OrganizationPosted by Annemarie Gubanski Jun 23, 2015 11:35:12
A Revenue Management Outsourcing program can mean so much more than just outsourcing, it should always give you a long term solution.
A proper outsourcing program should not only mean that you hire an expert in Revenue- and Distribution Management, you also hire a mentor; someone to interact and be creative with. An external Revenue Manager might also give you a different view to your usual routines and commercial actions. Your situation will be seen with fresh and objective eyes that might bring new opportunities.
Another important benefit of a well working Revenue Management outsourcing program is that it gives you a chance to understand how you can increase your profit margin and be able to take over the Revenue- and Distribution Management function in the future.
As each property is unique, Outsourcing programs mostly are individually adapted to the individual goals and needs of the customer. The services Taktikon offers are various starting from Light (around 10-15 hours per month) to Full Revenue Outsourcing (around 20-25 hours per week) with a duration of a few months to a few years. Whatever the level or duration, we always aim to increase the level of knowledge so that our clients are able to stand on their own Revenue Feet in the future.
When a Revenue Outsourcing Program is tailor made, it is ideal for a broad kind of properties; individual hotels as well as mid sized chains, for organisations that would like to start with Revenue Management and Distribution/E-Commerce as well as hotels or resorts that do have a Revenue- and Distribution team in place but would like to have a mentor or are without a Revenue Manager for a period of time.
In our opinion, programs should start with a full Revenue Audit, which forms the basis of outsourcing services. An audit is aimed to find the revenue opportunities within each company and should result in a report with clear action points so that properties can start working together with their Revenue Expert. In the Audit that Taktikon performs, we focus to achieve the optimal Marketing Mix, Distribution Strategies, Rate Structure and Revenue Organisation. Our Outsourcing Program is aimed to help hoteliers implement our findings and achieve an improved profit margin.
OrganizationPosted by Annemarie Gubanski May 22, 2014 14:16:13
The future Revenue Management Organization
The increasing importance from Social Media as well
as the move towards Total Revenue
Management and Profit Management has an
effect on the organization. In the near
future we will see that the different departments will work more closely
Having an effective Revenue
Management oriented organization will be more vital than ever. In this article
I will try to highlight which effects are behind the necessity to work more
closely together and what impact it has on your organization.
The Social Media effect
Social Media was, from the beginning, seen as “the thing
for the Marketing people”. Fortunately, organizations are now acknowledging the
effect it has on the entire
A study that Micros published
in april 2013 showed that a high position on TripAdvisor can lead to an
increased amount of reservations through the hotels website. Cornell published
in november 2012 a study on The Impact of Social Media on Lodging Performance where
they stated that a hotel can increase their price by 11,2% and still maintain
MPI if it increases its review scores by 1 point on a 5-point scale. This is confirmed
by Expedia, who find that “good reviews of 4.0 or 5.0 generate more than double
the conversion of a review of 1.0 – 2.9.”
Social Media can help increase both occupancy and rate. This means that these
media are important tools for the hotel industry and for Revenue Management in
order to increase result. And what are our guests talking about? Apart from the
size of the room and location of the property, the comments mainly involve
Operations oriented issues, such as cleanliness, friendliness, quality of food,
etc. This means that one of the most important marketing channels; Social
Media, actually is influenced by your operational departments. The better they
function, the higher the rate and better the chance you get to increase your
are moving towards a more individualized world, certainly helped with the
increase of Social Media. We are so used to being talked to individually on the
net, that we no longer are attracted by marketing campaigns directed to a
broader group. We want to feel like a company is talking to us directly. This forces
us to have a different approach towards our Market Segmentation. In a more
individualized world, we can no longer group our market segmentation mainly
depending on booking pattern and rate impact. We need to work with segments
that enable us to send individualized marketing campaigns to our clients. You
can read more about this in my earlier blog regarding Client segmentation.
Social Media has an immediate impact on our result as it has a positive effect
on both rate and number of reservations. Furthermore, they are excellent
channels that enable us to talk to our guests individually. The departments
that ensure an increase can be achieved are the Operations Departments, the
departments handling Social Media and the departments handling the brand
The Total Revenue Management effect
A clear trend within Revenue Management is the step
towards Total Revenue Management. This means that we are no longer “only”
focusing on Room- and/or Conference Revenue Management but apply this on all
revenue increasing departments, such as F&B outlets, minibar, spa, parking,
Applying Revenue Management on different
departments is interesting, as each department has its conditions to take into
account. The Time factor is different on Room Revenue as it is on most of the
other departments, as hotel rooms usually are booked per night, whereas the
other departments can face multiple requests that can differ from a few hours
to a few days. Menu Engineering is frequently used within Spa- and Restaurant
Revenue Management and is an excellent tool that enables properties to maximize
profit. I will write more on that in a later blog.
Smart scheduling can help optimize the use of the
spa facilities, as Smart Menus are used to attract the highest-margined dishes.
At its turn, all departments have the possibility to create highly commercial
packages and can calculate which impact the different package elements should
have on the different departments in order to create the optimized result.
This means that, besides increased knowledge in
Total Revenue Management, an organization needs to establish Who Does What and
have a close look into the different job descriptions and commission schemes for
the individual departments in order to make sure that all departments are
willing to work together to get the best total result for the property.
The Profit Management effect
With the move to Total Revenue Management, we see a
further swift towards Profit Management. This means that we not only look at
the revenue generated by the different departments, but even at the different
margins from each reservation. This involves both flexible and fixed cost such
as distribution, labor, rent, cleaning, purchasing, travel expenses and
This means that we will need to have a different
approach when it comes to mapping the different financial department codes
towards the revenue streams. Finance will need to have an increased cooperation
with the Revenue Management department in order to get the best picture. If
done right, we are able to calculate the exact net impact per reservation type
or market segment and with this obtain the best profit possible.
Are you ready for the future?
All commercial departments, operational departments
and Finance will be working together more closely in the future and if done
right, properties have the possibility to increase their net result
drastically. The question is; are you ready for the future?
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OrganizationPosted by Annemarie Gubanski Mar 01, 2014 13:22:01
The Power of Giving Compliments
In my neighborhood lives a man I have given the
somewhat non-original name; Compliments Man. It has happened to me a few times;
when he meets me on the street, he comes up to me, looks me in the eye and
says; “I just want to tell you, you look great”. I am far from exclusive, as
most days he just walks straight past me and goes to another girl, looks her in
the eye and says something. I know he tells her the same thing, as the reaction
is exactly the same as the way I react. A big smile. A happy face. I must admit
that I feel just a bit better and happier, the days I meet Compliments Man.
This reminds me about World Compliment Day, which
is a non-commercial initiative, held on the 1st of March every year.
From a commercial perspective; giving compliments
is about the best way to keep your staff and colleagues motivated and loyal. Showing
appreciation actually is far better and has a longer lasting effect than pay
raises, as these tend to be best only the first month. And why stop at the
working space? When was the last time you gave any of your friends and family a
spontaneous compliment? Think about how good it feels to receive one. Then
think about how great it feels to give one.
Support Compliment Day and give at least one
earnest compliment to any one of your friends, family, colleagues or innocent
by passers. I promise you that both parties will feel a lot better the whole
day. And with that said; why stop at Compliments Day? There are 365 days in a
year, you know?
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OrganizationPosted by Annemarie Gubanski Nov 22, 2013 22:46:19The Future Role of a Revenue Manager
After the first two articles in this series, we continue with the focus on the future role of a Revenue Manager. How will Revenue Management develop and how can a property adapt, so that the maximum result is acquired and they will keep ahead of their competitors? This is part three of a series of three articles, in which we will try to find an answer to the following questions:
- The current role of a Revenue Manager. In this article we defined that the purpose of a Revenue Manager is to use analytics in order to create the winning strategy.
- Forming a Revenue Management focused organization. After defining the role of a Revenue Manager, we used these findings to find the optimal organization
- The future role of a Revenue Manager. In an ever changing world, also the role of a Revenue Manager will change. In this article, we will find the answer to what implications these changes will have on the role of a Revenue Manager.
What do the experts say?
In Cheryl Kimes article about Total Revenue she refers to a study which she conducted in 2010 regarding the future of Revenue Management. She asked the respondents about what they thought what Revenue Management would look like in the future and in which other parts of the hotel they thought Revenue Management would be applied. “Respondents felt that in the future, Hotel Revenue Management would be more strategic in nature, would be more technology-enabled and that it would encompass all parts of the hotel. The respondents identified function space and restaurants as the most likely candidates for future applications of Revenue Management”. I believe this to be very true. Total Revenue Management can and should be part of the strategies of any property in order to ensure that increased result is being made. In future articles, I will write more about the subject of Total Revenue Management. In this article, I will limit myself to the implications for the organization and for the Revenue Manager.
During the Revenue Forum in November 2013, Idan Velleman from PowerYourRoom pointed out that Revenue Managers will become Demand- and Profit Managers and will move away from a Room Only Revenue Management effort. On the same Revenue Forum, Kim van den Wijngaard from Olery pointed out that Social Media already has a large impact on our Revenue Management strategies. There are studies done about the impact of Social Media on our result and on the possibility to attract more reservations coming in to our own website.
Cornell University published in November 2012 the outcome of their research: The Impact of Social Media on Lodging Performance, where they stated that “data from Travelocity illustrate that if a hotel increases its review scores by 1 point on a 5-point scale the hotel can increase its price by 11.2 % and still maintain the same occupancy or market share.” In the same report it is concluded that “a 1-percent reputation improvement leads up to a 1.42-percent increase in revenue per available room (RevPAR).” In other words; focus on Reputation Management together with the ability to give high quality service, generates reservations and revenue!
Jennifer Davies from Expedia says that “On Expedia.com, good reviews of 4.0 or 5.0 generate more than double the conversion of a review of 1.0 – 2.9,” Research that Micros published in April 2013 on How a Higher TripAdvisor Ranking Can Help Hotels Book More Room Nights has the following findings:
Properties ranked 20 see 10% more directly booked room nights p/month vs those ranked 40
Properties ranked 10 see 10% more directly booked room nights p/month vs those ranked 20
Properties ranked 5 see 9% more directly booked room nights p/month vs those ranked 10
Properties ranked 2 see 7% more directly booked room nights p/month vs those ranked 5
Properties ranked 1 see 11% more directly booked room nights p/month vs those ranked 2
The graph illustrates the importance of being on top. So; a great number of good reviews do not only generate Revenue, they generate Reservations. Do well and you will be able to attract more reservations coming through your own website; in most cases the cheapest channel you will be able to find!
The future is here!
I agree with the statement that the future of Revenue Management will be more focused on strategy, technology and applying Revenue Management on other departments. There already is a shift from hotels and hotel chains that is starting to extend the responsibility of the Revenue Management to the Function Spaces, however; I do not see properties to be massively moving to apply Revenue Management in their restaurants, which I consider to be a shame. I believe this is mostly because Restaurants are considered to be a service and not as the money making department it can be. There is no reason why the F&B Department should not contribute to the properties income more.
When it comes to technology, the shift is all about moving from Property Based systems to Cloud Based. On the Revenue Forum in Amsterdam, Thomas Broos from Van Hessen talked about the implications of this shift. He pointed out that today’s youngest generation will not know what a laptop looks like once they grow up. Developments in hotel systems are all done in the Cloud. Although we still are still not able to compile all our internal and external systems in one big database, the move towards The Cloud does mean that we are heading in the right direction. Imagine updating your PMS, OTA’s, Yield System and forecast from your Mobile Device. It will come! It does mean that we all should take this into account when purchasing any new technology. Think Cloud and skip Property Based! We have the knowledge, technology is moving in the right direction; why wait?
Challenges and Opportunities
The implication of the shift towards Total Revenue Management and Profit Management involves increased knowledge on the application of Revenue Management on departments other than Room. But not only training is of an essence. To an even greater extend staff members of all departments will have to be aware of the implications on their daily tasks. In many cases, a Revenue Management project on a property starts with making sure that all heads of department are aware of the changes the implementation of Revenue Management on their department. This can either be the fear of not being able to handle an increase in responsibilities on an already overloaded schedule, or the fear to delegate a certain responsibility to somebody else. The trick is to address these fears and make sure that the project involves increased knowledge and challenges to everybody.
I would advise you to take good care of the job description for your current or future Revenue Manager and keep in mind that, as I wrote in the first article “The Current Role of a Revenue Manager” in this series; there is a difference between a Revenue Manager and a Channel Manager.
Read the previous articles “The current role of a Revenue Manager” and “Forming a Revenue Management focused organization”
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OrganizationPosted by Annemarie Gubanski Nov 18, 2013 14:45:42
Forming a Revenue Management focused
After the first article in this
series, we continue with an analysis on how to create a Revenue Management
focused property. This is part two of a series of three articles, in which we
will try to find an answer to the following questions:
- The current role of
a Revenue Manager. In this article we defined that the purpose of a Revenue Manager is to
use analytics in order to create the winning strategy.
- Forming a Revenue
Management focused organization. Now we defined the role and skills of a Revenue
Manager, we will see if we can use these findings to form the optimal Revenue
Management oriented organizational schedule
- The future role of
a Revenue Manager. In an ever changing world, even the role of a Revenue Manager will
change. In this article, we will find the answer to the future role of a
Revenue Manager and what implications this might have.
Management within the organization
Revenue Management is not a
one-person job, reserved only for the Revenue Manager. Revenue Management
involves forming the best strategy by analyzing result. For a strategy to have
its effect, every department within the property should not only know about it,
they should also apply the same strategy.
At the same time, forming a strategy
is not only a job for the Revenue Manager. All relevant departments are
involved in the decision making. The difference is that a Revenue Manager bases
the strategy mostly on analyzing the result. To demonstrate what I mean I
usually draw the following picture on a whiteboard. This is a picture of the
The hands and feet stand for the Operational departments.
They are increasingly important as most of the comments made on Social Media
are about Operations. The heart stands for all decisions
we make based on feelings. For instance, it can feel right for the Group Sales
Department to contract a large group and give a discount in order to assure the
business. The head symbolizes the brain, or
the analytical part of the organization. For instance; analysis that shows that
a particular group should not be contracted against a rebate, as we expect to
be able to book an equal amount of individual guests against full price.
We humans base most of our decisions
on feelings. The analyzing part usually comes later. For instance, when we are
hungry and see a snackbar close by, we could go in there and order ourselves a
huge plate of French Fries. The notice that a salad would have been the healthy
and less fattening option usually comes afterwards. As Revenue Management
stands for the analytical part of decision making, it is good to take time to
listen to analytics before making the decision.
The role of the General Manager
The General Manager is essential in
order to guarantee success. I usually describe a Revenue Manager to be this negative
and nagging person. With this I do not mean that we are negative, rather that we
always calculate the loss of a certain piece of business. As we work with a
fixed capacity, this becomes increasingly important during days and periods
with high demand. We just do not like to see a space occupied by a guest paying
20% less than the rate we could have sold this space for. We focus on the 20%
loss (displacement) instead of the 80% income. This means that you can expect
us to be skeptical against any high producing contract, when we see that a
great deal of this production lies in weekdays or periods in which we expect
high demand. This goes right against the rules of negotiation; increase your volume
and we increase your discount.
At the time the contract is being
signed, the property has not yet experienced the demand the Revenue Manager is
expecting for this certain period. Practically, you see unused space when the
Revenue Manager already states that this space is going to be filled somewhere
in the future. At that time, it is good to remember that a Revenue Managers
role is to know about Lead Times and Expected Demand.
As Revenue Management comes with the
need for a certain mandate to be able to direct the properties strategies, a
Revenue Manager should be placed in the Management Team. This means that a
Revenue Manager is reporting directly to the General Manager. This, in its
turn, means that a General Manager should understand the principals of Revenue
Management, in order to support the Revenue Manager sufficiently.
The organizational schedule
In order to assure there is a
dynamic discussion regarding Occupancy versus Rate and Long Term versus Short
Term, it is strongly discouraged to put a Revenue Manager under a Sales Manager
or under an individual that does not have a profound knowledge of Revenue
Management. As said; as a Revenue Manager has an active part in deciding on the
strategies of the property, he/she is preferably part of the Management Team.
For several reasons, a General Manager might like to keep their Management Team
slimmed and chooses to have one representative for the Commercial Team. In this
case, the Commercial Manager, being the head of all commercial departments,
should have a profound knowledge of all different fields of work including
Read the previous article “The current
role of a Revenue Manager” and the next article in this series; “The Future
role of a Revenue Manager”
Download this article in Pdf
OrganizationPosted by Annemarie Gubanski Nov 13, 2013 15:41:20
What is the current role of a
As the job description of a Revenue
Manager can differ depending on where you work, it is not easy to define the
current role of a Revenue Manager. It is important, as it not only has an
implication on our image of a Revenue Manager, but also on training needs,
recruitment, the organizational schedule and even development within Revenue
Management. In three subsequent articles we will try to find an answer to the
- What is the current
role of a Revenue Manager? In this article we will define the purpose of a
Revenue Manager and match this to the day to day routines of this role.
- Forming a Revenue
Management focused organization. When we define the role of a Revenue Manager, we will
use these findings to find the correct place within the organization
- What is the future
role of a Revenue Manager? In an ever changing world, also the role of a Revenue
Manager will change. In this article, we will define what implications these
changes have on the role of a Revenue Manager.
The purpose of Revenue Management
Let us start with the definitions of
Revenue Management. The classic definition of Revenue Management comes from Robert Cross, the author of
the bestselling book “Revenue Management, Hard-Core Tactics for market
Domination”: “Sell the right space at the right price at the right time to the
right customer”. Later on, the evolution of distribution channels prompted us
to add “at The Right Channel”. This is the most known definition of Revenue
Management. Although this definition is easy to remember, it does not cover a
good job description of a Revenue Manager. A more accurate definition can be
found on Wikipedia: “Revenue Management is the application of disciplined
analytics that predict consumer behavior at the micro-market level and optimize
product availability and price to maximize revenue growth.” Though much harder
to remember, this highlights words like Analytics, Predict Consumer Behavior
and Optimize Product Availability. It therewith comes closer to what a Revenue
Manager actually is supposed to do.
describe the definition found on Wikipedia to be more actual, you
can describe a Revenue Manager as a person combining a commercial talent with a
love for numbers. We must have a brain for mathematics, as making calculations
is part of our day to day routine. The thing that makes a good Revenue Manager
is the ability to apply a calculation and an analysis in a commercial matter.
This does not sound like too much of a revelation, but all too often analysis
ends with a conclusion only. Making a commercial analysis means that you take
it a step further and apply the conclusion in such a matter that it results
into increased profitability.
Our main purpose is to determine the
strategies that will increase revenue. We do this by analyzing our result and
apply this to the commercial functions of the property. A Revenue Manager is
responsible for the total revenue of his or her department. So, a Revenue
Managers responsible for Rooms Division should have control over all
reservations that involve rooms. This includes contracts and group business. A
Revenue Manager that is not able to control anything other than the public
rates is called a Channel Manager. These are two different capacities.
The four competences of a Revenue
A Revenue Manager needs to have
great Analytic, Commercial, Technical and Communication Skills.
As analysis is the core of our work,
analytical skills are a must. As we also concluded earlier, we will need to
apply this analysis in a commercial way. This means that we will need to have
the ability to use our analysis in such a way that it increases profitability.
As we are responsible for the total
revenue of our department, we are very tightly bound to all commercial
departments, such as Sales and Marketing. This means that we need to have good
understanding of what these departments need and how they work.
As we are depending on various
different systems and even see us forced to produce a great number of analyzing
tools ourselves, a technical ability is vital to become a good Revenue Manager.
One perception of a Revenue Manager
is this person that sits in the office and produces Excel sheets. We need to be
able to communicate the best strategy in order to make sure that the strategy
is executed. As we stand at the basis of strategic decisions, it is vital that
all departments within the property are properly informed in order for
strategies to get their full impact.
A Revenue Manager that has strong analytic,
commercial and technical abilities is a good Revenue Manager. The difference
between a good Revenue Manager and a great Revenue Manager is the ability to
A day in the life of a Revenue
This is not easy to describe, as the
day to day routine of a Revenue Manager not only depends on the current
workload, but also differs from property to property. Above any property
specific tasks, a regular routine of a Revenue Manager usually include:
Analysis of Benchmarking
and forecast Total Demand
and need of Marketing campaigns
Factors and Overbooking levels
Keeping track of
Make sure rate
strategies are communicated both internally as on the various channels
and other lost business
As you can see, Revenue Managers
focus on quite a number of details. As we previously concluded; a great Revenue
Manager distinguishes him/herself from a good Revenue Manager by being able to
communicate clearly. From these numbers of details, we should be form a
strategy that is easy to understand and easy to communicate.
General misconceptions about Revenue
are four, what I consider to be, misconceptions I regularly come across when I
visit the properties that acquire my help to form a Revenue Management focused organization.
1: Revenue Managers only take care of the Booking Channels
Updating and optimizing the various
Distribution Channels is a different function, generally referred to as
Distribution Management. Distribution Management and Revenue Management are two
different capacities, though the one cannot function well without the other.
The function of Revenue Management is to form strategies that increase revenue
income by analyzing our result. Channel Management is our way to communicate
our rate strategies to the applicable markets. This can be done by a Revenue
Manager or by a function that works closely with the Revenue Manager, for
example a Channel Manager.
2: Revenue Managers are only responsible for the public rates
This usually is a direct result from
misconception no 1. The most optimal use of a Revenue Manager is to make him/her
responsible for the total Revenue income of the department he/she is
responsible for (for instance Rooms Division, Restaurant, Meeting Facilities,
etc.). As all contracted rates and group rates also have an impact on the
result of these individual departments, Revenue Management should be involved
in the volume, specifics and rate of these departments. The level of
involvement and cooperation between the different departments can differ from
property to property.
3: Revenue Management should be above Sales
This comes from the knowledge that
Revenue Management never should be placed under Sales or Marketing. In the second
article in this series about the forming of a Revenue Management focused
organization, we will discuss this point into further detail. In my experience,
the optimal way is to place commercial departments such as Marketing, Sales and
Revenue Management on the same level. You should take care that all individuals
are equally strong and can come to terms with each other. When a General
Manager wants to slim down the Management Team and applies one person who is
responsible for the commercial decisions, it is vital that this person has a
profound knowledge about Revenue Management and understands the analytics
behind a Revenue Managers reasoning.
4: Revenue Managers only care about short term result
Short term result is great. Long
term result is always best and should be the focus of any member of the
commercial team. As it is the focus of a Revenue Manager to increase revenue on
all market segments for which we try to find the optimal rate and production,
all rates and conditions are questioned. My experience is that the
communication level usually is the core of the issue. Questioning decisions usually
gives the best result and these discussions are best done by individuals that
are equally strong. More about this in my next article!
Read the next articles in this
series: “Forming a Revenue Management oriented organization” and “The Future
role of a Revenue Manager”
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