Carol Verret Consulting 
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The GM'S Role in
Revenue Management
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Carol Verret / October 2004
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October 2004

At a recent regional General Manager's meeting, I was invited to facilitate a discussion on the revenue management process and the GM's role.  There were seven General Managers in the room and we had about as many opinions on the subject.

The opening comments ranged from not quite knowing what the Revenue Manager actually did all day to viewing the Revenue Manager as setting policy on the rates to be quoted by everyone in a position to do so -- with a lot of comments in between.  Some viewed the Revenue Manager as a gatherer of data only and the position as being essentially a part-time function while others viewed the Revenue Manager as critical to the overall revenue strategy of the hotel.

I would hazard a guess that the answer is variable, depending upon the company and the hotel policy.  What was evident in this discussion was that some GMs had a higher comfort level with the Revenue Management process than others. 

The relationship between the sales department of the hotel and the Revenue Manager is another potential area of confusion.  In some situations, Directors of Sales have indicated to me that there was little communication between the two departments. Many times group blocks were sabotaged by a lower rate that the Revenue Manager had offered to the Electronic Distribution Channels, incurring a high attrition rate for groups whose attendees had located that lower rate for the hotel on the Internet and booked out of the block. 

One DOS indicated that her staff had to get approval from the Revenue Manager prior to quoting rates for groups.  It was often difficult for the sales person to explain a lower rate quote for a certain period of time justified by the organization's potential to book more business in an opportunity period, the need for rate consistency within a market segment, or a long standing relationship that the organization had with the hotel. 

How does a GM lead the Revenue Management process to ensure that both the needs of the client and the hotel's revenue objectives are met, not to mention ensure the cohesiveness of the team?
 

Understand the Revenue Management Process. Many General Mangers are uncomfortable with the process because they simply do not fully understand it. The discipline of revenue management has morphed over time with many new systems and programs available. Take a course on up to date revenue management. There are many offered on the Internet that are both time and cost effective. You cannot manage the process unless you fully understand it.
Develop an open attitude about the Electronic Distribution Channels. Back off, take a deep breath and consider the following: 1. These are reservations that your front desk or reservations staff does not have to process, 2. You have been paying a commission to Travel Agents since the beginning of time anyway and 3. You don't have to offer them a dirt bag rate! While recently assisting a client in the development of the hotel's revenue management strategy, it became evident that the ADR for these channels in one high occupancy period exceeded the hotel's ADR by $5 (after commission). Why? Because the hotel had let them pull the rate from the GDS during a period when all low rates were closed. By understanding this, you can make these electronic channels a valuable part of your revenue management strategy.
Establish a Revenue Management Strategy. Simply put, this means establishing room and rate allocations by market segment and opportunity dates and seasonality for the year, to be reviewed quarterly. This should be an essential part of the marketing plan developed in collaboration with the Revenue Manager, the sales department, front office and reservation managers and anyone else whose department is affected. Be prepared for heated discussions as everyone makes their case for their "pet" market segments. Make it clear that if sales or anyone else wants to give a lower rate to a group or segment in a given time period, the revenue must be made up in other segments.
Conflict Management. Expect conflict. As a wise person once said to me "Harmony is vastly overrated." While I am not suggesting that you tolerate a prolonged battle zone within the hotel, the dynamic that arises when people have conflicting but justifiable views benefits the process. Create a framework for managing revenue management conflicts when they arise and establish a decision making process -- even if that means that you cast the deciding vote. Leadership is not a popularity contest!
Be prepared to take risks. Revenue Management is not an exact science. Be prepared to take risks yourself and encourage the "risk takers" on your staff, provided that they can provide valid reasons to take them. You will win sometimes and sometimes you will lose. Example in point: A General Manager I know decided to vote against becoming a host hotel for a certain group and not to offer the preferred rate with the comp rooms that the group was asking for. His was the only hotel in the market not to do so. The "last to fill at the highest rate" strategy is always a risky one. A week prior to the group's arrival, they were sitting pretty much dead empty, the anticipated demand no where in sight and the GM was sweating bullets. At the end of the day, or night in this case, the hotel filled at a rate $25 higher than the rest of the market but it could have gone either way.

Leading the revenue management process is critical to the success of the hotel. It is not about analyzing the data within the spreadsheet but is ultimately about creating value for guests in every market segment without jeopardizing the hotel's revenue goals -- it is that guest value quotient that we often lose site of in the process!

Carol Verret Consulting and Training is a full service company offering consulting, training and other services to the hospitality industry in the areas of sales, marketing, customer service and human resources. Included in their suite of services are programs on Revenue Management, Leadership and Conflict Management. Please direct any feedback directly to Carol Verret at , or by phone (303) 618-4065 or visit the web site, www.carolverret.com.

copyright Carol Verret, 2002-2003 -2004



If you would like Carol or one of her associates to conduct a marketing plan seminar for your company like the one mentioned above or a facilitation, as mentioned in this article, contact her at carol@carolverret.com. Don't delay -- September is filling up fast!

Carol Verret is President of Carol Verret Consulting and Training, a company offering consulting and training seminars to the hospitality industry in the areas of sales and marketing and customer service.  If you missed attending our live webcasts in the Training Byte Series in 2003, you will be glad to know that we offer each "Training Byte" in PDF format on our web site. We will not be repeating these webcasts in 2004. To order your copy, please visit
http://www.carolverret.com/webcast_training.htm

Our Training Bytes Series for 2004 has begun!

Give your team the advantage - get help from a Pro!

Verret is a twenty-year veteran of the hotel industry. She arrived in Denver in the midst of an economic downturn and quickly established herself as an expert in sales and marketing in hotel turn-around situations, applying her formula for REVPAR improvement. To learn more about Carol Verret, Consulting and Training, visit her web site at http://www.carolverret.com

Send email to carol@carolverret.com


 
Contact:
Carol Verret
  3140 S. Peoria St, PMB 436
  Aurora, CO 80014
(303) 618-4065
Web Site: http://www.carolverret.biz
Email: carol@carolverret.biz
Also See: Transforming the Hotel Sales Organization; Alignment with the New Realities of Sales / Carol Verret / August 2004
The Revenue Management Strategy - The Pre-Plan Marketing Plan / Carol Verret / July 2004
Hotel Revenue Management this Summer - a Game of Skill, Art and Most of All Nerves / Carol Verett / May 2004
What Do Meeting Planners Want? Hotel Sales Managers Want to Know! / Carol Verret / May 2004
Revenue Management -- The Integration of Revenue Drivers / Carol Verret / March 2004
CYBER SALES -- Hotel Sales in an Internet World is the New Reality / Carol Verret / February 2004
The New Realities of Hotel Sales - Focus on Revenue Generation / Carol Verret / January 2004
Hotel Sales -- Innovation in the Face of Limitations / Carol Verret / November 2003
The Good News & the Bad News; Improving Economy = New Hotel Development / Carol Verret / October 2003
Leadership - General Managers Managing the Sales Process / Carol Verret  / October 2003
When the Crystal Ball is Cloudy; Marketing Plans for 2004 / Carol Verret / July 2003
Partnership of Sales and Technology; Using Tech Tools to "Sell" the Hotels / Carol Verret  / July 2003
Back to the Basics? The Basics of Hotel Sales Have Changed! / May 2003
Creating Sales "HUNTERS": The Skill Sets Required in the New Hotel Sales Environment / April 2003
Heightened Security Requires New Strategies in Hotels Sales / Carol Verret Consulting and Training / Mar 2003
Revenue Recovery - Building The ‘A’ Team in Sales / Carol Verret / January 2003
Contingency Marketing Plan – War In Iraq! / Carol Verret / November 2002
Playing the Rate Game - Positioning -- Positioning -- Positioning! / Carol Verret / October 2002
The Rate Game - Playing to Win / Carol Verret / October 2002
The Challenge of Marketing Independent Boutique Hotels / Carol Verett / August 2002
Hotel Sales in a Limited Service Environment - The Rules Have Changed / Carol Verett / August 2002
The General Manager’s Role in Sales -Chief Marketing Officer of the Hotel / Carol Verret / April 2002
100% Market Share Penetration is Not Good Enough / Carol Verett / January 2002
The Key to REVPAR Recovery –  New Business Development / Carol Verett / December  2001
Trash the 2002 Marketing Plan - And Just Start Over / Carol Verett / September 2001
How to Use Consultants Effectively –  A View From the Other Side  / Carol Verret / August 2001
How Soft Is Your Hotel's Economic Landing?  / Carol Verret / Aprl 2001
The ‘Value Proposition’: Marketing Yourself to Prospective Employees / Carol Verret / January 2001
Generation Y:  Motivating and Training a New Generation of Employees / Carol Verret / November  2000
Why Customer Service Seminars Don't Work / Carol Verret / October 2000
Creating a Culture of Customer Service / Carol Verret Consulting and Training / Sept 2000 
FAT, DUMB AND HAPPY – The Seasonal Boom and  Bust Cycle / Carol Verret / August 2000
Surf's Up - Ride the Wave or Miss the Boat -The Effective Use of Technology in Hotel Sales / Carol Verret / July 2000 
Measuring Effectiveness of  Hotel Sales Departments / Carol Verret / June 2000
Hotel Sales Training - The Need for Immediate Results / Carol Verret/ May 2000



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