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Revenue Management for Hotel GMs
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What You Don’t Know Can
Jump Up and Bite You! 
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by Carol Verret, July 2006 

General Managers have vastly different levels of understanding the revenue management process. In this year of opportunity, what a general manager doesn’t know and understand can jump up and bite him or her you know where. The levels of understanding tends to range from “I don’t really know what the Revenue Manager does all day” to those GMs whose background was revenue management. 

If you as a GM fall into the first category or anywhere close (and you know who you are), a speedy ramp up on revenue management is critical to your property maximizing the revenue that ultimately becomes the basis for your bonus or incentive. The gaps in your RM skill set can jump up and bite you in the wallet – how’s that for a WIIFM* factor!

There is a feeling on the part of many GMs that Revenue Management is simply the old yield management concept repackaged. Yield management is part of it but it is far more complex than that and advances in the discipline are morphing at light speed. 

Revenue Management is more complex than ever and changes in the discipline are morphing at light speed. RM not only manages demand during peak periods but also has a huge impact on stimulating demand in shoulder seasons. RM no longer only applies to room revenue but to managing the potential revenue for all profit centers. It enables a smart Customer Relationship Management strategy that has the potential to stimulate demand from the most valuable guests. 

The position of the General Manager is one of juggling competing priorities, keeping the department heads from seriously hurting each other and at the same time trying to produce an exceptional guest experience. What’s a GM to do to ramp up the Revenue Management IQ? Below are a few areas to test your RM IQ.

  • Understand the Reports. Your Revenue Manager probably produces a plethora of reports and proudly gives them to you during the Revenue Management meeting. (You do have a weekly Revenue Management Committee meeting, don’t you?) The reports come from various sources including the PMS, the GDS, the various channels and franchise reports. The Revenue Manager has probably designed a few of their own. Stare at them until they begin to make sense, ask for explanations and don’t pretend that you understand them when you don’t. 
  • Daily, Weekly and Monthly Disciplines. This is key to understanding what your Revenue Manager does all day. There is a set of activities that need to be performed at these intervals. Know what they are – how else can you measure how well the Revenue Manager is executing the RM strategy.
  • Channel Management. We now refer to channels as all sources of reservations. If you still think this refers only to the Internet travel sites, you need to ramp up. Managing these channels is more than just turning the inventory and rate faucet on and off, it also includes merchant agreements, internet specials, GDS marketing etc, to stimulate demand. This is a critical area for your Revenue Manager.
  • Web Site. Especially if you are managing an independent hotel or resort, you as a GM need to understand site design, optimization and Internet marketing. This is critical to the success of any independent. Your Revenue Manager should be intimately involved with the design and functionality of the reservation engine on your site. 
  • Rate Strategy versus Pricing Strategy. The rate strategy is where you position your rate structure for the year or fiscal period. The pricing strategy includes closing discounts, rates for ‘hot dates’ etc., in the short term or within the period covered by the rate strategy. 
  • Revenue Management and Customer Relationship Management. This tends to produce the glazed over ‘deer in the headlights’ look. The simple explanation is that CRM is about identifying the value of customers, individually or by market segment and then developing relationships with them in order to secure their loyalty or, put simply, repeat business. It can be this simple or much more complex but GMs need to understand what this means and the implications for the future.
The above is a short list of some of the basics that all GMs need to have a grasp of even if their Revenue Manager is supported by a Corporate Revenue Manager – remember it is your hotel’s revenue for which you are ultimately responsible and compensated for. For those of you who don’t know what the WIIFM factor is it is the acronym for What’s In It For Me – I hope we made that case!
 
Carol Verret is hosting a web cast on revenue management The Revenue Management Accelerator – the Next Level on July 28 for those for those of you who wish to increase your Revenue Management IQ. Click here for details.




Carol Verret And Associates Consulting and Training offers training services and consulting in the areas of sales, revenue management and customer service primarily but not exclusively to the hospitality industry. To find out more about the company click on www.carolverret.com. To contact carol send her an email at carol@carolverret.com or she can be reached by cell phone (303) 618-4065.

copyright © Carol Verret, 2002-2003 -2004 -2005 - 2006


 
Contact:
Carol Verret, Consulting and Training
Carol Verret
5910 S. University #C-18, PMB 374
Greenwood Village, CO 80121
Telephone: (303) 618-4065
carol@carolverret.com
Web Site: http://www.carolverret.com/
Email: carol@carolverret.com
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Also See: Feeding the Revenue Elephant; Hotel Revenue Management / Summer 2006 
The "Tipping Point" - Identifying the Touch Points in Hotel Sales / Carol Verret / May 2006
The "Tipping Point" - Touch Points Make a Difference in Customer Service Training / Carol Verret / April 2006
Selling Up! Taking Group Room Revenue to a New Level / Carol Verret / February 2006
Revenue Management 2006; The Risks and Rewards / Carol Verret /January 2006 
Revenue Management and Group Sales - The Partnership Not the Disconnect / Carol Verret / November 2005
Habits of Highly Successful Hotel Sales People / Carol Verret / September 2005
Triple Witching Hour - The Marketing Plan, Revenue Management Strategy and RFPs for '06 / Carol Verret / August 2005
"Smile" is a Learned Behavior - Creating a Culture of Customer Service / Carol Verret / July 2005
Revenue Management Systems -- Considerations for Evaluation / Carol Verret / June 2005
Disconnect -- Aligning the Revenue Management and Sales Strategies / Carol Verret / May 2005
Independent Hotels & Resorts; Ride the Wave or Float with the Tide? / Carol Verret / March 2005
Hospitality Sales Training Companies Reach Across the Competitive Playing Field to Combine Live Seminar Expertise with  the Convenience of the Internet / Carol Verret / January 2005
Revenue Management - The Challenge for Hotel Sales / Carol Verret / January 2005
Hotel Sales Departments -- Issues in Processes and Functionality / Carol Verret / November 2004
The GM'S Role in Revenue Management / Carol Verret / October 2004
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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