Hospitality Sales and Marketing Association International
Hospitality Sales and Marketing Association International
 
Hospitality Sales and Marketing Association International
From Math to English: The RM Guide to Getting Everyone On Board

Posted: November 13, 2012

Successful leadership in revenue management requires you to break down math into clear metrics in order to persuade your audience of the value of the data.

By Rhett Hirko, CRME, Director of Revenue Management, EAME-Southwest Asia, Hyatt Hotels Corporation and member of HSMAI’s Revenue Management Advisory Board

I recently facilitated a revenue management workshop focused on effective communication. A workshop participant was chosen to present anything he wished; he opted for his weekly yield meeting presentation. It was highly detailed with a dazzling spreadsheet of a million numbers, dates and colors. While he was obviously knowledgeable about the content, it was lost on the audience as they concentrated on trying to read it and understand the context.

I challenged the presenter to focus only on actionable content and to present key takeaways. He was proud and insisted that his General Manager asked for this report to be presented as such, chock full of detail and explained with minutiae.

Later that evening, at a welcome reception, the participant’s GM arrived and greeted me. After a round of small talk, he mentioned in a quiet aside:  “Please, if you teach him anything, ask him not to present that report the way he does at the yield meeting. It’s too much...”

– – – – –

How often do we have a yield meeting with a grid of important numbers projected on a screen with only one or two participants involved in the conversation and nary a murmur from the rest of the team? How often do you present a forecast to the sales team and have them walk away from the meeting only to quote a price over the very dates you’re sold out?

A survey of key characteristics of revenue managers was performed by Dr. Sheryl Kimes of Cornell University in 2010. Findings showed that revenue management leaders are clearly looking for solid communication and leadership skills in revenue managers, just after analytical skills and ahead of formal revenue management training (see chart below).  

RM article 1

Survey of Revenue Managers from Dr. Sheryl Kimes, Cornell University; n=500

So how can we improve our communications and get the rest of the hotel team engaged in revenue management? How do we plant the seed to get them to want to learn more?   

Know Your Audience

The key to any effective presentation is to understand your audience and to provide what is relevant to each of them. This is not always easy. Revenue managers have a unique and valuable skill set – they are able to gather data and metrics to understand the best direction of the hotel’s business to maximize revenue. However, translating this knowledge to diverse audiences, from hotel owners to housekeeping staff, is often challenging.

If you’re facing this challenge, start by identifying the individuals who will attend your next meeting. Be clear in your own mind why your data is important to each of them. As you prepare your presentation, think about the jargon you use.  If your audience isn’t familiar with the language of revenue management, work to ensure they understand the terms you present.  You may want to provide your team with a glossary of terms to which they can refer. At the same time, learn about the jargon and terms your team members use in their work. Make the connection to what is meaningful to each of them.

For example, imagine that you work with a sales manager who is not making his pick up data available in a timely manner and every week his answer is “I don’t know.” You could identify the impact that lacking data has on the hotel forecast. Or you could explain how this can impact the manager’s personal sales quota as well as the impact it has on the team quota. The latter, more personalized approach may be more effective.

Answer the question, “What’s In It for ME?”  For instance, what does room night occupancy mean to your audience? The hotel is busy. So what? Each department is impacted differently. To make the meaning of room night occupancy clear, take your weekly forecast, whether presented in a meeting or distributed, and share:

-          Arrivals and Departures (for front office staffing)

-          Total number of transient guests (for restaurant staffing and purchasing)

-          Number of package or promotion guests (for amenity, room service prepping, concierge reserving tickets, or whatever the promotion includes if applicable)

-          Any potential sold out days (for engineering to postpone any scheduled maintenance)

-          And so on.

Talk to each department and ask them how they may find your content in the meeting or report most valuable.  

Unknown Advocates

Tap into the knowledge and skills of others in your hotel who may be silent advocates for your cause.

The director of finance is typically knowledgeable, impartial, and analytical and can help explain difficult calculations and their relevance to other departments – they handle all the money, after all.  A public relations or marketing communications manager can help you with creative and effective delivery of a topic.  A sales manager can provide guidance on how to sell a new idea, perhaps to your General Manager.

A Presentation is not a Report:  Death by PowerPoint

Overwhelming an audience with a litany of numbers on a screen may confirm that the revenue manager is a geek but certainly not a leader. If all you are going to do is regurgitate the information that people can read anyway, you’re wasting their time – and yours. You might as well have just sent the information via email. A colleague of mine calls this “Death by PowerPoint.”

Instead, send the relevant information in advance. If you have to send a huge report, summarize the important details or highlight areas for people to review so they are prepared for the meeting. This reduces surprises and keeps the meeting relevant and on track.   

Rather than presenting a report like this:                                             

 RM Article 2

You could present this:

 RM Article 3

You can still pass out the report in all its detail, but your presentation might highlight the information in a graphical format that is easier for an audience to discern. Add a circle around the area for discussion; this makes it easier for the individual to understand and answer, and easier for a diverse audience to absorb.

During your presentation, they can look at the report while you engage them in discussion. Bring up only the key action points relevant to each person attending. This keeps it focused and lets them know you’re valuing their time and giving them the key takeaways.

If you have nothing actionable to share, then don’t call a meeting. A great example is a hotel going through a seasonal down period. Perhaps the 30-day yield meeting has nothing actionable. Why hold a meeting? Just distribute relevant reports if there’s nothing to talk about!

Use a Glossary

Provide a glossary of revenue management terms so your team members better understand what you’re presenting. It can be attached to any report as well as provided for a presentation. New attendees especially would find this very useful. (See the end of this article for 31 of the most commonly used terms and their definitions.)

An example:  A new director of sales asked why the data from STR (formerly Smith Travel) was reported at their hotel including their hotel in the competitive set, while they were used to the report excluding the competitive set at another hotel.  To answer the question and add more meaning to the data, the revenue manager distributed the glossary at the back of the STAR report and provided an explanation as to how to understand the reasoning behind the metrics. The RM also referred the DOS to a link to online training that provides further guidance. While some may find this detail irrelevant, it can create efficiencies and comfort for new team members. 

In Conclusion

Tap into this practical, useful top 10 list to effective presentation skills that can be adopted for any meeting:  http://www.aeaweb.org/committees/cswep/PDFs/top10_list.pdf

Successful leadership in revenue management requires you to break down math into clear metrics in order to persuade your audience of the value of the data. Make it a priority to understand your audience and provide relevant, actionable information that they understand. With that, your value and the value of revenue management will become more apparent across management, the understanding of revenue principles will increase along with team involvement, and positive outcomes will be the norm.

“The key to effective communication:  Know your audience – find out what’s in it for them,
 then give it to them.”

About the Author

RM Article 4

Rhett Hirko, CRME graduated from Michigan State University in 1990 with a B.A. in Business and a major in Hotel and Restaurant Management. He has worked for Hyatt Hotels in revenue management for over 17 years; he designed and implemented the single image inventory reservations process for all Hyatt hotels in North America and was involved overseeing revenue management in a regional capacity for 7 years. In the last nine years, Rhett has been in Hyatt’s international division. He designed the CRS-RM interface and the RM training program and directs the RM process for all international hotels. Rhett recently transferred to Zurich, Switzerland heading revenue management for all Hyatt hotels in Europe, Africa, the Middle East and Southwest Asia. Rhett is a member of HSMAI’s Revenue Management Advisory Board.

About the HSMAI Revenue Management Advisory Board

The Revenue Management Advisory Board leverages insights, emerging trends, and industry innovations to guide the development of products and programs that optimize revenue for hotels. www.revmanagement.org

Members include:

  • Co-Chair: Jon Eliot, CRME, CHA, Vice President of Revenue Management, Premier Hospitality Management
  • Co-Chair: Sloan Dean, CRME, Vice President of Sales & Marketing, Interstate Hotels & Resorts
  • Immediate Past Chair: Scott Roby, CRME, Vice President, Revenue Management, Evolution Hospitality
  • Chris K. Anderson, Ph.D., Professor, Cornell University
  • Bonnie Buckhiester, President & CEO, Buckhiester Management USA Inc.
  • Sheila Cosgrove, Director, Revenue Management Ops & Planning, Intercontinental Hotels Group
  • Kathleen Cullen, CRME, Vice President Revenue Strategies, Heritage Hotels and Resorts
  • Kent Duncan, CRME, Vice President, Sales & Revenue Strategy, Marcus Hotels & Resorts
  • Tammy Farley, Principal, The Rainmaker Group
  • Neal Fegan, CRME, Executive Director of Revenue Management, Fairmont Raffles Hotels International
  • Rhett Hirko, CRME, Director of Revenue Analytics, Hyatt Hotels & Resorts International Operations
  • Jay Hubbs, Vice President, Regional Sales, ReviewPro
  • Burl Hutchison, CRME, Director of Revenue & System Optimization, Sabre Hospitality
  • Klaus Kohlmayr, Senior Director, Consulting, IDeaS - A SAS Company
  • Mark Molinari, CRME, Corporate Vice President of Revenue Management and Distribution, Las Vegas Sands
  • Orly Ripmaster, CRME, Senior Associate, KSL Capital Partners
  • Mark Robertson, Central Director Revenue Management, Wyndham Hotel Group
  • Susan Spencer, Market Director - N. America, ChannelRUSH
  • Trevor Stuart-Hill, CRME, President, Revenue Matters
  • Paul Wood, CRME, CHBA, Vice President of Revenue Management, Greenwood Hospitality Group

Want to Learn More?

This topic will be addressed as part of the 10-part 2012 Revenue Management Webinar Series produced by the HSMAI University in partnership with HotelNewsNow and STR. Each month a webinar covers one aspect of cutting edge revenue management in today's economy in conjunction with articles written by members of the HSMAI Revenue Management Advisory Board. If you’re not able to attend a live program, archives are available.

Glossary of Common Revenue Management Terms

From The Evolving Dynamics of Revenue Management, published by the HSMAI Foundation and reproduced with permission 

Average Daily Rate

(ADR)

Figure derived by dividing actual daily revenue by the total number of rooms sold. 

Actual Daily Revenue / Total # of rooms sold

 

Average Length of Stay

(ALOS)

 

Figure derived by adding the total number of nights and dividing by the total number of bookings.

Total # of nights / Total # of bookings

Best Available Rate

(BAR)

 

These rates are usually offered as negotiated rates and are a percentage off of the best available publicly offered rates (best available publicly offered rates were formerly known as rack rates).

 

Closed to Arrival

(CTA)

A room inventory control function.  Indicates that a reservation cannot be confirmed for arrival on this date.

 

Commission

The payment that a travel agent receives from a supplier for selling transportation, accommodations, or other services.

Customer Relationship Management (CRM)

The name given to increasingly sophisticated programs to maintain close, lasting relationships between a company and its customers; between a hotel and its guests.

CRS

Originally, the term used for a Global Distribution System. Now used in the hotel industry to refer to a hotel company’s central reservation system – its CRS.

Coopetition

A term describing close cooperation between competitors to achieve a similar end goal – customer satisfaction and increased revenue.

Dynamic Packaging

 

Dynamic packaging is the term used to describe the ability of a consumer to create their own packages by choosing the components of the package as they shop. The component prices are not shown to the consumer, just the total package price.

Global Distribution System (GDS)

 

These are computerized reservation networks through which users - travel agents, airline employees or travelers - view data on a wide range of travel services, including air, hotel, auto rental and like services.  Several GDSs provide their services to users worldwide (e.g., Amadeus, Cendant’s Galileo International, Sabre, Worldspan) while others provide regional or national coverage.  Online services and the Internet are increasingly coming to be regarded as global distribution systems as well.

Gross Domestic Product (GDP)

GDP is the total of all goods and services produced in an economy. As it measures the market value of all final goods and services produced by a nation, it is a fundamental indicator of an economy’s performance. GDP is highly correlated with personal incomes and standard of living. It can be looked at as a true measure of the value added by an economy.

Gross Operating

Profit Per Available Room

(GOPPAR)

 

Figure derived by taking the revenue minus expenses divided by the number of available rooms.

(Revenue – Expenses) / # Available Rooms

 

Last Room Availability

An agent’s ability to book the last available room in a hotel.

 

Market Penetration

The ratio in comparing total occupied rooms with the total occupied rooms within a competitive set.

Total occupied rooms in hotel / Total occupied rooms in competitive set

Market Share

Total number of rooms in a hotel as a percentage of total rooms within a competitive set.

(Total # of rooms in hotel / Total # of rooms in competitive set) * 100 [results in a percentage]

Mark-Up

The difference between the supplier’s selling price and merchant’s price offered to the consumer.

Maximum Length of Stay

 

A room inventory control function.  Indicates that a reservation for arrival on a particular date may not extend past a certain number of days.

Minimum Length of Stay

A room inventory control function.  Indicates that a reservation for arrival on a particular date must be for a minimum number of nights (two or more).

 

Multi Channel Distribution

 

 

This is the concept of selling a product in many different channels.  For hotels, it could means via phone, wireless device, Internet, TV or walk-in.

Onward Distribution

The process by which hotel content is distributed on to multiple distributors who then in turn continue to distribute the content on to other distributors or affiliates. This process continues on ad infinitum.

 

Online Travel Agencies

(OTA)

OTAs allow consumers to research and book their own travel through the use of travel Web sites such as Expedia and Orbitz.

Overselling or Overbooking

The practice of confirming reservations beyond capacity, either in expectation of cancellations or no-shows, or in error.

 

Property Management System (PMS)

The computer system in a hotel that contains information about available and occupied guestrooms, historical and future reservations and guest charges.

Price Parity

To ensure an even playing field of pricing or rates across all channels based purely on the price points.

Product Parity

To ensure an even playing field of pricing or rates across all channels based on products and fences around rates.

Revenue Management

Also referred to as Yield Management.  The practice airlines, hotels and car rental companies use to control the supply and price of their inventory to achieve maximum revenue or profit.

 

Revenue per Available Room

(RevPAR)

 

The daily revenue of a hotel divided by the total number of available rooms at that hotel. 

Daily hotel revenue / Total # of available rooms in hotel

Revenue Generation Index (RGI) or

RevPAR Index (RPI

 

RGI is a ratio of the hotel’s RevPAR divided by the RevPAR of the competitive set.

Hotel’s RevPAR / Competitive Set RevPAR

Revenue per Available Space

(RevPAS)

A measurement of the revenue an event generates based on the square footage used compared to the square footage available.

(Event revenue / square footage used) / Available square footage

Revenue Management System

(RMS)

The computer system a hotel uses as a tool to assist with the maximization of revenue.  The system typically contains information on the hotel’s availability, room types, stay patterns (future and historical), ALOS, etc.  The systems can be automated or manual.

Unconstrained Demand 

The amount of demand for a hotel in the absence of any pricing and inventory constraints.


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