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Analytics for Strategic Decision Making

Understanding Hotel Analytics

While it is undeniable that there is a tremendous amount of data generated throughout the guest journey, for the vast majority of Hoteliers data analytics still remains an unexplored and overlooked domain.  Most of the time they will find themselves trying to find the right balance between improving guest satisfaction and increasing profits. With both competition and customer requirements growing, they would generally rather focus on guest satisfaction than crunching numbers and data. Analytics often fall way down the daily operations list. Almost every industry is supported by software and if a business doesn’t have a deep understanding of their operations, customers and competitors, it is going to be hard to prosper and even harder to profit.  Within the hospitality industry, competition is fierce with a constant influx of new supply and the continuing increase of optionality from the sharing economy. A hotelier’s willingness to both collect and analyse data can have a massive impact – not just on profitability but on reputation as well.

The aim of this article is not to provide a review of current data analytics and technologies associated with them, but it rather focuses on what data & data analytics is all about, what makes incorporating them so important and the benefits it can offer thought the entire organisation.

The Importance of Data

The significant role of data and data analytics is becoming an extremely important part of hotel management – and that too for a good reason. Incorporating data analytics ensures that you will be able to leverage on the information collected thought the entire customer journey and utilise it in order to improve service, revenues and profit margins. This will eventually lead in creating a culture where decisions are based on facts rather than gut feeling and moves the whole organisation from a reactive, problem solving approach to a more forward thinking and proactive tactics. Finally, this will lead in eliminating the current silos that exist in many hotels and ensure that everyone works from the same set of numbers and that strategies are aligned to serve the business as a whole.

Often viewed as “just information” Hoteliers can overlook that when data is analysed in the right way it can provide the answers to crucial business questions such as how to ensure revenue optimization and increase occupancy.

Hotel operators are beginning to recognize the importance of data and any hotel with a website or some social media presence already has access to significant quantities of data. However, there is a real need, not only to understand data collection but also how-to analyse it.  For example, Google Analytics provide valuable information about how a website is performing and analysing customer feedback data can increase return on investment.

Like all businesses, hotels, too, are constantly generating data – important data that can be leveraged to not only improve the customer experience, but also bring about a significant impact in the revenue and profits of the business. Whether or not your hotel has the resources of a five-star international chain, it is essential for you to start collecting and analysing the data gathered on a daily basis. Using the latest software and systems will allow you to collect important and high quality data in a timely manner, and enable you to use this data to your advantage before it becomes obsolete.

Data analytics technologies will also allow you to make informed and data driven decisions that will prove to be beneficial for your hotel business instead of making decisions on a whim that may or may not be in the best interest of your business. Equipping your operations with the right technologies will also reduce the possibility of errors since all of the decisions that you make for will be based on insights of previous experiences instead of being based on what you feel or results that you expect without any real basis.

One of the biggest challenges faced today in trying to create and implement the right data culture is the reliance on legacy, stand-alone systems which handcuffs their ability of Hoteliers to aggregated and analyse information.

System integration is crucial to ensure that cross departmental data processing necessities are met and total spend can be accurately mapped. A seamless system will ensure constant communication between all outlets and provide with accurate, timely and complete information. Some of the internal systems in any hotel today include: Property Management System, Revenue Management system, Customer Relationship Management, Sales and Catering systems etc., while some of the external sources of data include: STR data, Social media, Rate shopping, Reputation management system etc.

It is all about Data!


Big Vs. Small Data

At the core of it, big data is a large set of data that, through analysis can reveal trends whereas small data exists on a more manageable scale, generated from sources such as a website or a hotel Property Management System.

Big data is a term that is often misunderstood but with big data the word “big” actually means large, thousands or millions of data points in common and almost always coming from external sources to the hotel.  Examples of big data are weather, traffic or social media data – giant pools of information that can be sorted to find the relevant information required. Combined with internal data, they can provide a holistic picture and help improve marketing efforts, make loyalty programs more effective, better guest profiling and accurate personalisation, enhanced pricing strategies, efficient inventory management etc.

Small data, while without the name impact of small data, is just as valuable and when properly structured becomes actionable information that can make a quick, significant difference to operations.

But is it all about size? While a big set of data can provide a more thorough and in-depth view, what is even more important is data quality.

The major pillar behind any accurate and valuable analysis is accurate data. It is, therefore necessary that hotels should keep proper records of past events, trends, guest preferences etc., in order to project accurately into the future. Although the diversity of the data points could make the task even challenging, having a data culture in your hotel will make it easier as the importance of accurate data is easily understood and implemented by everyone.

Ensuring that data stored by hotels is accurate can provide significant business value and can not only improve guest satisfaction but lower operational costs and maximise profits.

Data Analytics / Revenue Management

Structured Vs. Unstructured Data


In addition to the size of data (big and small) there are two ways that data is compiled;

Structured Data – is comprised of data that is clearly organized, labelled or categorized. They provide a streamlined way to easily filter out the data in order to create fast and actionable insights.  For example, when a new reservation is added to your property booking system, the information entered on the guest such as arrival and departure dates, room type etc., can be easily filtered to better understand booking tends due to the data being sorted or structured.

Unstructured Data – is data that is presented in a disorganised way that makes filtering and searching difficult, but still have the potential to provide valuable insights to a hotel. In most cases, unstructured data come from external sources. An example of this type of data is Review and ranking info from OTA’s or TripAdvisor, although they are data that cannot be collected, stored and sorted easily, they are nevertheless an extremely valuable aid to decision making.

Types of Data Analytics

While we spoke enough about data and their different forms let’s have a look at the different types of data analytics and what differentiates them.

Descriptive Analytics – is the most straightforward and traditional form of analytics for generating insights. They can be used to describe past events and trends or provide with a picture of how business is performing for the future. Descriptive analytics is used in everyday hotel operations for tasks like populating pick-up reports, performance reports, occupancy statistics etc.

Predictive Analytics – go a step further, they are a form of advanced analytics which is used to make predictions about unknown future events. Predictive data uses large groups of past data to analyse parts trends and predict what may happen in the future.  An example of this is Forecasting. Past performance data are used on a very detailed level, usually by day of the week, by segment to provide a guide in producing an accurate estimation of how a specific month, day or segment will perform in the future.

Prescriptive Analytics – go even further than predictive analytics. While Descriptive analytics show what happened and Predictive analytics indicate what could happen, Prescriptive analytics try to guide the process of what should be done in a specific occasion. With the assistance of technologies such as data mining, statistics, machine learning, etc., they analyse current data to make predictions about the future. They are a form of advanced analytics that incorporate algorithms to predict unknown future events.  They include big data, such as weather forecast, airline statistics, review scores, ranking etc., to provide with the best possible course of action.


Applications of Hotel Analytics

Data analytics can be a powerful tool for any hotel, from developing customer centred marketing and pricing strategies to increasing ROI.

Personalized marketing and loyalty analyticsby tracking and processing guest behaviour hotels can provide them with personalised offers that can be more effective. An example of this application would be sending an email to a frequent guest to give them a coupon for a free drink on their next visit.

Revenue Management – is the application of disciplined analytics that predict guest behaviour at the micro-market level i.e. selling the right product to the right guest at the right time and the right price. The essence of this application is the understanding of a guest’s perception of value.

Operations Analytics – Energy consumption accounts for a big chunk of the utility costs for a typical hotel.  Data can help hoteliers to keep costs controllable without sacrificing guest comfort by using energy more efficiently. Statistics in operations can also be used to better schedule and manage human resources. This will lead not only to saving in payroll but also in increased customer service by efficient staffing

Operations Analytics – Energy consumption accounts for a big chunk of the utility costs for a typical hotel.  Data can help hoteliers to keep costs controllable without sacrificing guest comfort by using energy more efficiently.

Investment Management – Another way to use analytics for the hotel industry is for financial performance.  An example of this would be refurbishing the lobby and some of the rooms and then monitoring the difference (if any) in booking rates and customer satisfaction to make a data driven decision on future investment.

Today’s digital environment had brought about a new generation of hoteliers looking to monetise their data by acquiring actionable insights.  Hotels now have an abundance of new data than previously seen with paper transactions and manual processes and hotel professionals can now gather information through purchased or leased resources.

Data analytics are now much more manageable and distributed analytics can be implemented to increase performance, guest loyalty, reduce waste and improve sustainability. The key to effectively enhancing a guest’s experience through analytics is to collect the data in a non- invasive way, using information from past bookings, third parties and various forms of feedback. Hotel data and analytics are key contributors to building stronger relationships with guests and ultimately driving better guest loyalty, revenue and profitability.

The Role of Emotional Intelligence in Revenue Management

While writing extensively on Total Revenue Management over the last months, there is one subject that always felt germane and inseparable from the efforts of any Revenue Management professional to levitate their roles and acquire the commercial status that is the natural progression for this key business focused position. That subject is Emotional Intelligence and it provides the means to balance personal and social skills and bridges the gap to attaining the desired leadership status.

As we’ve discussed by now, today’s revenue managers have to deal with a lot more than just systems, rate management and reporting. More than analytical skills, revenue managers need to possess communication skills, leadership skills, and they also have to strive to be influential and motivational.

This is where emotional intelligence plays a central role in the career of a revenue manager. If a person in such a position is incapable of being empathic about the challenges of others, and if they’re unable to convey how valuable they are & the importance of their contribution, then they’re at risk of failing to help others unleash their full potential, which directly affects their success and the performance of the hotel business as a whole.

To understand Emotional Quotient or Emotional Intelligence, let’s dive deeper into the subject and see why it’s so vital for revenue managers to develop this essential skill.


What Exactly Is Emotional Quotient/Intelligence?

Emotional Quotient, most commonly known as Emotional Intelligence, also referred to as Emotional Intelligence Quotient, in its simplest terms, is the ability that individuals have to both recognise their own emotions and those of others.

It’s also the ability to differentiate and label feelings correctly, to use this emotional information to guide both thinking and behaviour, and to manage emotions so they don’t become a hindrance in achieving our goals.

Emotional Intelligence and empathy are terms that are often used interchangeably, and even though empathy is a big part of EI, EI is a lot more than just being able to relate to other human beings or to connect one’s own personal experiences to those of others to understand their position at any given time.

Emotional Intelligence encompasses self-awareness, self-regulation, motivation, empathy, and social skills. These five essential pillars of emotional intelligence are what make it so vital for people in positions of leadership.

Studies have shown that people with greater EI enjoy better mental health, they often show high job performance, and they possess great leadership skills.

Daniel Goleman, author and science journalist, gave EI its popularity in 1995 by writing a book about it, and it’s him who indicates that Emotional Intelligence as a whole accounts for 67% of the abilities that are considered to be necessary for leaders, which in fact matters more than technical expertise and even IQ.


Characteristics of A Leader with High Emotional Intelligence

The emotionally intelligent Revenue Manager will stand out among others because they practice the five pillars of EI that I mentioned above, so let’s look at each of them in turn and explore other important characteristics.

Self-awareness is one of the most important characteristics of the intelligent leader and it involves being aware of one’s own strengths and weaknesses, and understanding one’s own journey. This will allow them to shape their path while guiding others along the way.

Self-regulation goes hand in hand with self-awareness and it’s all about weighing your words before speaking. A good leader is always able to do this because he recognizes the impact he has on others. Because of this, they recognise the importance and the impact of words, which allows them to use them in a positive way.

Emotionally intelligent leaders also seem unable to lose motivation. They always strive and work towards their goals in a consistent and resilient way. This sort of behaviour has a contagious effect on others, which is why this kind of leader is often so successful at leading by example. This is a crucial element when we consider the competiveness of the hotel industry. Strategies and tactics need thorough and constant evaluation to reflect changes and any deviations need to be seen as a motivating factor and an opportunity to adapt and evolve, rather than failure.

Empathy is yet another essential trait, and it’s the ability of putting oneself in someone else’s shoes, which is what a successful leader should always be able to do. This leads to healthy social skills, which allow leaders to build a rapport with others and to communicate efficiently. The daily operations in Revenue Management can impact and influence decisions in other departments such as Sales, Marketing etc. A highly emotionally intelligent Revenue leader needs to comprehend the effect their decisions have in order to communicate them effectively while anticipating resistance will enable them in proactively resolving possible conflicts.
Another vital characteristic of the emotionally intelligent leader is that they are able to balance their work and their personal life. They recognize the importance of taking care of themselves, and they also encourage employees and colleagues to do the same.
This type of leader is also capable of putting setbacks into perspective in order to deal with them accordingly and appropriately. Emotionally intelligent leaders recognize the learning and improvement opportunities that lie within failures and disappointments. They engage with constructive criticism in order to learn from the experience and then move on to the next task.

Leaders with high EI are better at being fair, both to themselves and to others. They recognize value in others, and they judge employees objectively, which prevents an unbalanced workplace morale.
Assertiveness is another of the main traits of emotionally intelligent leaders. They can balance the need for respect with the need to voice their opinions and points of view in such a way that they share what they deem important without feeling embarrassed or attacked if they’re met with opposition.

Leaders with low Emotional Intelligence can be easily overwhelmed by trivial matters and they are not the best managers of time and personal energy, as they tend to devote it all to small battles.

An emotionally intelligent leader effectively recognizes that micromanaging is a big distraction and that there are better ways of achieving long-term business goals.

These are only a few of the most important characteristics that usually define the emotional intelligent leader. Much more can be said about the great qualities of emotionally intelligent individuals in general, but these are the most notable and essential traits from which we can learn quite a bit.

The Role of Emotional Intelligence in Revenue Management

Why Is Emotional Intelligence Relevant to a Revenue Manager?

If we consider the characteristics of emotionally intelligent leaders, every single one of them is relevant to revenue managers because each one represents a strength that can help them do their job better and generate higher revenues.

Managers who are emotionally intelligent really do make a difference in both outcome and attitude of every employee under their leadership. This, in turn, makes employee profit performance grow exponentially.

This is due to the fact that emotional intelligence allows revenue managers to solve conflicts in a constructive manner, and to establish a relationship of cooperation and trust among team members.

What’s more, such leaders use communication so effectively, that the team runs like a well-oiled machine; motivated and energised to perform their tasks to the best of their ability.

Employees under this kind of constructive and effective leadership often feel like their contributions matter and that their work is valued, which leads them to go above and beyond their duties.

The combination of all these factors has an incredibly positive effect on a company’s performance and success because it creates a workplace environment where everyone works together and is collectively motivated to achieve the same goals.


Ways to Increase Emotional Intelligence

Now that we have established how important EQ is for everyone in a leadership position, let’s see how we can increase our emotional intelligence and become better, more assertive people.

Being capable of understanding one’s own emotions is essential because this is what makes it possible for us to manage them accordingly. This may seem difficult, but the only thing you need to do to start understanding your feelings is to be aware of them. Take a moment to think about how you’re feeling at any given moment and try to trace the feeling to its roots.

We often tend to dismiss our feelings too quickly because sometimes they seem to be in the way, but the truth is that they’re more of a tool than a hindrance.

Understanding our emotions leads us to managing them. One of the great qualities of emotionally intelligent leaders is that they are able to pause whenever they’re feeling an intense emotion, whether positive or negative, and think before acting on it.

Of course, managing emotions can be particularly challenging for certain people, but the trick is to learn how to take a moment by shifting your emotional state whenever necessary. To do that, you can take a walk, do breathing exercises, vent to someone, listen to music, or anything else that can help you regain composure.

Managing emotions is also about correcting, so the goal is to learn how to give your feelings their place so that they don’t get in the way of your decision-making process. That’s why introspection is so important and it serves to ask questions to yourself in order to clarify and understand your emotions.

Last but not least, empathy is an essential part of EQ, so it’s important that we strive to make it stronger within ourselves. Understanding your own feelings makes it possible for you to put yourself in someone else’s shoes whenever you need to, but that’s not all it takes. You must also be open to interact with others and you must work on both your listening skills and your communication skills because they will guarantee honest exchanges that will help you grow as a person and a leader.

These are just a few of the exercises that you should integrate into your daily life to start maximizing your emotional intelligence. Practice conscious self-awareness and introspection, and you will see that your ability to manage your emotions and put them into use will increase exponentially.



Demand Optimisation

Demand Optimisation

In this series of articles on Total Revenue Management (TRM) we started by identifying five core elements namely, Revenue Culture, Market segmentation, Seamless technology, Forecasting by Revenue stream and Optimisation by Revenue stream, that consist the fundamentals for efficiently and effectively embracing such a business practice.

While the first three pave the way for successfully adopting and implementing TRM as a commercial philosophy, the last two involve the day-to-day ongoing operational activities for managing revenues and profits. This article will focus on Optimisation as a necessary tool for a successful total revenue management plan.

What is Optimisation?

Optimisation, a cornerstone of Revenue Management operations, is the action of making the best or most effective use of a hotel’s inventory while guiding the simultaneous action of revenue and profit growth. It ensures the best and most effective use of strategies and tactics in order to balance supply and demand and deliver the optimal business mix. Optimisation relies on intelligence gathered during forecasting, a process that indicates changes or variations in booking pace of a segment or segments, in order to deliver an updated action plan. It then moves on to investigate external factors that influence demand providing thus with a complete view and understanding of all dynamics.

Optimisation drives the ongoing process of controlling product availability and price to ensure revenue and profit growth. In a constantly changing market place, having a thorough understanding of booking patterns, lead times and cost of distribution will enable managing demand not only by price but also by cost of acquisition & contribution by revenue stream or centre.

With demand fluctuating, optimisation aims to highlight deviations from the strategies in place and suggests corrective measures. It takes into consideration the profit elements that influence performance in all revenue streams in order to decide potential reformulation of adopted strategies. Having the right revenue culture makes optimization easier to implement as there will be times where a sacrifice in price will need to be made for a product in one department in order to secure a piece of business that has significant profit value in another.

Fundamentals of the Optimisation process

There are five major elements in the Optimisation process: Pricing, dynamic price adjustment of product and services; Availability, management of inventory and product or services supply; Group evaluation, determining the implications of accepting a large piece of business; Ancillary Revenues, combination of strategies for all revenue streams; Tracking performance, measuring and understanding of successful strategies or failed actions.

Demand optimisation

  1. Pricing

A coherent pricing strategy starts with the knowledge of your market segments as the process of constructing them has already taken into account the buying power and spending willingness of each, booking patterns along with the cost of acquisition for each segment. This provides a detailed view and understanding of who the customers are, when they book and via what channels and last but not least support the calculation of the profitability of each segment through a better understanding of net rates.

When applying pricing, consideration needs to be given to the impact it has to each of the market segments and how that influence booking behaviour and patterns. A successful pricing approach will determine key decisions on strategies to adopt for revenue maximisation throughout the organisation, while the ability to anticipate demand patterns and preference requirements will facilitate the design and availability of services and products.

Pricing strategies are a consideration of how the business is currently trading in combination with the targets that need to be achieved. Moreover, knowledge of the market and the forces that drive competition is necessary as pricing decisions should not only be based upon what is happening in the hotel, but need to include external factors that influence demand. When it comes to pricing an often misunderstood concept is the notion of dynamic pricing being valuable only when demand is high. Pricing should also be used to stipulate demand as successful marketing activities that target the right segment at its optimal booking window can help create the required “base” business. The amount of required “base” business will vary according to the period of the year and despite popular believe it doesn’t necessary need to be built out of public discount or promotional rates but also from segments such as Groups (leisure and business), Wholesale etc., that have longer booking window.

Finally, it is important to keep in mind the perceived value for money and have a thorough view of the value the market places on the product or service. To achieve this, it is essential to incorporate ranking and review scores from different sources as it can be a critical decision factor for potential customers. To proactively RM your hotel not only by price point but also by cost of acquisition & contribution by revenue source, it is essential to understand the unconstrained market demand. That can be achieved via a detailed forecast which allows the view of how business is likely to perform in the future and it determines the fine-tuning of long term strategies and the deployment of short term tactics.


  1. Availability

As we already discussed, to increase the benefits from a TRM system, it is vital to optimise the buying process and measure total spend while considering different type of customers, their purchasing power, needs and habits.

Availability focuses in optimising and controlling inventory with the purpose of achieving the optimum business mix. By optimum business mix we mean the number of rooms allocated for each market segment, for a specific period, that lead to the best possible revenue and profit though-out the hotel. Moreover, these controls need to be implemented in food and beverage outlets, meeting rooms, spa facilities and any other revenue generating stream. A thorough understanding of profitability by segment and booking channel is imperative for successfully implementing availability controls. The purpose of such controls is to ensure enough inventory is available to the segments that are willing to pay the most when demand is high – traditionally these segments tend to have short lead times.

Some of the most common availability controls for rooms or meeting space are: Minimum Length of Stay (MLOS), requires booking to be made to a minimum predefined number of nights and is used to avoid uneven occupancy patterns that can block longer stays or restrict availability during high demand; Maximum Length of Stay (MaxLOS), requires booking to be made to a maximum predefined number of nights and is used to control discounted or promotional rates; Closed to Arrival (CTA), prevents bookings to be made with arrival on a specific day, CTA is used to avoid blocking days with weaker booking demand. Other controls can include allocating a specific number of rooms to promotional and discounted rates, limiting bookings for specific room types for particular rates etc. Above controls should be applied to all functions and not only rooms. For example, the use of such controls to meeting rooms is of particular interest due to lower fixed costs that can lead to higher returns and profits.

  1. Group evaluation

Looking at business displacement plays an important part in the optimisation process when deciding which pieces of business to consider or decline. The process of calculating displacement will need to include cost of sale, overall revenue contribution, contribution margins for different revenue centres, past performance over considered dates as well as forecast for the booking period.

Displacement analysis is usually required when considering groups, a large number of rooms booking together, or when coming across requests for extended stays. Every piece of business we accept limits the possibility for other business to book. It is therefore important to understand the impact every decision has and how essential displacement is in planning and driving revenues and profit. While there is a tendency to judge such bids only by rate, special consideration needs to be given in factors such as Total spend in all outlets and the value of the bookings the hotel will not be able to accept in the future. As Groups tend to have a long lead time, the necessary availability controls will need to be implemented in order to allow reaching the target for the optimal mix.


  1. Ancillary revenues

Ancillary revenues are an often over-looked area for revenue increase. With growing competition and over supply limiting or making achieving significant growth in room sales more challenging, ancillary revenues represent an opportunity for growth from streams that have not traditionally being the focus of attention but can nevertheless provide with significant returns. This has made the effort of maximising all revenue streams to their fullest potential an important factor in the operational process.

Ancillary revenues can be generated throughout the entire customer journey, from placing a booking to checking-in, from throughout the duration of their stay to keeping in contact after the have left the hotel. During the booking process and before arrival, hotels have the opportunity to assist the planning process by providing additional services, options to upgrade to higher room types, promote traditionally no busy periods for dinner, spa or other facilities. During the stay every point of contact becomes an opportunity to sell or upsell. From a room upsell during check-in and in-room amenities to all services offered. After the guest has left asking for feedback becomes the starting point for increasing communication and loyalty.

Beyond generating additional income, optimisation of ancillary revenue streams should aim to combine booking and transactional data. The insights from this analysis will lead to providing customised promotions, offers and service.


  1. Tracking performance

Tracking and measuring the performance of the optimisation process is a crucial function with countless benefits. The intent of this practice is to take a thorough look into strategy and procedure execution and offer clues on how to enhance their future performance. Combining and analysing the information gathered through the deployment of various strategies and the insights gained through examining their outcome, booking history and trend data will allow you to make better and more informed decisions that will prove to be advantageous for your hotel business overall. Furthermore, it can provide insights in underlying inadequacies in strategy setting which can lead to more efficient ways to utilise marketing and sales resources. Identifying areas of improvement will can lead to more precise results by improved methodologies and capacity utilisation, increased return on investment by enhanced promotional efficiency and better customer satisfaction.

Although a considerable amount of time is spent in drawing and deploying strategies, not enough effort is put into trying to understand if these reached their intended target or what can be done to improve future performance. Tracking and measuring the impact of the process can increase the effectiveness of demand optimisation and lead to more accurate and operationally valid actions.


Even though the components emphasised in this series of articles are by no means a definitive list for a TRM system they highlight some key focus areas. And while there are still challenges in the adoption of such a business practice it is an exciting time for Revenue management. Technological advances have led to systems with enormous potential for handling the complexities of managing revenue streams due to their abilities in advanced problem solving, reasoning and perception. This will elevate the role of RM and empower it to reach its full potential whilst allowing the whole organisation to benefit from its concepts.

Forecasting by Revenue stream in Total Revenue Management

Forecasting Hotel Demand

Today’s hospitality landscape is characterized by increasing room supply and high cost margins. And while there is enough space for everyone to excel at delivering optimum performance & results, the stiff competition makes it imperative for hotel revenue managers to constantly adjust in order for their strategies to remain relevant. This is even more sensitive when the seasonality of the business is considered.

Accurate demand forecasting is extremely important for a business as it drives strategic planning aimed at optimising sales, increasing operational efficiency, improving customer service and maximising profit. Predicting what the customer wants, anticipating the sales of products and services helps managers understand revenue opportunities and make informed decisions about pricing and business growth strategies.

With a holistic revenue management plan, a hotel can be confident it is still running with the most profitable business mix while all revenue streams are optimized and designed to improve customer service.  Much has already been discussed about the components that are vital for an effective Total Revenue Management process (TRM) in earlier installments in this series. This article will focus on forecasting by revenue stream as a necessary tool for a successful total revenue management plan.

What is forecasting?

In simple terms, forecasting is the process of predicting future developments in any hotel by using past and present data. It involves attempting to gain an insight into the future while relying solely on past trends and present events. Forecasting is the scientific version of crystal gazing and while future events may deviate from past trends, the intelligent insights obtained from forecasting, provide a reliable platform to build upon.

Forecasting hotel demand and revenue accurately can prove difficult. Though the seasonality lends some much-desired predictability to the task, factors such as changes in the market, consumer behavior etc., still make it seem like trying to hit a moving target. But it must be done and done right if a hotel is to maximize revenue & profitability. Vital business decisions bordering around pricing, advertising, distribution etc. are all made based on the conclusions drawn from a forecast.

The importance of forecasting to TRM

As hinted earlier, many management decisions rest on the quality of forecasts making it even more germane to total revenue management. Total revenue management focuses on increasing revenue across all revenue streams, rather than simply relying on revenue generated from rooms. Forecasting helps to generate relevant strategies to achieve this. A good forecast would not only predict when clients would be coming into a hotel. It would also give an insight into associated data like where they would be coming from, how they book, the duration and purpose of their stay, trends on spend in other revenue streams etc.

A hotel located in a leisure area, for example, would naturally expect a spike in demand during the tourist seasons. Traditional revenue management systems would only move to manipulate the rental prices of rooms during this period. There is only so much revenue that can be generated with this approach if the hotel management doesn’t want the strategy to backfire. TRM on the other hand would employ data to come up with additional services that would increase patronage and revenue. In a previous article we talked about Seamless technology. Data gathered from various sources are a key component in deciding services to introduce, improve or replace in an effort to anticipate changes in consumer behaviour.

Forecasting becomes all the more important when we consider the key matrices that can be improved upon during different demand seasons. Forecasting takes all these into considerations and provides reliable data from which informed decisions can be made.

Forecasting models

There are numerous models of forecasting but they all stem from two major models. Every method that is used to make a forecast is based on these two models which are qualitative and quantitative models

Qualitative models: the scope of this forecast is limited and is utilised in making short-term predictions. It is used in making a short-term success of the hotel organization and enhances the quality of the services rendered. It is expert driven and does not involve historical data.

Quantitative model: this involves the use of statistics to discern the trends and progress of the organization. It is used for long-term predictions. This type of forecasting is accurate as it based on the utilization of a large amount of data. It takes into account data such as market segment profitability by revenue stream, cost of sale, statistics on channel and boking source, booking pace, geographic origin of business etc.

Forecasting process & tips

As mentioned earlier, accurate forecasting could prove a daunting task for even the most experienced revenue manager. So how do we accurately forecast demand? Forecasting is both a science and an art as it requires statistical analysis of historical data and trends as well as flexibility of mind to make assumptions on elements that have no trend or are new to the business and therefore have a high level of uncertainty.   But, it is far from impossible.

There are 3 steps that need to be considered before establishing forecasting requirements:

  • Define the elements that need to be forecasted in line with targets and how detailed your forecast needs to be
  • Define the timescale of forecasting in line with business needs
  • Continuously monitor forecast evolution & accuracy

Forecasting by Bespoke Revenue Management

1)Define the elements that need to be forecasted in line with targets and how detailed your forecast needs to be

A business should decide which elements need to be forecasted by looking at business activities that drive profit and Key Performance Indicators that, if met, will ensure achievement of targets. In hotels, the most common KPIs are occupancy, ADR, RevPAR. Exceeding last year occupancy level and rate whilst maintaining cost at a similar level of prior years, should lead to certain profit. A good forecast should also look at market segmentation as each segmented customer has different purchase intentions and therefore purchasing requirements, preferences, expectations, booking trends, etc.

A family going on a holiday break will have different requirement than a business traveller attending a conference. Forecasting each of these customer requirements and spend will not just allow the organisation to plan operations around meeting these requirements but also decide which of these customers is more valuable for the organisation and therefore which one to take and which one to turn down. When forecasting demand by segment, an organisation should not just look at the base rate but also consider ancillaries and cost of sale as the total revenue generators may be different than the single value of selling a room.

Each organisation needs to find the right balance between detailed and aggregated forecast. Forecasting by revenue stream does not entail performing a thorough forecast for each revenue source, rather keeping in mind contribution and cost. An optimum contribution should have high enough returns to aid strategic planning and enough details to produce a robust forecast (the higher the number, the more accurate the forecast).

2) Define the timescale of forecasting in line with business needs

It is crucial to define the period to forecast, how far in advance an organisation should forecast and how often/the re-occurrence (next 3 months, 1 month out, weekly forecast, etc.).

When deciding timescale’s for forecasting we should consider the business requirements and the lead time the hotel needs to react to changes in the forecast. Depending on the market a hotel is based in, forecasting needs to be done as far in advance to match booking pace patterns in-line with demand.


3) Continuously monitor forecast evolution & accuracy

Forecasting is an ongoing process as it reflects the constant changes in BOB, (Business on the Books), and booking pace while it reflects on strategies in place and the impact they have on how business materialises.

Measuring and evaluating forecast accuracy is as important as forecasting itself. It allows a view in common errors in how a forecast is constructed while in can highlight previously missed patterns.  As forecast deviations are inevitable, extra effort is required in keeping track of accuracy to facilitate reducing errors to a minimum.

One of the best metric to use when measuring forecast accuracy is the Mean Absolute Percent Error (MAPE), as it represents the forecast error in percentage and absolute terms.

MAPE = (Absolute Value (Actual – Forecast) / Actual) x 100

Calculating the square root of the variance in error (Standard deviation) can also help improving the forecast as it will identify not just the average difference between actual results and forecast, but also the spread of accuracies.

It is a good practice to predict first the “unconstrained” demand, the “real” consumer demand not affected by managerial decisions, yielding actions or supply constraint.  In order to do so it is important to analyse historical data taking into consideration not just the business accepted/booked but the amount left on the table (turndown, rejected bookings, etc.).

Once unconstrained consumer demand has been established, RM can calculate the segment that will bring the most total revenue and profit. The unconstrained forecast becomes “constrained” and this will be the “plan” to distribute to relevant stakeholders that if successfully executed will bring the highest revenue and profit for the organisation.

Below are some tips that could aid forecasting efforts.

Forecasting by Bespoke Revenue Management
Forecasting by Bespoke Revenue Management
  • Proper documentation – focus on quality

The major pillar behind any accurate forecast is accurate data. It is, therefore necessary that hotels should keep proper records of past events and trends in order to project accurately into the future. The diversity of the records could make the task even more difficult. Having a revenue culture in your hotel will make it easier as the importance of accurate data is easily understood and implemented by everyone.

  • Collection of historical data & analysis of past trends

The seasonality of the hotel business makes historical data the best forecasting tool around. Although the projections obtained thereof may not be completely accurate, it still provides a good idea of when to expect spikes in demand and provide a detailed road-map of booking pace and patterns.

A thorough rooms forecast should involve analysis by market segment, by day. When forecasting by day it is imperative to compare like to like and therefore analysis should be done by Day of the Week and not by date. It is also important to have an indication of pace and how current trading variances from the average booking patterns for the specific day / segment.

  • Identify and analyse special events separately

It is imperative to monitor special events and holidays alongside the historical data. This will provide with a solid understanding of seasonality trends and any pattern that happens often enough to predict their repetition. It will also be easier to highlight deviations for past patterns which may signal reviewing or changes to current strategies. As above analysis needs to be made on Day of the Week basis to ensure like to like comparison. Lastly it can help identify changes in consumer behaviour (booking window, customer requirements, etc.) and decide which elements to include or exclude (anomalies) from future forecast

  • Be aware of what the competition is doing right

It is true your hotel should have its own unique methods and strategies, but the competition in the hospitality industry is such that you wouldn’t want to be left behind. Keep tabs on the competition’s pricing strategies, advertising techniques, get to know if a hotel recently opened in your area or if a hotel just embarked on extensive renovations. Then do what you can to stay on top of your game.

  • Pay attention to global trends

This is particularly important to a hotel that enjoys a lot of international business. Follow the general trends in the hospitality industry. Has there been a recent decrease in the industry’s viability? Is the economic situation in a particular country having a negative or positive impact on the industry overall? Monitoring these trends would give you a fair idea of what needs to be adjusted and where you need to focus your efforts.

  • Collaborate with the marketing department Your forecast data should factor and guide the efforts of the marketing and sales department of your hotel. You should know how your hotel is being projected to the people and where your demand is coming from. Forecast data can also help channel marketing efforts. If forecast data shows a lack of interest from a particular market segment, marketing efforts may be steered towards attracting that segment.

Forecasting is germane to total revenue management in the hospitality industry. An accurate forecast gives the much-needed peek into the future and affords revenue managers a strong platform on which projections can be made. Remember, the idea behind the concept of total revenue management is to increase the revenue generated across the board and not simply focus on the revenue generated from room rentals. A comprehensive forecast data would, therefore, not only focus on demand but also on the origins of the demand and related information and details on how revenue is spend throughout all outlets. Having an insight into such associated information informs decisions that would aid total revenue management efforts.

The Importance of Seamless Technology in a Total Revenue Management

Revenue Management Technology

Total Revenue management is becoming an extremely important part of hotel management in recent times – and that too for good reason. Incorporating revenue management in your strategy ensures that you will be able to leverage the maximum number of components of the entire customer journey to improve sales figures. The entire operation of a business is taken into account for a total revenue management system regardless of the industry that the said business is based in.

Needless to say, it is practically impossible to make the most of a revenue management system without the right technologies by your side. Below, we’re talking all about how technology is incorporated in a total revenue management system and why it’s so important for successful implementation and execution of the system.

As important as total revenue management process may be for your hotel business, the fact of the matter is that incorporating and implementing the right strategies won’t quite be as effective unless you know how to use and leverage the technologies associated with it. Additionally, having access to the technologies that are affiliated with creating a total revenue management approach but not knowing how exactly they can be leveraged to your advantage, too, is problematic.

Like all businesses, hotels, too, are constantly generating data – important data that can be leveraged to not only improve the customer experience, but also bring about a significant impact in the revenue of the business. Whether or not your hotel has the resources of a five star international chain, it is essential for you to start using the latest technologies to make the most of your total revenue management system. Using the latest software and systems will allow you to collect important and high quality data in a timely manner, and enable you to use this data to your advantage before it becomes obsolete.

Using the right technologies will also allow you to make informed and data driven decisions that will prove to be beneficial for your hotel business instead of making decisions on a whim that may or may not be in the best interest of your business. Equipping your operations with the right technologies will also reduce the possibility of errors since all of the decisions that you make for your business will be based on insights of previous experiences instead of being based on what you feel or results that you expect without any real basis.

Since you will be able to gain a lot of useful information by using the right technologies with a total revenue management system for your business, it will also be far more easy and convenient for you to optimize different components of the buying process. The latest technology for a total revenue management system for your hotel business will also help you analyze the market and view booking patterns in order to leverage different factors, operations and activities in order for you to make the most of your hotel business.

Which Type of Technology Should You Use for Your Hotel Business?

To facilitate the above a seamless system that enables cross-departmental sharing of data will be a key element. While the benefits of technology are undeniable, the variety of systems used in different departments may present a challenge for implementing a TRM process. System integration is required to ensure that cross departmental data processing necessities are met and total spend can be accurately mapped. A seamless system will ensure constant communication between all outlets and provide with accurate, timely and complete information for successful optimisation while enabling and supporting better management forecasts. Some of the internal systems in hotel today include: Property Management System, Revenue Management system, Customer Relationship Management, Sales and Catering systems etc., while some of the external sources of data include: STR data, Social media, Rate shopping, Reputation management system etc.

A seamless flow of information will enable hotel operations to streamline their efforts leading to enhanced guest experience and business performance. A well-constructed and integrated system will allow reaping the benefits of gathering and optimizing the continuous flow of information, produced by all different departments. It will act as a central hub for storing and processing real time and past data. Key benefits of an integrated network of systems are:

  • Creation of a central database. Data produced in different departments and outlets can be stored in a central pool of data. This will enable hotels to effectively combine and analyse information. Data quality is of outmost importance as the quality of decision making will be as good the information it is based on. It is therefore imperative to have enough controls and checks in place to guarantee data quality and integrity
  • Understanding of customer behaviour. Data gathered and analysed from all different sources will enable hotel operations to better understand their customer behaviour and offer enhanced guest experience by providing personlised service. It will also permit them to predict trends in spending patterns and improve guest experience by better designing products and services
  • Streamline internal processes. A total revenue management culture will eliminate departmental silos and lead to improved internal communication and sharing of information. Furthermore, it will create improve efficiency in the daily operational tasks which in return will reduce operational costs
  • Improve business intelligence and decision making. Combining data from different sources will provide with a holistic view of the business and how it performs. Better business intelligence will advance commercial performance through enhanced information-based strategic decision making. This will not only benefit your Revenue management strategies but also your operations by providing insights on booking patterns, product and services utilization, markets & customers to target etc.
  • Competitive advantage. Seamless technology will not only help improve business performance but it will provide a competitive advantage by creating a seamless guest experience. Better understanding of customer wants and needs will pave the way to offering personilased service. Finally, this will lead to increased loyalty and customer retention

Total Revenue Management - Technology

When it comes to designing a total revenue management process, one of the most common problems that people face is that they are uncertain about the type of technology that they should opt for. Contrary to popular belief, relying on a generic technology or revenue management system won’t do much well just like the same strategy won’t offer the same results for every type of hotel business. In other words, the cookie cutter approach isn’t of much use when it comes to selecting the right technology or revenue management system for your hotel.

Small hotel businesses will obviously need technologies and systems that are different from those that are needed or required by international chains of hotels. A small-scale hotel business will, therefore, need only a few technologies in addition to a dashboard that helps them keep track of basic information and manage inventories. This is particularly important because small hotels often face problems of overselling because of minor human errors or manual entry of data.  Automating the system will help you better understand the areas where your hotel business was suffering due to easily avoidable problems and mistakes and with the right insights and data to back your decisions, you’ll be able to take well informed and calculated steps to rise to success one booking at a time.

The needs and requirements of a more established and recognized hotel business will be different than those of a hotel brand that only has a single franchise or two. Seamless technology becomes a necessity more than a privilege in cases like these. It is important for a mid-scale hotel business to have a proper reporting system; it is also essential for a hotel business like that to tweak their revenue model at regular intervals, based on the data that is being collected to ensure that the revenue management system is always up-to-date, leverages data, analytics, and insights for all the right reasons.

With access to the right systems and technologies, mid and high level hotel businesses will also be able to apply forecasting which can provide in-depth information about the market and what needs to be done to succeed. Hotel businesses that are competitive will also be able to leverage big data with the help of the latest technologies that will allow them to understand the needs and requirements of customers in a more personalized manner, allowing them to optimize the customer journey and buyer’s process in a way that will be guaranteed to drive conversions and improve revenue figures.

Some of the factors to consider when deciding on any system are: technology and data integration, cloud hosting, mobile access, flexibility and customisation & user experience.

While technology is important for the successful implementation of a total revenue management system for a hotel business, it is essential for people to understand the type and nature of technologies that they can leverage to maximize improvements and an increase in the overall revenue of the business. This is exactly why research about the different options available is crucial and must be done thoroughly to ensure that you’re making the right choices that will prove to be beneficial in the long run.

Redefining Market Segmentation

Market Segmentation

To increase the benefits from a Total Revenue Management system (TRM), it is vital to optimise the buying process and measure total spend, consider different type of customers, their purchasing power, needs and habits. For optimum results the process of segmenting customers will need to take into account the contribution of each segment in all revenue streams as well as the cost of sale. This will provide a detailed view and understanding of who the customers are while having the knowledge of which segment is more profitable, will offer a clear insight and enable the development of the Optimum Business mix. In fact, while examining only rooms may classify a segment secondary due to less booked revenue, the contribution in ancillary services and products combined with how they book can make it more profitable.

Market segmentation is of particular importance in the complex and competitive world of today because it does not only help put things in perspective, but also ensures that you won’t have to waste money and efforts in areas that won’t bring any positive results.

Cost of acquisition and contribution by revenue source are extremely important factors that need to be taken into consideration when managing a business in the highly competitive and ambiguous hotel management industry of today, which is another reason why market segmentation needs to be leveraged. Doing so will not only help you understand where your customers are coming from, but it will also be easier for you to figure out which areas need improvement and which customer groups you should focus on more for greater revenues.

Still not convinced? Below, we’re talking all about why market segmentation is so important, how it’s done, and how market segmentation can prove to be beneficial for any hotel.

Benefits of Effective Market Segmentation

  • Leads to better customer understanding – Lays the foundation of understanding customer behaviour, booking patterns and spending habits. This can lead to improved and personalised service
  • Leads to superior insights – Segmentation is the cornerstone of Revenue management and guides efficient and accurate forecasting combined with insights such as booking pace, channel and geographic origin of business statistics etc.
  • Leads to enhanced pricing and optimization strategies – Strategies take into consideration spend by revenue stream and therefore lead to more effective plans
  • Leads to effective use of budgets – Effective segmentation provides guidance for better utilization of both marketing and operational budgets. Targeting the right audiences at the right time guarantees better conversion of promotional activities
  • Leads to increased profitability – Contribution by segment provides a way to not just increase revenues but also profitability across the entire operation. Optimum Business Mix is now comprised of indicators that highlight the impact of each segment on profit performance

Market Segmentation

What is Market Segmentation and How Does It Fit into Your Hotel Strategy?

Contrary to popular belief, market segmentation is possible in practically every industry, which is what makes it even more unfortunate that the approach is not being fully leveraged in hotels. However, before letting you in on how hotels can leverage market segmentation, it is essential for you to understand some of the benefits that market segmentation brings. Incorporating this strategy or approach can not only help optimize the revenue and profits of your hotel by creating different groups of customers on the basis of their features, but market segmentation also acts as a great risk management technique.

With market segmentation and categorizing your customers into different groups and subgroups, you will not only be able to distribute the risk involved, but will also be able to try your hand at different techniques and strategies for each of your different customer groups to figure out which of them is most promising and brings you the best results without putting all of your eggs in one basket.

So, how can you go about incorporating market segmentation for your hotel? Read on for the details and some of the greatest tips on how market segmentation can be leveraged.

How Can Market Segmentation be achieved in Hotels?

The first thing that you must do to leverage market segmentation for your hotel is to classify your customers into groups based on certain unique or distinct features. By definition a market segment is a group of customers with similar buying power & willingness to pay for your product or services. To fully benefit from the process of defining your market segments It is important that the following criteria are considered:

  • Measurable: the ability to measure the size of the segment along with frequency and volume of booking
  • Accessible: segment needs to be accessible by the hotel in order to influence their booking behaviour
  • Substantial: the segment needs to be big enough in order to generate adequate revenue
  • Differential: segment needs to have different booking patterns, acquisition costs, price sensitivity etc.
  • Actionable: the hotel needs to be able to actually sell to the specific segment

A coherent set of market segments will not only guide the process of pricing but also forecasting, setting up the optimum business mix and all promotional & marketing activities. While considering marketing activities, segmentation criteria will also include Geographic, Demographic and Psychographic variables.

In many hotels there is a tendency to mix market segments and booking channels (Segment: who is the client depending on his willingness to pay, booking channel: the channel used to make the booking), it is our opinion that these two should be tracked separately, although a well configured market segmentation will also provide an indication for both.

For example, OTA is a segment we have seen in some of the hotels we have worked with. But is it a segment? Before answering that consider the following: You have one guest who books your Best Available Rate directly on your website and one that books the same rate via an OTA. Are those two guests willing to pay the same price for staying with you? Yes, therefore by definition they belong to the same segment. What changes is the method of booking. If you then consider BAR (Best Available Rate) as the broad market segment group, it could have sub-groups to help better identification and tracking of customers. Potential sub-groups for your BAR segment could be: BAR-direct, BAR-OTA Net, etc.

The uniqueness of your segments and sub-segments will enable better and more accurate tracking of how business is picking up, deviations from your strategy and forecast while enabling you to identify periods that require extra attention.

For example, some of your main market groups can include:

  • BAR: Best available unrestricted rate, sub-groups can include BAR-direct, BAR-OTA Net, etc.
  • CORPORATE: Rates contracted to specific companies, sub-groups can include segments by volume/rate, Consortia rates etc.
  • DISCOUNT: Restricted or fenced rates derived from your BAR, sub-groups can be as per BAR segment above
  • PROMOTIONS: Ad-hoc promotions designed to fill in occupancy gaps
  • GROUPS: Usually bookings for more than 10 rooms, sub-groups can include Leisure groups, Corporate groups, Residential groups etc.
  • WHOLESALE: Opaque rates contracted with various travel agents that they use to resell

This is by no means a definite list of market segments but an indication of what can be included. The appropriate segments for your hotel will need to be determined by examining your product, the market and the competition & they will need to answer to the criteria we listed above (Measurable, Substantial, Accessible, Actionable, Differential)

Once you have your customer groups figured out, it is essential for you to assess and evaluate which ones of them offer the most benefits and contribute to your profits or revenue the most. Next, it is important for you to calculate the amount of money that you are spending on each of these customer groups. As mentioned earlier, the cost of acquisition and the cost of distribution are key factors that need to be taken into consideration when you’re trying to make the most of your market segments and redefine the way in which the process is carried out.

Understanding how much it costs you to get customers from each one of your market segments is crucial in order to evaluate which of the market segments that you have created gives you the best results at the least cost. Additionally, better forecasting will also be possible if you have all of the information needed about each of your customer segments and the cost that is incurred to bring in customers from each of these market segments. If the cost needed to bring in customers from one of the market segments is incredibly higher than the rest, it is essential for you to figure out how these costs can be reduced for optimization and better results.

Forecasting will also help you understand and fine-tune strategies and approaches that you are using for each of your market segments. This will not only prove to be beneficial from a revenue management perspective, but it will also ensure that you’re able to make the most of all of the available and accessible resources in the best possible way. Evaluating the market segment bringing in the most customers and the most beneficial market segment will also help you understand where you need to direct and channel most of your advertisements and energies.

As mentioned earlier, market segmentation will help you get an understanding of what you can and should expect from each of your market segments and how much time, effort, money and energy it would be wise to spend on each of these segments to reach the optimum business mix.

Combining and analyzing the information revealed to you through effective and efficient market segmentation and using it in harmony with other insights gained through booking history and trend data will also allow you to make better and more informed decisions that will prove to be advantageous for your hotel business. These strategies and approaches will prove to be fruitful especially in case of fluctuating demands and complicated market conditions.

Developing and Instilling a Revenue Management Culture

Revenue Management Culture

In a recent article we discussed Total Revenue Management, a concept that should be implemented as a business philosophy and strategy as its principles take into account the entire operation. Total Revenue Management, (TRM), comprises both strategical and tactical procedures and aims to identify & optimize the customer journey (you can read the full article on Total Revenue management here: https://goo.gl/9ri1ED).

The success of a TRM process depends on not only the main objectives that a hotel or hotel company aims to achieve, but also the route it plans to take and move on to lead towards accomplishing those. The ideal route to maximize profit by adapting a TRM approach is through developing and instilling a revenue culture. A coherent revenue strategy is more than just systems, demand forecasting and constant price adjustments.  It is a business philosophy and strategy that when taken into account in all departmental procedures can result in increased revenue & profit performance.

A revenue culture implies that all participants have a common vision of what needs to be achieved, why, and how. By having a clear understanding of what the organization stands for, and the strategies and tactics it employs to reach set targets, one will find it easier to define standards of performance, and establish expectations.  Whilst not everyone will ultimately be responsible for achieving what is required, it is essential that relevant stakeholders participate in the discussions and everyone is aware of the decisions taken. This will improve cross-departmental communication & engagement which are the key elements of a revenue culture and will ultimately foster collaboration and innovation.

Furthermore, having an overall view of the business will motivate and incite involvement, a factor that will give the team a sense of ownership. The implementation of a rigorous training program is mandatory to shape and instill the right mentality and guarantee long-term success. This will create an environment that celebrates opportunities, transparency, and diversity.

It is important to understand that no matter how well planned and executed a strategy is, it will not reach its full performance potential unless it is aligned with the overall culture. The best strategies will not work in isolation especially if they cause conflict to targets or plans of other departments. This is something we have seen very often in a number of hotels we have worked with where inconsistent strategies can lead to profit loss & operational inefficiencies.

The Importance of a Revenue Culture

Revenue Management,

·        Allows the formulation of profit maximisation strategies

Revenue management is a culture that needs to focus entirely on profit maximization of your hotel, which is the top priority in your set of targets. Developing & establishing such a culture will aid the development of your hotel’s profit maximization strategies. This will lead to strategies that focus entirely on profit performance of the operation as a whole by allowing a deeper dive in the revenue potential of each department.

·        Allows to focus on performance strategies and long-term growth

Revenue management culture takes into perspective the broader spectrum of an organizations goals and targets. This is something the managers can deviate from since they become more focused on the short-termed, day-to-day goals that are more lucrative. A revenue culture incites the participation of all the stakeholders who are directly affected by the hotel’s decisions. It is therefore tenacious in its focus on the hotel’s long-term goals, and sets targets that can be achieved by collectively devising long-term performance strategies.


·        Allows revenue management forecasts to take into account operational and financial forecasts

Operational forecasts of any hotel include cost estimations of resources needed such as staff, inventory etc. On the other hand, the financial forecasts are the estimates of the profitability that the organization would be able to achieve at a month’s end. Developing a revenue culture will allow forecasts to be assessed on the basis of three different perspectives and offer a better understanding on the affect that different strategies have on cross-departmental profits and more importantly on net profit.

Moreover, as requirements will include focus on overall profitability, current metrics will need to be re-evaluated to reflect that. While RevPAR (Revenue Per Available Room) will still play an important role, TrevPAR (Total Revenue Per Available Room) will need to be established to measure overall performance, while GOPPAR (Gross Operating Profit Per Available Room) should be adopted to measure profit. Calculating GOPPAR could prove challenging as different organisations place different cost elements before or after GOP. Therefore, a universal re-positioning in financial statements will be required for the adoption of this fundamental metric.

·        Allows an organization to develop cross-departmental communication culture

Each of the departments has its own set of goals. Where a sales department is volume-driven and strives to accumulate as many customers as it can, the service department is chiefly concerned with the product quality to satisfy the customer. Similarly, all the other departments focus on their own goals. However, a revenue management culture focuses on team building and collective performance which is why, it encourages an improved communication system and allows the organization to cooperate in their operations to achieve mutual interests.  This will eventually eliminate conflicting decisions taken in isolation and improve both financial and operational performance

·        Allows the inclusion of value addition from revamps and investments

Strategies derived in an environment with a strong revenue culture are crucial for not only constructing profit maximizing strategies or cost budgeting, but also taking into account the value additional investments such as revamps and renovations to the hotel that can significantly raise the standard and quality of the service. This is important especially for operators looking to attract investors or potential franchisees.

Developing and Instilling a Revenue Management Culture


An effective revenue culture is developed and instilled when the objectives are established by the top levels of the hierarchy and informed to the subordinates accordingly. This allows better communication amongst the top management, head of departments and employees at all levels of organizational hierarchy, bringing everyone aboard to work on aligned set of targets.


The next crucial step to developing and instilling a revenue management culture is through effective planning. Once the goals have been established, the next point of focus is execution of actions that would enable the organization to achieve those goals. This is why planning is imperative in order to devise successful strategies. Planning is also necessary to not only ensure that the right steps are taken to achieve the hotel’s targets and goals but also, to provide a source for measuring the concrete results and whether or not the strategies employed have remained successful.


Training of the employees at all levels of hierarchy is the key to developing and instilling a revenue management culture. A revenue culture breeds successful business leaders because it trains the employees to communicate effectively. Training and focused group sessions that educate employees of different departments and different hierarchy levels allows them to understand the mutual objectives that they all are working to achieve, improving their productivity and output.


Technology is a resourceful way of developing and instilling a revenue management culture. Progress in big data has simplified the methods of acknowledging and measuring challenges, risks and opportunities by producing relevant dashboards and key indicators. This gives your hotel the valuable information it needs for example market response to pricing, demand, and revenue elasticity. Moreover, the organization also gets to receive valuable insights on the market segment that is the most profitable not only for your rooms operations but for the hotel as a whole. As a result, your hotel can devise and develop more informed strategies that will lead to higher profit performance.

Profile of the future Revenue Manager

While profiling the future Revenue Manager is not the main topic, this article wouldn’t be complete without a brief mention of the key character traits for anyone willing to successfully occupy such a position.

The role of a Revenue Manager and its position in the organisational structure will need to be re-examined and expanded to include additional responsibilities. Beyond the analytical skills, the modern RM will also need to possess personality attributes such as impeccable communication, influential and leadership skills.

To perfectly execute a successful revenue culture, it is essential to recruit a revenue manager with high levels of Emotional Quotient (EQ).  EQ or Emotional Intelligence is the level of intellect which determines their mental capacity with respect to their emotional availability. Emotional Intelligence in a Revenue Manager allows them to effectively communicate with the hotel management staff, while considering their emotional challenges and treating them in a way where they feel valuable to the hotel’s performance and success.

With the rapid advances in technology it is no longer about analyzing data and producing reports it is about being able to make solid conclusions out of them. Moreover, soft skills and especially communication will be an important factor in gaining the buying in of everyone involved in decision making.   Since a Revenue manager will take more emphatic working approaches than robotic ones, interacting with piers and employees healthily while satisfying their emotional needs of acceptance and importance which keeps them motivated to function productively in order to constructively contribute to the hotel’s profitability.

Lastly, developing and instilling a revenue management culture is a long process but is extremely lucrative in nature and boosts the success of your hotel much faster than anything else does.




We are Hiring! Join Us in Bangkok

We are Hiring! Join Us in Bangkok

Bespoke Revenue Management offers rapid-response, technology-driven revenue management solutions, consultations and training to businesses across the globe.

We aim to provide our customers with a tailored solution to their revenue management challenges, and help them streamline their operations for maximum impact on their revenue. With our holistic approach, we are able to guide you towards the creation of a total revenue management culture in your organisation.

We apply our profit maximization techniques in all departmental procedures, enabling instilling Revenue Management as a business philosophy and strategy, rather than a management technique.  You will receive a dedicated revenue management team that is able to assess the needs of your company specifically, and will offer solutions that match your requirements.

Join our Team!


Bespoke Revenue Management



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The distribution and cost-per-guest-acquisition landscape remains complicated and ever-changing, hotel owners and operators said during a panel discussion which touched on direct-booking campaigns versus outside booking channels.


Competitive Advantage 2018 – The World Has Changed









The classic model of competitive advantage is Michael Porter’s five forces shown below. This is still a useful model for the hotel industry. The most interesting part of this in 2017 is the “substitute” portion of the grid–this is what Airbnb is all about and they will have had a huge impact on our industry by the time most people wake up to it.



5 Ways to Protect Your Hotel Brand Online and Increase Profit 









A very useful exercise which all hoteliers should be doing on a regular basis is searching for their hotel brand name online and monitoring those results. With so many travel websites, it may seem like an arduous task but it doesn’t have to be. If the responsibility is shared across staff members in your hotel the task will become less daunting and you’ll be more effective at spotting inconsistencies and mistakes.


GDS: The forgotten leisure channel?









Consternation over the relationship between online travel agencies and hotels has garnered a lot of ink in industry articles over the past several years—that’s understandable.However, one very viable leisure channel has either been overlooked, or is not well understood by many hoteliers. For decades, travel agents worldwide have relied upon their global distribution system of choice to book hotels, and there are some very good reasons for that. As revenue-per-available-room growth is anticipated to slow in 2018, hoteliers looking for an edge will be well-advised to refocus their attention on this channel


Finding and Promoting Revenue Management Talent Within Your Organization


Do you have a catering assistant whose first question each morning is Did we sell out? or What was our occupancy and ADR last night? What about a front office associate who is so hungry to earn the perfect sell incentive that every time she works the 3:00 to 11:00 shift and the hotel has just a few rooms left to sell, you can count on the fact that you are going to end up with a perfect sell? If so, you may have just found your next revenue manager!




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We welcome any and all queries about our process and the discussion about revenue management of your company.

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