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Getting the most from your revenue management strategy

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Whether big or small, a business is only as strong as its revenue strategy. We asked experts from the hotel and airline industries about the challenges of analysing data, managing demand – and staying profitable

There was a time when revenue management was seen as a misunderstood, even unloved, department in the travel industry. No more. It’s now become a central force in a company’s ability to manage demand and drive profitability - whether you’re an airline, hotel or other type of property. 

London, UK
London, UK

Much of this shift is down to advances in technology. Today’s ‘big data’ era of mobile booking platforms offers vast volumes of data, whereas before it was often collected manually. Clearly, the art of revenue management has evolved significantly throughout the years - and the people behind important revenue decisions must move with the times now like never before. But what else makes a successful revenue manager?

Morgane Bimet, Revenue Manager for Hilton London Bankside, studies clients’ behaviour patterns and uses a revenue management system to help price rooms. “A good revenue manager will have an eye for detail, be target-driven and understand the basics of maths,” she explains.

But it’s not all about number-crunching. “You actually need to be a social person because you work with so many different departments,” Bimet says. “If you’re not aligned with the sales and reservation teams then they aren’t going to sell as per your strategy. If you don’t have everybody on board you won’t succeed.”

Challenges of technology

Although the vast quantity of data available these days helps find the optimal price for a product, ironically it can also prove challenging. Icy Chan is Revenue Manager at Four Seasons Hotel Hong Kong. Every day she uses a programme from Analytics Dashboard that provides data insight including competition pricing and search information.

“The biggest challenge is when you have different technological systems that don’t communicate with each other,” Chan says. “There are so many out there, it’s rare to see data integration. You price with one system, search with another system - but these different systems never talk to each other.”

Another difficult task is measuring the cost of distribution. A company may have both traditional channels (such as phone and GDS) and online channels (such as websites and Online Travel Agencies), but it can be hard to see the real net revenue of each channel due to hidden costs, such as search optimisation and digital advertising. Chan says: “A customer can view a paid ad before calling hotel for a booking. It's difficult to attribute that cost.”

The biggest challenge is when you have different technological systems that don’t communicate with each other - Icy Chan, Four Seasons Hotel Hong Kong

A skilled revenue manager will handle the way changes around the world affect the business, according to Duncan Bramwell, Managing Director of advisory firm, Revenue Performance. These changes could include adverse weather, like ash clouds, and terrorist attacks. “You need to be sufficiently agile to respond at a moment’s notice to events like these,” Bramwell says. “No revenue manager can anticipate a terror attack in Barcelona, but a skillful one will be able to handle the hours, days, and weeks afterwards to get the business back to normal trading conditions as quickly as possible when other hotels might have been thrown by it.”

In the airline industry, it’s just as important to have insight into customer buying patterns. Snorri Pétur Eggertsson, Revenue Manager at WOW air, says there is a different demand for every flight. For instance, on a US flight there may be passengers from London, Copenhagen and Iceland, each with different buying behaviour and price sensitivity. “Every single flight needs to be optimised. Without a revenue manager you’re losing revenue - it’s as simple as that,” he says.

Transformation of airline industry

The arrival of low cost airlines has transformed revenue management in the airline industry. “The market has changed rapidly - especially in the economy section,” Eggertsson says. “In economy, or with low cost airlines, you are always fighting on fare, not necessarily on quality. Passengers in economy just want to get from A to B and don’t care how or when. In business and first class, passengers are willing to pay for the right product, so the market changes are less dramatic.”

With an ever-changing market, the revenue manager’s role is constantly evolving. Gone are the days when you would look at your daily sales strategy once a week. Now you should look at it three times a day. Chan says: “It’s no longer just about setting room rates - it’s about working out how you can maximise revenue in all areas of the hotel, right down to food and beverage and the spa. A revenue manager is more integrated into the hotel now than ever before.”

If you want to increase or decrease the price, you need to provide a valid explanation or you will have no credibility - Morgane Bimet, Hilton London Bankside

The biggest tip Bimet would offer others starting out in the industry is to validate every action with reasonable thought process. “If you want to increase or decrease the price, you need to provide a valid explanation or you will have no credibility.”

Eggertsson adds: “You also have to have thick skin, because every decision you make can be criticised or challenged. You need to be able to take the criticism and figure out what is constructive and what is just noise.”


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What do you think of this page?

  • A good revenue manager will have an eye for detail, be target-driven and understand the basics of maths
  • According to Snorri Pétur Eggertsson, Revenue Manager at WOW air, having a "thick skin" is crucial because every decision you make is open criticism or can be challenged as it has the potential to impact the whole business, so people are interested in understanding the decision-making process
  • Being able to provide valid explanations for strategy decisions when under pressure is a necessity, says Morgane Bimet, Revenue Manager for Hilton London Bankside