[VIDEO] Mathlete Mondays- 5 Things I Wish I’d Known Before Entering Revenue Management Pt. 2

Welcome to this episode of Mathlete Mondays. This week, we’re going to talk about the #2 and #3 things I wish I’d known before embarking on a career in revenue optimization. If you missed the first episode, you can find it at focalrevenue.com/content.

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#3. Cultivate Divergent Thinking

Over the past three years, Airbnb has grown by 211%, Expedia and Booking Holdings have grown by nearly 50%, inflation has grown by 8%. And hotel revenues? They’ve grown by just 6%.

Despite the fact that we, as an industry, are getting our a** kicked, we continue to look internally to determine how to better compete.It’s a bit like learning how to be a world champion sprinter from the best person on your high school track team. You might get a little better, but the pros are still going to smoke you.

The travel industry has evolved considerably over the past several years, and the rate of change will only continue to accelerate. The revenue optimization leaders of tomorrow will possess the ability to read the tea leaves and cultivate divergent thinking within their organizations.

Those who are most successful in driving change apply the following tactics:

  • First, they test new ideas and divergent concepts against the status quo before implementing broadly. They are expert A/B testers, and are focused on limiting risk and documenting results in an unbiased manner in order to confirm or disprove their theories.
  • Once they’ve tested new strategies and proven them to be successful, they remain resolute in their efforts to convince those around them that change is needed, oftentimes in the face of resistance from those in more senior positions than them.
  • This is often where the art of inception comes into play. Rather than trying to convince everyone that you are right, those that are the most effective at driving change often find a way to lay down a trail of breadcrumbs, allowing their leadership teams to come to the right conclusion about what’s needed “on their own.”
  • Those that are effective at driving change are also constantly on guard to ensure they don’t become too insular. Oftentimes in the hotel industry, we look at the way hotels price, hotels market, and hotels sell, with the intent of delivering incremental improvement. However, if you look at the rest of the world, it continues to move at a much quicker pace.

Think about Airbnb, Amazon, Netflix. Each business has become more and more successful by adapting to changing customer buying behaviors and tailoring individualized offerings to each customer. As you continue in your careers, I’d recommend keeping an eye on other industries to see how they are producing their success. This does, however, need to be balanced out with building deep hospitality subject matter expertise, as you need to know the rules before you can break the rules.

#2. It’s hard to be successful without the right tools. 

Leveraging the right technology stack is perhaps the single biggest determinant for success that I’ve seen throughout my time in the industry. Despite this fact, the state of hospitality tech for revenue managers typically runs the gamut from god awful to decent due to a couple critical factors.

The first is that historically the hospitality industry hasn’t done a great job of attracting technology professionals. Why would you jump into hospitality as an IT support tech where you’ll make $50,000 per year, when you can learn how to code and make $100K in your first job out of school?

While IT professionals in the industry often have a robust support skillset, they are usually focused on managing legacy on-premise servers and resetting logins rather than architecting technology and developing new applications.

Even those that have started hospitality tech companies often base their platforms on white labeled third party technology, such as SSRS or Tableau, which results in a lack of flexibility and customization. Fortunately, new technology solutions are emerging that have been purpose built for hospitality using a customized codebase.

The second factor is that many property management systems are built on legacy architecture, which has made it challenging to extract the data necessary to support downstream applications such as the RMS, BI, and CRM systems. This is starting to change as the major PMS vendors deploy their cloud orgs, but quite frankly, it’s still moving too slow and relatively few are moving forward with a pure play API approach.

It’ll be interesting to see how it plays out over the next few years as there are several new PMS providers, such as StayNTouch, that are hanging their hat on ease of integration.

The third factor is that hoteliers haven’t done a great job of articulating the benefits of an improved technology stack. Oftentimes when pitching new investments in technology, we focus on the time it will save us or how much easier it will make our lives. I’m not saying that our owners don’t care about our job satisfaction, but we’ll have much more success when framing the benefits around the improved financial performance we’ll be able to achieve as a result of any new systems under consideration.

One of the most important things you can do throughout your career is ensure you have a strong understanding of the various components used in the revenue manager’s technology stack. Not only do you need to understand how each system works, but you also need to understand how it interacts with the other systems within the hospitality tech ecosystem. Otherwise, you may end up with a Frankenstein stack with systems that don’t speak to each other.

Finally, you must brush up on your persuasion skills, as all of this knowledge doesn’t help you if you can’t gain investment.

Closing

Thanks for joining me for this week’s Mathlete Monday episode. You’ll have to wait for future the next episode for the final lesson, but I promise it’ll be worth it.

If you enjoyed this week’s episode, please share it with your colleagues and friends. For more Mathlete Monday episodes, head over focalrevenue.com/content, where you’ll find a link to subscribe to future updates. As a bonus, when you sign up I’ll add you to our monthly digest containing links to the top revenue optimization articles and white papers, which we’ve curated specifically for Focal’s fanbase.

Thank you for joining me, and until next time, good luck outrunning the competition!

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