Hospitality is a multi-billion dollar industry and much of the success of hotels around the globe can be attributed to hotel revenue managers who help drive profits. A hotel revenue manager incorporates innovative strategy and high-level analytics in order to impact the number of rooms a hotel is able to book and ensure its survival against competitors.
The Importance of Forecasting
A revenue manager must accurately anticipate the expected revenue generated from room bookings for specified periods of time. This complex task involves analyzing historical data, including the rate of occupancy during similar time periods, consideration for special events or conventions in the area, and the current rate of occupancy. Accuracy in forecasting is overwhelmingly important as it is the primary driver of both room pricing and allocation decisions made by property management. Miscalculations must also be included in the forecasting report in order for the hotel to best prepare for the financial impact of any inaccuracies.
Determining Room Rates
Determining room rates is a key responsibility for a hotel revenue manager. This can be a delicate balancing act, as setting room rates too high will deter potential guests, while setting rates too low may cause the hotel to operate at a loss. Revenue management software can help a manager determine room rates by analyzing information, such as historical data and seasonal influences. Setting the right room rate can also have further impact on other aspects of the business. For instance, as more guests are attracted by reasonable room rates, the more money they may spend at the property's restaurant establishments, on room service or utilizing other property amenities.
Assessing the strengths and weaknesses of a hotel and its competitors is a common practice in the hospitality industry: Because of this, a critical function of a revenue manager is to regularly create competitive analyses. This involves detailing strategic comparisons between their property and rival hotel groups. This may involve comparisons of room inventory, restaurant outlets, and any other sources of revenue. Revenue managers and hotel leadership will use this information to help drive future decisions or improve their organizational practices.
A revenue manager must also possess a unique set of soft skills in order to be effective in their role. A revenue manager must have exceptional communication skills, as they will routinely present to operating committees and other property leaders. He must also be comfortable with sales, as he will be tasked with making recommendations to sales directors, general managers and other executives who must support pricing strategies put forth by the revenue manager. Additionally, a revenue manager must be comfortable acting as a change agent who is not afraid to embrace and implement creative strategies to increase hotel profits.
- XHotels: Hotel Revenue Manager Job Description
- 4Hoteliers: What Makes a Good Revenue Manager?
- Revenue Your Hotel: Effective Room Forecasting is Key to the Hotel's Future Performance
- ECornell: Forecasting and Availability Controls in Hotel Revenue Management
- Cornell Hotel School: The Hotel Competitor Analysis Tool (H-CAT): A Strategic Positioning Tool for Managers
- Bureau of Labor Statistics: Lodging Managers
- Photo Credit Chris Clinton/Photodisc/Getty Images
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