plan.  Many hotel executives feel that RMs lack the ability to execute plans, mainly because, unlike F&B and other operational managers, they came from positions where they did not have to manage many people.  RMs are seen as “analyst” types who usually work alone and don’t need to manage in the traditional sense.  This perception is very worrisome as it directly impacts the career path of RMs into upper management.

I don’t think there’s anything on the above list that is surprising.  There is plenty of literature on the need to develop the current RM talent in hospitality.  What is eye-opening is that there are many who believe that hotel executives see RM as a “black-box” that they don’t really understand given the technical processes inherent in the function, but that is just not true.  The top hotel executives have very clear expectations for their RM function and they are able to articulate the deficiencies they see in the way their RMs run the function.  Does this mean that top management will become more RM-oriented in the future, which may open up the C-suite for RM types?


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Robert Hernandez, Hotel Profit Engineer

Author Info: Robert Hernandez is an expert in the field of mathematical Hotel Optimization and Analytics. He has spent the last 17 years building data-driven forecasting and optimization models for companies in over 20 different industries, from tech to tourism. Robert possesses a very unique skill set including cross-disciplinary experience, advanced mathematical and analytics skills, data transformation, industry-specific knowledge and business-process improvement expertise. Robert began his career at the Walt Disney Company in Revenue Planning. Read More+


 

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