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Are revenue managers spending enough time actually generating revenue?

Mar 15, 2021  By 

It’s the middle of a pandemic. Do you know what your revenue managers are up to? Even before work from home and Zoom-only interactions, the day-to-day of revenue managers was a bit difficult to track. Many revenue managers don’t work in the same location as their leaders, the analytical nature of their job is intimidating and a bit foggy to stakeholders and they spend a lot of time alone at computers crunching numbers. So, are revenue managers able to stay focused on, well, managing revenue? Here’s the problem: Right now, they aren’t—and they probably haven’t ever been fully able to.


At the end of 2020, HSMAI and ZS surveyed 145 U.S. property revenue managers to find out how they spent time across the various activities associated with their roles. Our survey respondents reported spending nearly as much of their time (51%) on non-revenue generating activities as they do on revenue generating activities (49%). The higher the title, the less time those respondents spent on revenue generating activities: Analysts spent 62% of their time, managers spent 52% and directors spent only 48% of their time. Because revenue generating is their core role and value to their organizations, this is a huge problem for senior revenue managers.


While our study was conducted during a pandemic that has devastated the hospitality industry, revenue managers have had six or more months to adapt to their new operating conditions. They’ll have to navigate this volatile environment through the bulk of 2021, so the results can’t completely be written off as strictly due to pandemic operating conditions.


In fact, we suspect that pandemic operating conditions have only exacerbated conditions that have existed since the early days of revenue management. 


Here are our study’s key findings, and recommendations for how revenue managers can spend more time actually generating revenue. We found that revenue managers are: 


1. Overriding revenue management system recommendations too often: Respondents reported overriding revenue management system (RMS) recommendations about 39% of the time, on average. Upscale hotels (47%) and casinos (67%) reported the highest percentage of overrides. On-property revenue managers (43%) override systems more than cluster revenue managers (36%). The need to override price happens either because the system isn’t accurately picking up on market trends, or because the user is not trained on how to manage system inputs and interpret results. In these cases, the user just overrides the system when they don’t agree with pricing.


Granted, the pandemic did cause a temporary disruption in system effectiveness, but after six to eight months, most systems should have caught up. Our suspicion is that many revenue managers aren’t comfortable interrogating the RMS, so they resort to simply overriding price, leading to longer-term degradation in system performance. It’s also possible that some RMSs need an overhaul, pandemic or not.


Leaders should implement an ongoing training program to ensure sustainable, long-term use of the RMS, while putting pressure on system providers to make sure systems are responsive to all market conditions. 


2. Spending too much time on administrative tasks: Many systems, managed manually, add a great deal of administrative work to revenue managers’ days, and pulling together data and reporting is also quite time consuming. An average of 18% of respondents’ time is spent on internal, administrative work (answering emails, internal meetings), and 9% of their time on collecting data and reports.

Any reduction in workload through process redesign, expectation management or automation would result in more time for revenue-generating activities, such as pricing. The revenue management function is ripe for automation far beyond the RMS. Tremendous amounts of time (51%) are spent on reservation systems upkeep, pulling reports and other data together, internal administrative activities and repetitive stakeholder interactions using the same data in different formats. Any automation of these manual tasks can refocus precious time on pricing. 


Techniques like robotic process automation (RPA) can automate highly manual tasks like rate loading and system upkeep by wrapping around existing technology and having the bot replicate human actions. Visualization technology streamlines the production and distribution of reporting, and “smart reporting” can surface key actions proactively through workflows or alerts to direct revenue managers’ attention to the actions they need to take instead of making them hunt for them.


3. Spending too much time on budgets and responding to RFPs: Among all yearly activities, revenue managers spend the most time responding to RFPs (26 days) and building budgets (28 days). On-property revenue managers spend more time on both RFPs (40 days) and budgets (32 days) than cluster revenue managers (RFPs, 16 days; budgets, 24 days).


Even though responding to RFPs is a revenue-generating activity, it’s only one component of managing overall revenue opportunities. Budgeting, however, is a purely administrative task that takes revenue managers away from revenue generation. Any automation, reduction of steps or reallocation of tasks in these two processes would help revenue managers complete them faster, so they can go back to focusing on revenue-generating activities.


4. Having meetings that are too tactical and backward looking: Although the volatile nature of the current environment and shortened booking windows might be exacerbating this long-standing trend, now’s a good time to review the tenor of conversations at revenue strategy meetings. Are you addressing the longer-term horizon sufficiently, even if it’s just brainstorming about what could happen? When you review past performance, is it a true post-mortem? Are you discussing what strategies worked and didn’t to learn for the future, or is it more of a readout of performance data? 

According to our study, 71% of revenue managers always review past performance in their strategy meetings, whereas only 51% say they always cover strategies for future months, and 68% say they always cover strategies for upcoming events. To improve this ratio, consider automating the creation, distribution and access to performance reporting so that stakeholders can review information on their own time, thus freeing up your meeting agenda for strategic and forward-looking discussion. Train revenue managers to focus on planning and exception management in strategy meetings. Prescribe agendas so revenue managers don’t run out of time for more strategic discussion. Empower them to respectfully steer the conversation to higher-level thinking when stakeholders start to pull them in the weeds of rates and dates or reading out past performance.

5. Not spending enough time on productive stakeholder-facing activities: Study respondents spent 76% of their time during the week on non-stakeholder-facing activities, 18% on stakeholder-facing activities and 6% on internal administrative work. If revenue managers want to keep their seat at the strategy table, more productive stakeholder-facing activity is better, and non-stakeholder-facing time should be focused on identifying revenue opportunities.

Of respondents’ non-stakeholder-facing time, 24% was spent on analysis, 17% on system-related activities and 15% on research. Of the stakeholder-facing time, 27% was spent facilitating meetings and 26% on interacting with sales and marketing counterparts. There was some variability by chain scale, which could be considered in line with what’s required to manage each category of property. For example, midscale revenue managers spent less time with sales and marketing counterparts (16%), than their counterparts at other chain scales, but more time facilitating meetings, because they likely have more properties in their portfolios. In fact, cluster revenue managers spent 34% of time in stakeholder-facing meetings, whereas on-property revenue managers only spent 18%. 

When it came to the effectiveness of interactions with stakeholders, revenue managers spent an average of 30% of stakeholder-facing time convincing stakeholders to align with their strategies, and 80% of their recommendations, on average, were accepted. In the chain scale breakdown, upscale revenue managers struggled the most with having their stakeholder recommendations accepted, as they spent 32% of time offering stakeholders recommendations, and 75% of their recommendations were accepted. 

To ensure that revenue managers are communicating effectively with their stakeholders, arm them with tools to create compelling evidence to support their recommendations. Train them to be more persuasive and tell a story with their data. Not surprisingly, revenue managers with more job tenure have more of their recommendations accepted with less time spent convincing stakeholders to do so than their more junior counterparts. See whether there are tools or mentoring opportunities that would bridge this gap and help more junior revenue managers establish credibility and be more persuasive.


Everyone from executive level leadership down to revenue analysts bears some responsibility for breaking revenue management out of the old way of doing things. Instead of giving lip service to the importance of being strategic, pull yourself out of the role of performance reporter and into the role of revenue generator. Improve lines of communication with stakeholders across the organization so that you become a trusted advisor. Find opportunities for automation and advocate with evidence for getting the tools you need to be more efficient and effective at your job. Use the tools you have to their fullest potential. There’s a long, hard road ahead to recovery, but there’s also an opportunity to end up in a better position than where we started, if revenue management can rise to the occasion and break out of the current mold.


About Kelly McGuire

Kelly McGuire

Kelly McGuire leads the Hospitality and Travel Global Practice for SAS, Institute. In this role, she is responsible for driving the offering set and setting strategic direction for the practice. Before taking on this role, she was the

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