5 mistakes made by revenue managers and how to avoid them

From responsibility and strategy to the prioritizing of revenue streams, here are five common mistakes made by even the top revenue managers and, more importantly, how to avoid them.

Mistake 1: There is a common misconception that only the revenue manager needs to be trained in revenue management. This often stems from others within the hotel organization’s leadership team but it can have negative effects throughout the business.

Advice: For those who perhaps feel this is the case, revenue managers are not islands. In fact, they need the whole of an organization’s support to employ the necessary strategies effectively. The more understanding of revenue management all members of the team have, from the very top to the very bottom, the more likely they are to buy into and support the strategies needed to drive the business forward.

Mistake 2: Reliance on one or two accounts or distribution channels can leave the hotel overly exposed to variables outside a revenue manager’s control; this can leave the hotel’s sales team tied into rate negotiations.

Advice: Where possible, the volume from every account and distribution channel should be monitored both retrospectively and for the future. Doing this will allow the hotel to keep a greater balance between the number of accounts and channels and gives the revenue manager more control.

Mistake 3: A change of strategy is always essential but a drastic change in strategy within too short of a time scale could be fatal. For example, a move from an occupancy lead strategy to a rate-driven strategy can result in a steep decline in occupancy, and as a result a short- and medium-term decline in RevPAR.

Advice: It is imperative not to implement too many actions at the same time, as this will make it difficult to assess the success of each individual change.

Mistake 4: The continuous technological advances from within revenue management have made it easy to become reliant on revenue management systems. Although such systems analyse trends and booking patterns to a much great degree than most revenue leaders, such systems naturally do not have human intuition or general market intelligence. For example, a one-off event being scheduled would fundamentally change the demand pattern for this specific time period.

Advice: A modern revenue leader should keep abreast with local news and, indeed, network inside and outside of the industry to gain insight into local demand changes, using this to set yielding and pricing strategies.

Mistake 5: With rooms generally contributing between 60% to 70% of a hotel’s revenue, this revenue stream becomes a revenue manager’s main priority. A common mistake, however, is to assume that maximizing rooms will fix any issues with other revenue streams such as food and beverage.

Advice: Hotels which make food and beverage a priority are often more successful in driving a market premium in terms of total revenue. The best way to make food and beverage a greater revenue management priority is using KPI’s such as revenue per available seat, per hour in the restaurant. Making food and beverage a key part of weekly and monthly commercial strategy meetings can also improve the revenue stream.


Contributed by Jesper Johansen, revenue director, Michel’s & Taylor Managed Hotel division, London