The Next Hotel Revenue Manager Generation in the AI Era

In today’s competitive hospitality industry, revenue management is the key to success. It’s a blend of strategic thinking and data analysis, and it’s constantly changing.

Traditionally, revenue managers relied on experience and manual tools, but now technology is revolutionizing the field. Artificial Intelligence (AI) is now transforming the field. This shift goes beyond simply using new technology. It marks a fundamental change in how professionals approach their work. AI in revenue management isn’t just about having new tools; It’s about a new way of thinking that merges human creativity with the incredible power of modern AI.

But the success of a hotel hinges on its Revenue Manager in order to maximize profits, these strategic leaders orchestrate collaboration across departments, ensuring everyone works towards the same goal: increased revenue and profitability, this is why hotels rely heavily on Revenue Managers.

What or Who is a Hotel Revenue Manager?

A revenue manager as title was first used by the airline industry, then revenue management expertise was introduced in the hotel industry by Marriott in the late 1980s. Since then, the position did not stop evolving to adapt to growing expectations. However, the revenue manager has evolved from first being known as a reservation manager and then a yield manager. The position changed its title over time to be called a revenue manager or revenue strategist. The role of the revenue manager is evolving. They are being asked to take on more responsibility for optimizing profit, while at the same time new data and technology are making basic decisions more difficult. This shift is creating a need for revenue managers who can think strategically and lead to solve complex problems.

The multitude of technologies available to customers and businesses and the increase of online distribution channels do not limit the revenue manager’s role anymore to just opening and closing availability and rates. The evolution from fix to dynamic pricing strategies, from tactical to strategic expertise, coupled with customer behavior changes, urged revenue managers to develop multi-functional skills.

Which Revenue Manager Generation Are You?

As a revenue manager, have you asked yourself who am I? which generation am I? what is the future showing for me, in order to identify yourself? Let us talk about the various generations as below:

The First Generation of Revenue Managers were those individuals who were most often members of an on-property reservations team. Their role may have been one of a reservation supervisor or manager. When the Internet emerged and electronic reservations became far more mainstream, these pioneers formed the early cohort of revenue managers. They were largely self-taught, still expected to run reservations, in many cases ill-equipped to handle the tasks of the intricate and complicated world of online distribution.

The Second Generation of Revenue Managers emerged as the hospitality industry evolved, these revenue management professionals became accomplished tacticians. Their primary mission was to open and close rates, dates, and stays in order to optimize demand. Their tools were predominantly Excel spreadsheets, and their role was subjugated to that of the director of sales and marketing or even the front office. Fewer hotels deployed sophisticated revenue management systems in those days, and system interfaces were definitely a challenge. Many revenue managers were tasked with managing individual extranets, and it wasn’t unusual for reservations to arrive via email to be re-keyed into the property management system.

The Third Generation of Revenue Managers Before COVID, a third generation of revenue managers had emerged, albeit slowly in some sectors of the industry. The shift from tactician to strategist was underway. Many revenue directors were finding ways to dig themselves out of the minutiae. The importance of the position in the leadership hierarchy was cemented. Large, full-service hotels had dedicated directors of revenue, and virtually all other hotel classes had some form of revenue management effort, either through shared resources or third-party vendors. Although total revenue management was far from a reality, and the vital connection to digital marketing was sporadic, progress was being made.

Then COVID-19 hit, and many in the industry were questioning the need for a revenue manager. If there wasn’t any revenue to manage. I can appreciate the premise, but now is the very time to re-engineer the revenue management role. We often hear that a downturn in the industry is not the time to forego marketing. Well, this is not the time and will not be the time to forego the revenue management effort.

Today, consumer buying behavior is evolving so rapidly. Revenue Managers must feel like they are trying “to shoe a horse on a dead run”. Not to mention that technology is more complex, distribution options multiply day by day, and business intelligence reports are seemingly limitless. How does a revenue management professional keep pace with this change and the associated complexities?

The answer is they don’t. No one can possibly stay abreast of these changes, much less discern which trends are for real and which will evaporate when the next newest phenomena emerge. As a revenue management specialist, I can’t keep up with the plethora of new information, technologies, and best practices…and I do this for a living…all day every day.

So, what is a Revenue Manager to do? And how does a hotel or hotel company determine whether their revenue management resources are first, second, or third generation professionals?

In addition, the need to be technologically savvy was also evident as distribution evolved from a semi-restricted environment of PMS/CRS/GDS to PMS/CRS/GDS/Website/OTA/Onward distribution and niche sites.

The Fourth Generation of Revenue Managers it is the AI time. However, this isn’t just a transition from Excel to AI; it’s a whole new way to think about maximizing hotel profits. It’s a chance for revenue managers to level up their skills, dive into innovation, and guide their hotels towards a future where human ideas and AI insights work together for incredible results.

As we enter this exciting time, one thing’s for sure: AI isn’t just about keeping up with the competition. It’s about becoming the best revenue managers and leaders we can be.

Remember, the real secret weapon is you as a revenue manager, not the technology. But using that technology is essential! As below:

How the Revenue Management Game is Changing: The NextGen Revenue Managers

The hospitality industry is constantly evolving, and the role of the revenue manager is no exception. As technology advances, a new generation of revenue managers is emerging, equipped with a different skillset than their predecessors. Let’s explore what defines this “NextGen” and how they’ll navigate the hotel landscape.

Farewell to Spreadsheets, Hello to Strategic Thinking, Tech-Savvy and Data-Driven

The introduction of spreadsheet software like Excel was a revolutionary step forward for revenue management. It allowed professionals to organize vast amounts of data, perform complex calculations, and visualize trends with unprecedented ease. Excel became an indispensable tool for revenue managers, enabling them to forecast demand, set pricing strategies, and optimize distribution channels more effectively than ever before.

Traditionally, revenue management was a data-heavy field. Revenue managers spent countless hours manipulating spreadsheets and wrestling with complex pricing strategies. However, as the industry’s complexity grew, so did the limitations of manual data analysis and decision-making. Enter the era of AI as it is changing this. By automating tedious tasks like data collection and price calculations, AI frees up revenue managers to focus on the bigger picture. They can now leverage their human expertise for strategic decision-making, crafting revenue-generating initiatives and fostering collaboration across departments.

Forget the days of spreadsheet dominance. NextGen revenue managers are digital natives, comfortable wielding a vast array of technology tools. Revenue Management Systems (RMS) and data visualization platforms are second nature to them. This fluency allows them to analyze complex data sets, identify revenue opportunities, and translate insights into actionable strategies.

The Power of Prediction: AI as a Crystal Ball with Agility in a Dynamic Market

In today’s dynamic travel landscape, accurate forecasting is crucial. AI-powered revenue management systems (RMS) are the new crystal balls, analyzing vast amounts of data to predict future demand with unparalleled accuracy. This empowers revenue managers to make data-driven decisions on pricing, inventory allocation, and marketing campaigns, maximizing revenue in an ever-evolving market.

The travel landscape is more fluid than ever. NextGen revenue managers are masters of adaptation. They can quickly adjust pricing strategies based on real-time market fluctuations, competitor activity, and unforeseen events. This agility allows them to capitalize on opportunities and mitigate risks in a dynamic environment.

The Human Touch Endures: Why AI Needs a Partner

Despite advances in technology, the human element remains irreplaceable. The real-world application of revenue management thrives on the intuition, experience, and creativity of professionals who can interpret data, understand the nuances of customer behavior, and craft innovative strategies that resonate with the market. This blend of technology and human insight is the secret sauce that drives success in the hospitality industry.

While AI excels at number-crunching, it can’t replace the human element of hospitality. Revenue managers bring their intuition, industry knowledge, and understanding of guest behavior to the table. This human touch remains vital for crafting personalized guest experiences and navigating unforeseen circumstances. The future belongs to the revenue managers who can work seamlessly with AI, leveraging its power to make informed decisions while maintaining a guest-centric approach.

While technology plays a crucial role, the human element remains vital. NextGen revenue managers won’t be replaced by robots. Their strength lies in combining data-driven insights with human intuition and guest understanding. They’ll use AI to make informed decisions but retain the human touch that personalizes the guest experience.

Beyond the Room: Holistic Revenue Focus and Collaboration

NextGen hoteliers understand the power of collaboration. They’ll break down departmental silos, working closely with sales, marketing, and guest services to create a unified revenue generation strategy. This collaborative approach ensures all aspects of the guest experience contribute to the hotel’s bottom line.

While room rates remain a core focus, NextGen revenue managers recognize the broader revenue picture. They’ll explore maximizing income from ancillary services like spa treatments, in-room dining, and experience packages. Upselling and dynamic pricing will be second nature, all while maintaining a guest-centric approach.

The Future is Bright: Preparing the Next Revenue Manager Generation

Hospitality schools need to adapt their curriculums to equip the next generation of revenue managers with the skills to thrive in the AI age. Courses in data analysis, AI fundamentals, and strategic thinking will be essential for future hospitality leaders.

The arrival of AI is not the end of the revenue manager. It’s the beginning of a new and exciting chapter. The next generation of revenue managers will be strategic powerhouses, wielding the power of AI to optimize profitability while ensuring exceptional guest experiences. This is the era of the revenue management renegade, and the future of hospitality looks bright.

The rise of the NextGen revenue manager is a positive development for the hospitality industry. Their tech-savvy approach, holistic focus, and collaborative spirit will drive innovation and profitability. As they navigate the ever-changing travel landscape, they’ll ensure hotels remain competitive and guests continue to receive exceptional experiences.

“Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com”