ITHACA, New York—The future of revenue management was a topic of discussion during the Cornell Hospitality Research Summit last week.
Cornell professor Sheryl Kimes disclosed the results of an international study of revenue managers that delved into what form revenue management is likely to take in the coming years. Respondents, she said, expect to see an increased amount of forecasting while the process becomes more technology-driven.
“Pricing is going to become more analytical,” she said, adding it will become more commonplace to see different pricing for different distribution channels.
Also, analyzing hotel performance is likely to be based on more than just the oft-quoted metric of revenue per available room, according to Kimes’ survey. Instead, gross operating profit per available room was the metric expected to be the most important measure in the future.
She said she mentioned to officials at STR and PKF Hospitality Research that she would like to get her hands on those numbers.
“After they got off the floor laughing, they said they would like to get it once a year,” Kimes said.
Tomorrow’s revenue management
David Roberts, senior VP of global revenue management at Marriott International, said hoteliers need to spend more time on forecasting. “Everything we do in revenue management is about forecasting,” he said.
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Hoteliers have a wealth of customer information at their fingertips: what credit cards the customer uses; how many kids they have; whether they drive or fly frequently, etc. “It’s a little Big Brother-ish,” he said. Collecting such data is the easy part, he added. “The hard part is: ‘How do you make money off that?’”
Roberts expressed frustration that hotels were not making better use of the information.
“If you know your customers, then you have the ability to sell and market directly to them,” he said. “That’s the Holy Grail of marketing. … It sounds fabulous. We don’t do it.”
Addressing the analytical/psychological side of revenue management, Roberts said revenue managers also will need to do a better job of taking into account how the competition will react to rate moves.
“If I drop my rates, it takes about 15 seconds for my competitors to drop theirs,” he said. “If we all dive to the bottom, we’ll all lose money.”
Key qualities
Roberts and Kimes discussed during the panel presentation what employers will be looking for in future revenue managers.
Leadership, communication and analytical skills will be key. Kimes summed it up as:
“Geeks who can speak.”
Such qualities will be important, because revenue managers increasingly will be called on to interact with all different levels of the company, she said.
“Ten years ago, you didn’t have to know what the other (departments) were doing,” Kimes said. “Today, you can’t be successful without that.”