Chris Cheney, VP Of Revenue Management, SBCOS

Hotel revenue managers no longer ‘behind the scenes’

Dave Farmer Uncategorized

Originally appeared in Hotel News Now in July, 2017

TORONTO—For a long time in the hotel industry, the expectation has been that revenue management reports to sales and marketing.

But that structure is less and less the expectation, according to a group of U.S.-based revenue-management executives who spoke with Hotel News Now at HSMAI’s Revenue Optimization Conference.

The executives said it seems like the industry is doing more now to elevate the role and importance of revenue management.

Lori Kiel, chief revenue and marketing officer for the Kessler Collection, said her company has gone with a different reporting structure entirely.

Revenue management “isn’t behind the scenes at Kessler. We’re on the front lines,” she said. “I oversee all of revenue, sales and marketing. I don’t know any other organizations that are there yet, but at Kessler, it’s always been revenue above sales and marketing. It’s all one strategy with one vision. You start with revenue management to create that strategy.”

Competing goals
Geoffrey Field, VP of revenue management for Shaner Hotels, said one of the reasons it doesn’t make sense to have revenue management operate as a function of sales is those two sides aren’t always completely in line when it comes to their objectives.

“A lot of more in-depth decision-making or pricing recommendations have been evolving and becoming more important,” he said. “And as that’s become more important for the discipline, there would be clashes with sales’ goals. That’s basically a core reason for elevating (revenue management) to a leadership role.”

Jamie Pena, VP of revenue strategy and global distribution for Omni Hotels & Resorts, said it’s important to note that both sides of that equation perform important, albeit different, functions for a company or a hotel. She said her company has sales, revenue and marketing work together to highlight each area’s strengths.

“Revenue management is like a scientist, while marketing and group sales are artists,” she said. “They’re going to creatively figure out what’s needed for the business.”

Field said one of the difficulties remaining for revenue management, at least from a management company’s perspective, is explaining to less experienced owners its importance compared to those other functions.

“We talk to a lot of owners on new properties or new constructions that this might be their first endeavor into the hotel industry,” he said. “When we’re explaining the costs for sales and marketing and then say, ‘Revenue management is going to cost this,’ they ask what revenue management is. Then it’s like, ‘Here we go again.’”

A voice in the C-suite
Sloan Dean, SVP of revenue optimization and underwriting for Ashford Inc., said the importance of revenue management has grown to the point that it should be reflected in the senior leadership of every hotel company.

“Growing up in revenue management, I was sensitive not to get pigeonholed,” he said. “I had seen it happen to some of my mentors, and there were limited opportunities in that capacity. But I’ve evolved my thinking on the subject. I think there needs to be a strict (chief revenue officer) that reports to the CEO with a revenue management background. Every organization needs the equivalent of a chief commercial officer that needs to have an analytical, data-centric mind.”

Dev Koushik, VP of global revenue optimization for InterContinental Hotels Group, said he doesn’t think the person in the chief commercial officer role needs to be a trained revenue manager, but that person should be able to understand the work.

“As long as they’re analytically minded … they should be fine,” he said. “They don’t necessarily have to be a revenue-management person.”

Dean agreed that past revenue-management experience isn’t an absolute requirement for a chief commercial officer, but the two have similar skill sets.

“How they grew up doesn’t matter as much as the core of the person,” he said. “They need an applied economics-type mind with a high level of curiosity and good leadership. I think it’s natural for revenue managers to be those people.”

Koushik pointed out that his company now has a CEO that prioritizes revenue management, with the ascension of Keith Barr.