Managing Hotel Revenue

Hotels are being pummeled by the economy, and the hospitality industry is suffering in every corner of the globe – what else is new?
In the current climate, most hotel experts are expecting RevPar (revenue per available room) to drop by as much as 11%, perhaps even more.And with occupancy rates already at all-time lows, this isn’t good news for the hotel business. In such a climate, many hoteliers will compete on rate, but this only creates a downward spiral of price competitiveness, and more pain for the long-term growth and sustainability of hotels’ revenues once the economy bounces back.
So how can hotels compete in this weak economy, looking beyond discounts? Is it possible to flourish, even during such a travel slowdown?The answer is yes! I have seen proper revenue management take a struggling hotel from barely surviving to thriving, even as the recession bites deeper.
One Miami-based property was struggling to maintain a 45% occupancy rate. After overhauling its revenue management system, occupancy jumped to 90 to 94%, with an increase in revenues of 70%. Too good to be true? Absolutely not!
A fundamental building block of revenue management, RevPar is one of the most important metrics of the hospitality industry and absolutely possible with the right system in place.For hotels, RevPar is key determinant of profitability. It’s what keeps the doors open, yet many hotels and chains still handle room occupancy and pricing in an old-fashioned and haphazard manner – reactively and rarely scientifically.
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Times like these require greater efficiencies in everything from improving customer relationships and boosting loyalty initiatives, to improving direct marketing programs and not cutting back on service. None of these, however, can be sustained without optimizing cost centers and profits. And on that basis, effective revenue management becomes an operational imperative, not an option.
It’s time for hoteliers to think beyond discounts and so I have created a list of tips on how hotels can increase their RevPar, without sacrificing margins or brand value:Supercharge your internet salesOnly web-based internet sales can compensate for what has not been sold in advance to fill your hotel. In 2009, the meetings and corporate market is slowing even more so sales efforts should be focused on the internet.
This is the channel that discount-hungry travelers are using more and more frequently when booking travel, so it is vital to manage your hotel’s web presence to gain greater visibility and better positioning… which of course, means more sales.Open your sales office at nightHotel staff cannot manage Online Travel Agencies (OTA) allotments 24/7. So if you’re not adapting in real-time and making updates as travelers are out there shopping (even internationally) when you’re asleep, you are missing out on valuable RevPar dollars.
As supply and demand fluctuate non-stop, you need to automate your pricing at night to increase your hotel’s profitability.Increase sales by changing your rates more oftenOnce the OTA allotments are filled, your hotel is closed for business, with no one to reopen the online booking allotment.
But as more bookings arrive, hotel rates should successively increase. Many hotels, however, leave money on the table because there is no one to change prices in real-time. In this economic environment where every dollar can make the difference between boom or bust, changing rates only once or twice a day does not make sense, or cents, anymore.Use today’s technology tools to sell your roomsRevenue and reservations managers get overwhelmed by day-to-day data entry. The manipulation of extranets, rate buckets, rate codes, allotments, promotions and page positioning has become so complicated that many leave rates stagnant in fear of changing the wrong codes or buttons. But no action can lead to no business.
By automating the process, staff can focus their time and energy on the ‘big picture’ such as strategy development, OTA market manager relationships, promotions, packaging, implementation, group values, etc. You know, all the good stuff.Re-direct sales from your online competitors to your hotelThe evolution of the internet and the growth of online bookings, has made every hotel’s list of direct competition grow dramatically. But online is now a lifeline for the lodgings industry.
There are many hotels to choose from in any particular area, but by increasing your hotel’s online visibility, managing complicated internet opaque channels, and having the perfect competitive rate always listed on your website while keeping rate parity and best rate guarantee, will lead to a substantial increase in sales.
Pricing competitively at all times will keep your hotel in the front of your online competitors, and will re-direct guests to your hotel, keeping your rooms full and profits ticking over.While this may sound like a lot of work, having the right revenue management system in place can wring the maximum amount of revenue from any hotel property – automatically – and free of human error.
The added benefit of having such a system is that it frees managers to control pricing and other crucial variables in a proactive rather than reactive manner. Hotels can increase their occupancy rates and manage their distribution costs like never before.Given the effects of the global economic downturn, managing RevPar intelligently and effectively is a necessity and savvy hoteliers are embracing this business practice in their own properties. Rather than discounting in an effort to increase bookings (and decreasing their profit margins in the process), they are optimizing their pricing and their online presence for increased bookings and revenue. They are thriving even as consumer and business travel continues to decline. So now the only question is – will you be one of them?
Jean Francois Mourier is CEO & Founder of RevPar Guru, a company that has developed an alternative type of revenue management and real-time pricing solution (combined with automated online distribution) to help hotels maximize occupancy and increase their profits. The company’s Yield Dynamic Price Engine, an integrated revenue management and pricing solution, adds unprecedented power and real-time adaptability to the pricing process, leaving managers more time to run their hotels. Reach him at jfmourier@revparguru.com or visit www.revparguru.com for more information about the company’s services.

REVPAR GURU recognizes the growing need for a competitive pricing system that updates the rates automatically in real time. It is reacting to the changing consumer purchasing behavior and delivers results that are based on current supply and demand instead of poor performing forecasts.
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Resident or hotel managers are responsible for the day-to-day operations of the property. In larger properties, more than one of these managers may assist the general manager, frequently dividing responsibilities between the food and beverage operations and the rooms or lodging services. At least one manager, either the general manager or a hotel manager, is on call 24 hours a day to resolve problems or emergencies.
Assistant managers help run the day-to-day operations of the hotel. In large hotels, they may be responsible for activities such as personnel, accounting, office administration, marketing and sales, purchasing, security, maintenance, and pool, spa, or recreational facilities. In smaller hotels, these duties may be combined into one position. Assistant managers may adjust charges on a hotel guest’s bill when a manager is unavailable.
Lodging managers are responsible for keeping their establishments efficient and profitable. In a small establishment with a limited staff, the manager may oversee all aspects of operations. However, large hotels may employ hundreds of workers, and the general manager usually is aided by a number of assistant managers assigned to the various departments of the operation. In hotels of every size, managerial duties vary significantly by job title.
General managers have overall responsibility for the operation of the hotel. Within guidelines established by the owners of the hotel or executives of the hotel chain, the general manager sets room rates, allocates funds to departments, approves expenditures, and ensures expected standards for guest service, decor, housekeeping, food quality, and banquet operations. Managers who work for chains also may organize and staff a newly built hotel, refurbish an older hotel, or reorganize a hotel or motel that is not operating successfully. In order to fill entry-level service and clerical jobs in hotels, some managers attend career fairs.
Because hotels are open around the clock, night and weekend work is common. Many lodging managers work more than 40 hours per week, and may be called back to work at any time. Some managers of resort properties or other hotels where much of the business is seasonal have other duties on the property during the off-season or find work at other hotels or in other areas.
Lodging managers experience the pressures of coordinating a wide range of activities. At larger hotels, they also carry the burden of managing a large staff and finding a way to satisfy guest needs while maintaining positive attitudes and employee morale. Conventions and large groups of tourists may present unusual problems or require extended work hours. Moreover, dealing with irate guests can be stressful. The job can be particularly hectic for front office managers during check-in and check-out times. Computer failures can further complicate processing and add to frustration levels.

Hotels increasingly emphasize specialized training. Postsecondary training in hotel, restaurant, or hospitality management is preferred for most hotel management positions; however, a college liberal arts degree may be sufficient when coupled with related hotel experience or business education. Internships or part-time or summer work experience in a hotel are an asset to students seeking a career in hotel management. The experience gained and the contacts made with employers can greatly benefit students after graduation. Most degree programs include work-study opportunities.
Community colleges, junior colleges, and many universities offer certificate or degree programs in hotel, restaurant, or hospitality management leading to an associate, bachelor, or graduate degree. Technical institutes, vocational and trade schools, and other academic institutions also offer courses leading to formal recognition in hospitality management. In total, more than 800 educational facilities provide academic training for would-be lodging managers. Hotel management programs include instruction in hotel administration, accounting, economics, marketing, housekeeping, food service management and catering, and hotel maintenance engineering. Computer training also is an integral part of hotel management training, due to the widespread use of computers in reservations, billing, and housekeeping management.
More than 450 high schools in 45 States offer the Lodging Management Program created by the Educational Institute of the American Hotel and Lodging Association. This two-year program offered to high school juniors and seniors teaches management principles and leads to a professional certification called the “Certified Rooms Division Specialist.” Many colleges and universities grant participants credit towards a post-secondary degree in hotel management.
Lodging managers must be able to get along with many different types of people, even in stressful situations. They must be able to solve problems and concentrate on details. Initiative, self-discipline, effective communication skills, and the ability to organize and direct the work of others also are essential for managers at all levels.
Persons wishing to make a career in the hospitality industry may be promoted into a management trainee position sponsored by the hotel or a hotel chain’s corporate parent. Typically, trainees work as assistant managers and may rotate assignments among the hotel’s departments—front office, housekeeping, or food and beverage—to gain a wide range of experiences. Relocation to another property may be required to help round out the experience and to help grow a trainee into the position.
Work experience in the hospitality industry at any level or in any segment, including summer jobs or part-time work in a hotel or restaurant, is good background for entering hotel management. Most employers require a bachelor’s degree with some education in business and computer literacy, while some prefer a master’s degree for hotel management positions. However, employees who demonstrate leadership potential and possess sufficient length or breadth of experience may be invited to participate in a management training program and advance to hotel management positions without the education beyond high school.
Large hotel and motel chains may offer better opportunities for advancement than small, independently owned establishments, but relocation every several years often is necessary for advancement. The large chains have more extensive career ladder programs and offer managers the opportunity to transfer to another hotel or motel in the chain or to the central office. Career advancement can be accelerated by the completion of certification programs offered by various associations. These programs usually require a combination of course work, examinations, and experience. For example, outstanding lodging managers may advance to higher level manager positions.
Renewed business travel and domestic and foreign tourism will drive employment growth of lodging managers in full-service hotels. The numbers of economy-class rooms and extended-stay hotels also are expected to increase to accommodate leisure travelers and bargain-conscious guests. An increasing range of lodging accommodations is available to travelers, from economy hotels which offer clean, comfortable rooms and front desk services without costly extras such as restaurants and room service, to luxury and boutique inns that offer sumptuous furnishings and personal services. The accommodation industry is expected to continue to consolidate as lodging chains acquire independently owned establishments or undertake their operation on a contract basis. The increasing number of extended-stay hotels will moderate growth of manager jobs because these properties usually have fewer departments and require fewer managers. Also, these establishments often do not require a manager to be available 24 hours a day, instead assigning front desk clerks on duty at night some of the responsibilities previously reserved for managers.
Additional demands for managers is expected in suite hotels, because some guests—especially business customers—are willing to pay higher prices for rooms with kitchens and suites that provide the space needed to conduct small meetings. In addition, large full-service hotels—offering restaurants, fitness centers, large meeting rooms, and play areas for children, among other amenities—will continue to provide many trainee and managerial opportunities.

Freelance writer for over eleven years.
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