Up to a few of years ago, I was usually derided when I presented the idea to intermediaries. Or anyone else, for that matter. “Bah, RM is only for hotels. Besides, we don’t have inventory”, they would utter in an obvious condescending manner.
From last year (2017), they wouldn’t dismiss the concept. But they would argue that dynamic pricing renders RM undoable for accommodation wholesalers. Sure enough, most of my interlocutors were salesmen, paid to roam trade shows and pestering prospects, not to really mind about hard distribution issues…
These days, though, job ads targeting revenue managers (or the like) are popping up like fungus in the specific sector (traditional tour operators are also reacting, somehow).
[ctt template=”3″ link=”3Nadf” via=”yes” ]It seems the top echelons finally realized everybody was selling the same stuff as everyone else, at the same price, through the same channels.[/ctt]
Hence something must be done to get competitive edge. I can imagine their board meetings, when after a puzzled impasse, somebody smart would say: “Oi, why don’t we do as the hoteliers do?”
The proverbial “a-ha!” moment. What took you so long?
Reasoning, please
It makes sense, it always had. Yes, your bed bank doesn’t hold physical inventory, but isn’t every room on sale through XML flow perishable? Has that very room zero cost to be available on the sales funnel? As for the dynamic pricing objection: yes, the hotel is varying its rates on channel managers, eventually all wholesalers will have to settle with dynamic rate-only contracts (mark my words). But those variances are in relation to the hotel’s own demand and compset! What about yours? Who says you can’t adjust your prices if you notice fluctuations in demand for certain destination or dates? What prevents you to raise or lower rates if you find out your main competitors are doing the same? Because, rest assured: they are!
An almost impossible task, you said? Well, be aware that the market offers solutions that are way more advanced than the stupid spreadsheets you want to place your bets on. Not only it’s easier than ever, it’s even possible to automatize pricing strategies based on demand/market/dates and so on. Not going to tell you names this time: if you’ve been following my articles, you know by now and this is not a sales gig.
You might also know that I have been advocating the use of RM techniques in tour operators >> and incoming agencies >> for a while, so far unsuccessfully. I suppose that sooner or later both sectors will come to their senses, because as much as bed banks they have the same basic need: to sell all that’s available at the best possible rate. Yet, all three operations will face the same challenges.
Challenges ahead
Funny thing is, on this incipient tendency for RM adopted by non-hotel companies, I’m seeing the same problems the accommodation industry is still trying to phase out. Bigger one: the compartmentalization of information. For instance, take this multinational’s ad for a Director of Revenue Management. The job description mentions that the candidate will have to “report to the Chief Commercial Officer, subject to change according to organization structure.” Alas, they see RM as a function of sales, just like hotels did ages ago. And if the position doesn’t fit there, they’ll try somewhere else. Hey, at least they’re flexible: I noticed most people in the industry equate RM with dynamic pricing! It took the hotels and airlines decades to realize that RM is not only about analytics or rates, but a whole strategic philosophy… It’s not going to be this humble author the one that enlightens multi-billion enterprises on RM’s essence: they may well damn find out themselves with their own fat resources.
Second problem: to find the right staff. Being a relatively new trend, there can be a very limited number of RM specialists available with experience on this specific field, so bed banks will have to rely on airline or hotel experts. No matter their training, both types will have natural-born “excellent analytic and reporting” skills, so adding such requirement in job ads for qualified RM positions denotes a gross unawareness from HR departments.
Moreover, just like hotels did in the old times (some still do), bed banks want candidates with proven Excel mastery. Really? No, I mean: REALLY? Do you think an experienced senior RM director still needs bloody Excel to deal with two or ten million requests per day coming from a global market? Driving a paralel with my Data Scientist job ads parodical piece >>, it sounds a lot like a hospital looking for a neuro-surgeon who’s well versed in cutting skin with copper bistoury… and does not faint at the sight of blood.
Sadly, such two issues combined will bring the same unprofitable and lagging outcomes hotels tackled for years. Which could be avoided if, before adopting RM. there was a data-driven culture >> company-wide. Like it or not, at its core revenue management is DATA. A data-intensive process that needs to have all stakeholders moving along the same lines. Otherwise it doesn’t work, or at least, it doesn’t lend the expected results.
Excuse my French
I apologize if my words have a patronizing vibe, English is not my mother tongue, nor subtlety my nature. The intention here is -once again- to help. Not the cigar-smoking hotshots with MBAs and financial backgrounds, no. I’d like to help the many friends I have among the bed bank ranks to profit from the lessons learnt at the accommodation industry. Otherwise, they’ll stumble upon the same boulders, again and again. Or worse.
Take my word at face value, dear room distributors. I am amazed by the fact that you (or your bosses) are starting NOW to see the value your huge mountain of internal data has. But I’ll be less than surprised if in a couple of years or less your company goes down the travel industry graveyard path, or gets eaten and digested by one of the large conglomerates… Unless RM is considered as a comprehensive strategy, instead of yet another buzzword associated with magical formulae that saves companies from bankruptcy.
If you don’t believe me, ask your most successful hotel chain providers.
Thanks for reading!
Marcello Bresin