The Role of the Revenue Manager is more Tactical than Strategic

REVENUE MANAGEMENT has become a very important and talked about subject in the hotel industry today. To begin with, let’s first understand what it means in layman’s terms. Revenue Management essentially is the process of utilising the capacity of any available facility or infrastructure to the fullest and generate the maximum possible revenue out of it.

REVENUE MANAGEMENT has become a very important and talked about subject in the hotel industry today. To begin with, let’s first understand what it means in layman’s terms. Revenue Management essentially is the process of utilising the capacity of any available facility or infrastructure to the fullest and generate the maximum possible revenue out of it. It means, that one needs to understand the demand of the business in advance and then compare it with the available supply for a given point of time and then try and produce highest possible revenue out of that available inventory.
The reason the industry is emphasizing more and more on this subject is because of the nature of the product that we deal with. Hotel space, like airlines seats are a highly perishable commodity and hence unsold inventory will remain unsold forever. It is a tremendous opportunity cost that the industry can ill afford to absorb. In earlier times, the market environment was far less volatile compared to what we observe today and thus the business cycles were also far more predictable.
Today, demand all of a sudden can come from nowhere and supply is also getting added much faster than ever before. Source of business is becoming more and more diverse and channels of acquiring business is evolving at break neck speeds. What does it all mean? It means that we need to manage this aspect better and more efficiently and so, all the focus is on revenue management, the science and art of maximising revenue in a profitable manner.
A revenue manager has to be wary about lots of information and factors. He or she has to have lots of historical data, awareness about the micro-market the hotel is operating out of; the macro-economic condition of the state, country and even the world; new trends which influence customer choices and thus the decision making process and any possible threat out of new competition or any disruptive technology so to speak. That’s why the role of a revenue manager has become more tactical than strategic. One has to be always on the ball to effectively optimise the business opportunity that lies ahead at any given point of time. Today, improved and sophisticated technology is capturing as well as generating a lot of data about all kinds influencing factors of the business, but the success lies in the correct interpretation of the data. This will help the business make a robust execution plan to get the best out of any business opportunity.
As we move ahead, every business will become more and more competitive, hence it only makes sense to take proactive steps to ensure resource utilisation to the last drop. Effective revenue management is certainly one of sure shot way to achieve that.
The author is General Manager, Country Inns and Suites by Carlson, Gurgaon Sector 29.


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