Comment piece by Michael McCartan, Duetto’s managing director, Europe, Middle East and Africa
Ever since our Revenue Strategy Forum held in London last November, I’ve been thinking: “Where do you find the new breed of revenue managers, and how do you train them in this new discipline?”
I’m not sure I have the answer, but I can’t get the question out of mind. I believe it’s one of the industry’s most pressing issues.
If hotels are to catch up — even just keep pace — with the OTAs and new innovators such as Airbnb, it’s incumbent they fill their most important positions with the brightest people. It has to start with a greater emphasis on revenue management and a shift in culture to make the position and discipline more strategic.
They need to start treating the demand/revenue generation part of their business differently, and start emulating the OTAs. This means breaking down the stove piped environment and bringing together sales, marketing, revenue management and all other revenue generating efforts. Part of this cultural change is the provision of continuous in-house education and providing an environment in which employees can easily transition between different disciplines within the business, thereby accumulating a variety of business skills.
Breaking down silos
A colleague of mine recently made a great analogy between the role of the hotel general manager and the pilot of an aircraft. General managers are often responsible for everything to do with their property, including sales and marketing. Pilots, on the other hand, are specialists. They fly the plane and have little concern for how the passengers booked and the price they paid. They don’t get involved in pricing or revenue strategy.
It is not hard to argue that the general manager is the pilot of the hotel, and a reason we need revenue specialists focused on business development.
If hotels are to catch up — even just keep pace — with the OTAs and new innovators such as Airbnb, it’s incumbent hotels fill their most important positions with the brightest people.
For me, revenue strategy is an integration of sales, marketing and revenue management. Hotels need to break down the silos that exist between these three departments and develop specialists who can move easily between all three functions.
Let’s be honest – the reason why OTAs do so well is because their sales people are also great digital marketers and great revenue strategists. They are creative while also being business oriented. OTAs focus on innovation and encourage their people to take risks and be imaginative. For the brightest stars, rising to the boardroom is not impossible.
Now let’s consider the career path of a hotel revenue manager. Often trained as a property management system operator, the role may progress to an on-site revenue manager or cluster revenue manager. But have you ever met a hotel company chief executive who came up through the ranks of revenue management?
Rarely will this role progress up the ladder to become a general manager or beyond. There is a glass ceiling. And this puts us in danger of losing talent to OTAs and other industries.
A colleague of mine recently made a great analogy between the role of the hotel general manager and the pilot of an aircraft. General managers are often responsible for everything to do with their property, including sales and marketing. Pilots, on the other hand, are specialists.
In order to break down the silos further, hotel organisations need to create a broader revenue function, perhaps one that ends in a chief revenue officer role, reporting into the chief executive and board. This structure would give talented revenue managers a clear career path to the top.
Hotel organisations can and should play a central role in this evolution of the revenue strategist discipline. However, change could start even earlier, with hotel schools and business schools creating more opportunities for business-oriented hoteliers to hone their skills.
Hotel schools and hotel organisations need to distinguish between on-property hotel operations and the digital marketplace. They need to put equal weight on both these disciplines as part of their education programme.
As an industry we need to teach young professionals business skills. We need to teach them about client generation and engagement. We need to teach them how to convert “lookers” into “bookers”. Hotel schools need to morph into business schools with a hospitality focus.
Course advancements at institutions such as Cornell in the US and the Essec Business School in France give us hope. These will hopefully provide future leaders the impetus to reach for that first rung on the revenue management ladder. Talented marketing professionals, schooled in the real business of hotels, and without a glass ceiling, could rewrite the revenue management role and take it to the boardroom. And maybe one day we’ll see a chief executive with a revenue management background.
Digital marketing professionals
Hotel schools and organisations need to go beyond just revenue management and provide a platform for these graduates to hone a cross section of business skills in order to be effective in the digital marketplace. Today’s revenue strategists must be digital marketing professionals. They have to communicate with guests in the way guests most prefer. OTAs excel at this. They are active on social media and have a strong online presence. We need hotel revenue teams to do the same. Schools and organisations need to educate young hoteliers on properly segmenting their business, understanding the different personas of guests, building loyalty and nurturing it through social media and other digital channels. These are vital skills in driving and managing demand.
OTAs succeed because they are constantly looking to improve their proposition. They test new promotional messages, website designs and marketing channels. And then they test again, and again. A/B testing is a continuous process. Hotels can learn from this. We can’t afford to be stagnant.
We need to start thinking like OTAs and other online businesses. Guest engagement starts with the first click and not with check-in.
We need to give business-oriented people the chance to grow within the hotel industry. We need their cutting-edge ideas. We need to lead trends rather than play catch up. We need to train a new generation of business innovators and we need to start now.