Hotel Profit Discovery

Why I Push for More “Advanced” for Revenue Managers

Writing can be very therapeutic and this is one of those posts where I will vent.

Within 15 minutes of arrival, on the very first day of my first consulting gig for a hotel I was told by the company’s CFO to keep my analysis at “the lower end of the sophistication range.”  He explained that the hotel industry has many “service” types that rose to managerial positions without getting much exposure to business analysis techniques and would therefore not be able to follow a complex or mathematical approach to problem solving.  I thought it was interesting that this company was paying ME to teach ME how to think more like THEM, when the only reason they should be paying me is for me to teach them how to think like I do.

Since that day, nine years ago, I have had hundreds of conversations with GMs, Heads of RM, owners, and other hospitality “leaders” where I have been told in very direct terms to DUMB IT DOWN as much as possible.  For example, I have been approached by several large hotel companies (some global) that have wanted to train their RMs on the science of the profession, but after reading through the lesson topics of my course(which has been successfully completed by hundreds of RMs), they have been scared away because they believe my course is “above their heads.”  I’ve also been told by countless GMs that their RMs don’t need too much analytical skills, that it’s better for them to take “baby steps” because their systems should do the “thinking”.  Worst of all, I’ve spoken to too many Heads of RM who don’t believe that learning anything other than Distribution channel management is a worthwhile investment.

I never really gave in to the “dumb it down” mentality.  It actually makes me furious when I hear it. Basically, I don’t buy into it for three simple reasons.  The first is that research has proven that the deepest learning happens when students or managers are forced to reach beyond their capabilities and to be challenged to the point where they are completely lost.  Having to struggle to understand is actually good. Second, once you start “dumbing it down” you can always dumb it down more and more until there’s no point to your training and analysis.  I find a lot of RM training and certification providers guilty of this.  However, the biggest reason is because I would be playing a part in destroying my own business.  Let me explain.

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There is very little future value in the clerical(distribution) side of RM. As inventory and channel management systems become even more sophisticated, the data entry/inventory control side of the RM profession will lose value exponentially.  Therefore I want to stay away from the “dumb” aspects of RM.  What will increase in value in the future is the Predictive & Analytics side of the RM profession.  This is the “Advanced” side of RM and it’s where I focus all of my efforts.

Let’s look at some data that I extracted from indeed.com, a website where you can search for average US salaries by job title.  The grid below shows the job titles that pay above and below the hotel RM job.  As you can see, the more clerical jobs, those that mirror a typical RMs distribution responsibilities, have the lowest value. In fact, Data Entry, has been named a Top 10 disappearing job by the US Bureau of Labor Statistics.  Obviously this suggests that RM salaries will stagnate if the profession remains mostly a clerical/distribution role.  On the other side are the “predictive” jobs which include pricing, planning, math and data focused roles. All of these jobs pay more than the average hotel RM.  Yet, the sophisticated definition of hotel RM, the non-dumbed down version, the OWL version, resembles more the jobs on the right side of the grid and actually have very little to do with the left side.  That’s why I focus on taking RMs further to the right than showing them how to become more efficient at staying on the left.  I fight the good fight to increase the value of the RM profession so that my value increases as a result.

rm_range

Download this grid in Excel (21KB)

However, this still does not answer one question – why are the people in charge of developing Revenue Managers so unwilling to challenge their RMs?  The innocent answer is that they don’t know any better.  A more cynical answer is that they know it will cost them if their RMs move to the right.

I believe that with the right type of training and support most Revenue Managers can become a world class Pricing and Profit Engineer and some can even become Hotel Data Scientists.  I have dozens of stories that prove that I am right.  However I’ll have to leave those for later.


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Robert Hernandez, Statistical Analysis and Data Mining for Revenue Growth Robert 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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