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Revenue Management: Are You Ready?

Yesterday, we discussed social media as a must-have tool for today’s businesses. In addition to social media, revenue management (RM) is one of those tools that hotels can’t survive without. RM, also known as yield management or profit management, was introduced to help service providers to “yield” maximum revenues from a fixed, intangible, and perishable service capacity. I shared a January Cornell Hospitality Report (CHR) about RM before. Today, I am going to share another recent CHR that discusses the future of RM in hotels.

This report reveals the results of Dr. Kimes’ study with 487 RM professionals. According to Dr. Kimes, RM is being integrated into other aspects of hotel management, such as marketing, finance, and operating strategies. Hotels will rely more on technology and those revenue managers with strong analytical skills, leadership skills, and communication skills. Pricing, forecasting, budget, group decisions, and marketing are the key functions of RM. Among all possible distribution channels, websites, smart phones, and social networking are considered the most important. Instead of using RevPAR as an indicator, the effectiveness of RM will be measured by GOPPAR (gross operating profit per available room), TotRevPAR (total revenue per available room) and TotRevPASF (total revenue per available square foot), which challenges future revenue managers to plan with a “big picture” and work with all revenue-generated departments to yield the maximum incomes. Restaurants, functional space, spas, and everything that has a fixed, intangible, and perishable capacity should use RM.

As the industry pays great attention to RM, it seems every hotel manager needs to have some knowledge of RM. In fact, finding good revenue managers are not easy even in this economy. RM certainly provides a great career opportunity to those well-rounded and well-prepared college students. From this study, we know analytical, leadership, and communication skills are critical for revenue managers. RM professionals also suggest college students to take classes in data analytics, pricing, distribution, economics, website optimization, and social media. So, if you want to become a revenue manager, maybe you need assess your qualifications and see how well you can prepare yourself with relevant course work, internship/work experience, and extra-curricular activities.

Interested in Dr. Kimes’ study? You may check out the embedded video, in which Dr. Kimes was interviewed by Linda Hatfield, VP of Product Management at IDeaS.


References:
Kimes, S.E. (October, 2010). The future of hotel revenue management. Cornell Hospitality Report, 10(14).
* If you want to read Dr. Kimes’ full report in PDF file, you may register for a free account at The Center for Hospitality Research at Cornell University and access the article through the following hyperlink: http://t.co/GNx1vyb

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