Home Revenue Management Back To Basics What Not to Do in Revenue Management, Part One

What Not to Do in Revenue Management, Part One

Sep 6, 2013  By 

 Today, most articles are full of advice: best practices, tips, tricks and information that will help you do your job better. But as useful as those tips can be, it can often be even more helpful to learn what NOT to do, especially when it comes to a field like revenue management where there are as many different opinions, as there are hotels.

So let’s get down to business. Here are five things NOT to do in revenue management.

DON’T Think That Your Customers Know Anything About Your Compset

When most revenue managers analyze the rates of their competition, they typically only compare their rates with the small number of hotels in their compset. This is a mistake. When potential guests search online to find a hotel for their upcoming trip, they don’t consider compsets. They search through all of the hotels within a certain star rating (or two!) within a destination. If revenue managers don’t think like their customers, and therefore, if they don’t provide rates that will appeal to customers’ needs, they will lose the booking to another property — and another revenue manager — who can.

DON’T Use Stagnant Rates

As you probably all know from reading my previous articles, I am a big, HUGE supporter of dynamic rates. Why? Because in today’s highly competitive and ever-changing marketplace, updating your prices in the online channel once a day is not nearly often enough. By consistently updating your rates in real-time as factors within the market change, your property will be able to secure as many bookings as possible, at the highest rate possible. Dynamic rates are the ONLY way to fully capitalize on the revenue-earning opportunity offered by the online channel.

DON’T Forget to Replenish your Inventory Online

Just like with rates, which need to be updated constantly, it is important that revenue managers are replenishing their online inventory immediately when it runs out. Especially during busy season, when an entire block of rooms could be booked in hours or even minutes, if you’re not replenishing your inventory on a regular basis, you’re losing valuable revenue

DON’T Overcomplicate Your Job

I’m sure that you’ve heard the phrase K.I.S.S., which stands for Keep It Simple Silly. As a revenue manager, because your job has so many very important responsibilities ­ many of which are hugely time-consuming ­ it’s important that you follow this rule of thumb. If you’ve ever heard the term Ounconstrained demand’, then you know what I’m talking about!

Your goal each day should be to minimize the busy work that can come along with the job ­ endless reporting, meetings, etc. — so that you can focus on the activities that earn your property money. A good rule of thumb is to aim to spend 80% of your time on the functions that directly impact revenues and only 20% of your time on admin tasks.

DON’T Be Afraid of Technology

Revenue management technology was designed as a tool to help revenue managers be more effective and productive in their jobs, NOT replace them altogether. Revenue managers should be taking advantage of technology to manage the never-ending data analysis and automatic updating of rates and inventory in the online channel. Only by using sophisticated technology, will a revenue manager be able to be as efficient as possible, and therefore earn as much money as possible from each booking.

Check back next week for “What Not to Do in Revenue Management ­ Part Two” which will examine the remaining sins of revenue management, and how you can avoid making the same mistakes.


About Jean Francois Mourier

Jean Francois Mourier

Jean Francois Mourier arrived in South Florida in 2003 after a successful and distinguished career in Europe as a trader, financial analyst and director for a number of top firms including Merrill Lynch, ING Barings and others. He joined

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