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by Anuj Jenveja, Director of Customer Success, Duetto

August 6, 2013

Hotels do not receive bookings on a 9 to 5 basis. Reservations are made all times of day and night, shifting rate structures and demand patterns at hotels, even while hotel management sleeps. 

Pricing, therefore, and price optimization, are not "9 to 5" functions - they take place 24 hours a day, 7 days a week. 

Yet we've all seen properties, where a revenue manager only monitors the property during regular business hours five days a week. Once 5 p.m. hits, they clock out and either hand over the keys to overworked front desk staff, or they don't do anything at all. 

This can be detrimental, if not devastating -- especially in markets with weekend compression (think Vegas and Atlantic City, for example). I've heard too many stories of a revenue manager arriving to work on a Monday morning and exclaiming, in exasperation - "We moved 80 rooms and now we're oversold!" Worse yet, think about the money left on the table by not yielding during that time.

How does it happen? Like this. At a property with lots of weekend business, like a resort or casino, it may not be out of the ordinary to get 10, 20 or 50 reservations on a Thursday or Friday evening for that weekend. Or maybe there's a big event that comes up, like a sports team unexpectedly advancing in a tournament, which brings plenty of out-of-town visitors. 

It can happen at more upscale properties, too. Imagine a large property reliant on group business that has a block of rooms held for an event a month out. The group might have a room block of 120 rooms in the PMS based on an expected wash off its contract. Then, when the rooming list comes back two weeks later at 70 rooms, there are suddenly 50 unsold rooms. Even worse, the opposite may happen -- the rooming list might come in at 150 rooms, well over the block, and the sales managers will try to slip in every room hoping the revenue manager doesn't notice. If it's over a very compressed period, like when there is a large convention in town, then the property might be in a serious overcommitted situation for this time period. If either situation transpired on a Friday evening, and no one noticed until Monday morning, in the first example you've just lost a full weekend of trying to sell those rooms at a lower rate. In the second example, you might have continued selling and allowed the property to get into an even more serious overcommitted situation by allowing rooms to be sold while the property was oversold (and probably at relatively low rates).

In such circumstances, even if the revenue managers had entrusted the front desk for help when they checked out for the weekend, the results are not likely to be good. The front-desk staff has other responsibilities, which largely means taking care of guests already in house, and beyond that, they're not technically trained to monitor pace and yield, especially for future dates.

There was a time when the revenue management function fell to the front desk -- but as the discipline has grown in importance and become a legitimate function of hotel management, the front desk has become less engaged in rate management, and more inclined to stay on the sidelines.

So, it's clear: A property can make much more money by revenue managing around the clock, than by leaving the process to chance, or under-trained staff. 

The most profitable hotels have a revenue manager who thinks like the owner, living and breathing with the bottom line. The hotel's performance reflects the revenue manager's performance, and I know then when I was a revenue manger, I didn't want to fail. 

Revenue managers who bring that ethos are invaluable, and should be incentivized with bonuses based on the hotel's performance. Their job is vital to the profitability of the property.

Which type of revenue manager would you want running your hotel? The one who clocks out at 5 p.m., or the one who treats the hotel as an owner would? 

I'm not saying revenue managers shouldn't sleep at night, but owners should understand the dynamics of revenue management, and should realize, if they do not already, that they need as much help as possible to do the job correctly. They need the right tools, like Duetto Edge  (www.duettoedge.com), which makes it easy for a revenue manager to check booking patterns remotely, and identify urgent situations. When they log in, which can be done without waiting for a VPN to respond, the cloud-based system alerts them to the most critical situations that require immediate attention. They can pop on, see a problem and fix it in minutes. 

And with Duetto Edge, it need not be all about the Revenue Manager - other employees can also be monitor the system during off hours. The Edge's reliable forecasting and yielding recommendations can easily be implemented, and monitored, with a minimum amount of effort or training.

I wish I had had access to an application like that when I was revenue managing, 24/7, before Duetto Edge was developed.

With it, I could have relaxed knowing the system was thinking for me while I was away from my computer.

About Duetto

Duetto provides hotel executives with cutting-edge solutions to optimize demand, maximize rates, and minimize costs. Leveraging travel industry 'big data', Duetto highlights opportunities to raise rates or shift mix, monitor competitors, identify parity problems, reduce technology costs and eliminate the need for tedious data entry. Powered by leading Silicon Valley technologists and hospitality industry veterans, Duetto is where innovation and insight meet - to help the hotel industry create new standards of efficiency and profitability, and re-think how revenue management is done. Duetto has attracted many of the highest regarded investors and advisors from the hospitality and technology industries, including, among others, Thayer Ventures, Battery Ventures, Trinity Ventures, Altimeter Capital, Lee Pillsbury, founder and Chairman of Thayer Lodging, and Marc Benioff, founder, Chairman and CEO of Salesforce.com.

Contact: Michael Frenkel, MFC PR - New York

michael@mfcpr.com / 212-808-6559

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August 6, 2013 4:55pm

David says:

I find it very improbable that the author, “…heard too many stories of a revenue manager arriving to work on a Monday morning and exclaiming, in exasperation - “We moved 80 rooms and now we’re oversold!” Worse yet, think about the money left on the table by not yielding during that time.”

I enjoy articles on analytics and revenue management and I thought I was reading as such, but when I read the above within the first few paragraphs I wondered if this was a serious article at all.  I continued reading this and realized this was an advertisement for business.  What a waste.  This would rarely happen in today’s data intensive automated systems with proper forecasting parameters set guiding pricing levels.

This article assumes a single price was set with no overbooking parameters set.