How Hotel Revenue Management Impacts Sales
By Shelley Maher Director of Business Development & Client Relations, Total Customized Revenue Management | May 05, 2019
This article was co-authored by Marcela Trujillo, Senior Revenue Consultant, Total Customized Revenue Management
"In the hospitality industry, Revenue and Sales leaders are two peas in a pod." This statement is likely to be disputed by professionals on both sides. Hospitality Revenue Management continues to evolve into an essential and finely-tuned art, with more data, more systems, and more advanced tools to assist in maximizing strategy and potential. This impressive development, however, should not overshadow the importance of the relationship between the Revenue Team and the Sales Team. To effectively optimize all of the revenue streams of an asset, there must be concentrated collaboration between various departments, especially Revenue and Sales.
What impact does Revenue Management really have on Sales? This is a common question, and has many different answers, depending on who is being asked. Isn't it true that the Revenue Department is really just the Revenue Manager sitting alone analyzing trends and adjusting pricing in a world all their own? And doesn't the Sales Team simply entertain customers in the restaurant or take them on site visits? While these descriptions are exaggerated generalizations, the reality is that neither Revenue nor Sales can achieve positive results alone. The level of expertise in each of these departments is invaluable to an asset when applied together to maximize profitability.
One of the most important ways that Revenue can impact Sales is by opening lines of communication. There is a reason why leaders are chosen for their respective departments, and each one brings a unique level of expertise. These skills and viewpoints are different for Revenue and Sales professionals. The Revenue Manager can offer the Sales Professional a deeper look into the world of Revenue Management, and can provide a new level of understanding of the reasons certain directions in strategy are suggested, especially when it comes to quoting rates for both individual and group travelers.
On the other side, a Sales Manager, looking at the bigger picture, may request a lower rate for a group or individual to lock in that piece of business. Communication regarding these factors can create a broader understanding and lead to compromise – key in these scenarios – so that Sales can continue to nurture the relationship and Revenue can garner reasonable rates.
This points to the progression in the definition of what the roles of Revenue Managers and Sales Managers should be. The goal is no longer simply to achieve topline revenues in Transient and Group segments. Today's goals involve working together to optimize every revenue stream that is touched by the two disciplines. Beyond room night production, ADR and RevPAR, there is the maximization of banquet and meeting spaces, catering and F&B revenue, as well as creatively utilizing Spa, Golf, and other revenue streams in order to bring those topline realizations to the bottom line.
For example, a corporate group will probably request sleeping rooms, but will also request meeting space, possibly AV, additional breakout rooms, plus food and beverage. Given the amount of potential spend on various revenue streams, the room rate provided can be more flexible to offer the group incentive to confirm their stay. This type of group is ideal, increasing profitability over a time frame that may otherwise have had only room reservations, without the additional revenue. This is how the most profitable decisions are made, working together for asset rather than for each individual department.