Considerations for strategic revenue management

IDeaS works globally with thousands of clients on revenue performance challenges spanning from reviewing tactical decisions at individual hotels to long-term future planning for large-scale hotel groups. These client interactions have afforded us a big-picture view of not only the obstacles that hotels face, but also the opportunities that can be harnessed with the right approach.

The roadmap to long-term, positive revenue performance can be strategically and tactically achieved in the short and long term with several key steps and considerations in place. Our expansive client experiences have allowed us to develop this Revenue Development Roadmap to help supplement your strategic revenue planning and fuel Total Revenue Performance.

Obtain Executive Buy-In and Create the Vision

Effective revenue management starts at the top and its vision and revenue management goals must be shared by the executive team and board of directors. When you are presenting your revenue management strategies, it is important to use key points such as returns on investment and profitability that resonate with the executive audience. Highlight specific examples where revenue opportunities are being left on the table, animating revenue management for those unfamiliar with its relevant day-to-day activities.

Use example situations that are at the top-of-mind for everyone, such as a key revenue generator or frequently communicated problem. Describe how revenue management can improve revenue results or poor performance and drive profitability.

Approaches that involve reams of data or extensive spreadsheets may overwhelm your audience and are best avoided. This risks losing your executive audience or diverting focus to insignificant details that detract from your main message. Stay focused on customers and make your point using clear and concise illustrations of the impacts.

Best practices include creating a concrete roadmap outlining your objectives and cor responding deliverables that achieve buy-in with your revenue management vision. Once everyone is aligned on the same strategic path, you can garner the commitment and resources needed to start out strong.

Create a Roadmap Outlining Your Short, Medium, and Long-Term Goals and Objectives

Once the attention of the executive team has been gained, a Revenue Development Roadmap will ensure that you can work effectively toward achieving your goals and objectives. Outline your roadmap using key milestones that are relevant to the executive team. These are achievable objectives that allow you to track your progress. This will allow you to look back on the roadmap for tangible and measurable results.

Total Revenue Performance spans across the entire hotel, making it important to enlist the support of other departments in your organization. The more your peers feel they have contributed towards your plan, the more likely they will provide support throughout its execution and commit for the long-term benefits.

Review your completed roadmap with the executive team for an official sign-off, which ensures you are working toward mutual goals.

Building Culture through Education

Total Revenue Performance goes beyond the revenue manager to permeate every department at different levels of focus and intensity. General Managers often become the key to success. If they “get it,” they will drive their teams to also buy into the revenue management philosophy and generate cultural awareness of your goals.

Revenue management training should extend to general managers to help them understand the core concepts of revenue management and its benefits. A revenue management course focused on these principles is the beginning of an effective revenue culture. It also provides a starting point for a modular revenue academy.

A modular revenue academy allows you to create focused sessions or workgroups not only for revenue managers and general managers, but also for directors of sales and marketing, and others in the organization who would benefit from increased knowledge and awareness of revenue management principles.

Once an education system is established, the next phase in building a culture is ensuring there is continuity and sustainability within the revenue teams through revenue management career paths.

Revenue management should be the beginning of creating future leaders for your company. They understand the customers, financials, and demands – all carrying long-term knowledge benefits for many leadership positions. Think about your revenue management structure and consider whether revenue managers need to be full-time or on-site. Clustering, regionalization and centralization can address requirements and optimize capabilities from revenue teams across your most valuable assets, allowing you to create growth opportunities within the revenue team.

Addressing the Big Data Challenge

The internet, mobile, online distribution and dynamics that have come with advancements in big data have given us infinite data points to analyze and optimize. If this influx of data is evaluated across an estate of hotels, in addition to social media, online reviews and other recent developments, it can seem like an overwhelming challenge to organize. This data, however, carries a wealth of opportunity that can help you achieve your goals.

Today’s interconnected environment requires the consideration and analysis of multiple data points to determine proper revenue strategies. Utilizing available technology can uncover hidden revenue opportunities and trends in the data. Visualization is also important, translating data into metrics with actionable outcomes.

Identify and measure challenges and opportunities by creating key performance indicators and meaningful dashboards. Large amounts of data provides valuable information about areas like price, elasticity of demand and revenue – areas that cannot be effectively analyzed when you only skim the surface of available data – and can help hotel operators and owners make more informed revenue management decisions.


Similar to big data analysis, enhanced automated processes relating to demand, reservations, price changes and inventory optimization are happening fast. To free up time for analysis and to reduce the risk of human error, it is critical to automate all possible processes.

This automation allows revenue managers and stakeholders to focus on strategic challenges and opportunities, dedicating more of their valuable time to achieving the key milestones on the revenue roadmap.

In fact, implementing an automation strategy should be an integral part of your revenue roadmap, and continuous improvement and development of any existing automated solutions should be recurring milestones within your plan.

Decisions can then be based on these analytics and backed up by real-time data, allowing conversations to mature and center on demand, price position and yield mix.

Going Beyond Rooms

If you have not tackled other revenue departments yet – now is the time. Culture and technology are starting to fall into place for areas beyond rooms, and the leading hotel groups have addressed, in large part, the challenges outlined above and are now moving on to the rest of the hotel assets.

With group business representing 40-60 percent of a hotel’s revenue potential, it is critical that hotels identify ways to maximize this stream. By bridging the gap between sales, catering and revenue management, these services will help you understand how to leverage function space data and pinpoint areas for improvement.

When it comes to dealing with non-room departments, you can follow the same principles as in rooms: executive buy-in, culture and education, big data, and automation. These exist just as much, if not more, in other areas of hotels. Start educating your front-line revenue managers in the basics of Total Revenue Performance. Ideas and approaches to challenges will start bubbling up from the bottom while you are tackling it from the top.

Similar with rooms, the revenue management cycle starts with data collection and analysis. Build data acquisition capabilities and process alignment in your non-room departments as soon as possible. This will be the greatest challenge in the short-term, but it will bring benefits further down the line. Start by testing some basic principles to demonstrate your case for going beyond rooms, such as seasonal rates for food and beverage, forecasting in function space or data analysis for spa.

Revenue optimization is still in its infancy, and the possibilities for growth by incorporating big data, analytics and technology are endless. Total Revenue Performance should be the objective of all forward-looking revenue leaders. By ensuring that the above points are addressed in your organization, you make a solid start on your journey to continually drive revenue performance and profitability over the long-term.

More Information

 Did you know that automated revenue management tools help hotels achieve an average uplift of 6% and 5% increases in RevPAR and ADR, respectively.

Are you ready to push your revenue target higher for next year? Download the ebook – The 2017 Smart Decision Guide to Hospitality Revenue Management to find out how to select the right revenue management solution and/or services for your organization.

Download it now.

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