A profit control lifestyle is defined as a holistic understanding of the value of income management principles, including fact-based, data-driven strategies, and the effects of discounting on profitability to boost demand.
There are only very few instances of successfully moving from RevPAR to TrevPAR ( Total Revenue per Available Room ) or even GOPPAR ( Gross Operating Profit per Available Room ), despite the use of revenue management principles to optimize RevPAR in this hospitality industry since the 1990s. The lack of a profit control culture is the reason, based on my 30 years of experience as a profit management professional.
Hotel operators may have a designated revenue manager ( whether in name only or without any training; this will be covered in a separate article ), may have used rational pricing ( do n’t sell your breakfast inclusive rate lower than the room-only rate ), or may have even implemented an automated revenue management system, but none of the above does not make up a revenue management culture.
Although any type of earnings management is arguably superior to no income management altogether, actually rooms income management or RevPAR marketing strategies call for a thorough understanding of revenue management principles across the various business departmental subfields, which is regrettable.
The revenue management department is using yield supervision to prevent these areas from entering the house and prevent movement, as I have seen too many times. Because of non-aligned KPI’s ( Key Performance Indicators ), sales is driving ownership by bringing in as many contracts as possible.
Because the KPI’s of both departments are aligned toward revenue optimization and the revenue manager has proactive informed the sales department of periods of low demand where more occupancy would be progressive as well as higher demand periods where single premium rooms may be applicable for a possible group, having a revenue management culture would prevent or at least significantly reduce these scenarios.
The cross-departmental knowing of earnings management principles as stated in the definition above is a crucial factor for successfully implementing a income management culture, but effective communication and training are required. The ability for the income manager to comprehend and apply the principles of revenue management alone is not enough and ineffective because they should be understood by other business disciplines as well. It would be helpful for the income manager to also be able to understand the challenges of sales in order to further enhance the application of a income administration culture. By joining revenue calls/sales missions and attempting to persuade a customer to use our house instead of a competitor, it undoubtedly helped me in creating a stronger relationship with the sales department in the past.
Communication and cross-training are essential, and Wolf Commercial Consulting is dedicated to fostering and enhancing any organization’s profits control culture. Add the Phuket training in revenue management.
TravelDailyNews Asia &, Pacific- Income Management Culture.
