5 more lessons Revenue Managers could learn form COVID-19 pandemic

Posted by JaniP on 2023-01-08

The COVID-19 pandemic seems like a terrible nightmare from which we have barely woken up. Although the disease itself will probably stay with us for quite some time, the pandemic is over for now.
Can we - as Revenue managers - starting with new year and looking back at 2022, 2021 and 2020, make some recap of lessons learned? Here is my take on this:

  1. There is such thing as Black Swan event

    A Black Swan event is a highly unlikely and unexpected occurrence that has significant consequences. The COVID-19 pandemic could be considered a Black Swan event, and Revenue Managers should always be prepared for the possibility of similar events in the future. This arises the question How? Well, first of all do not blindly trust your RMS system, if you use one. Any forecasting algorithm is a powerful tool, but it has a weak spot - it cannot forecast Black Swan event. Thus, stay in control over decisions, understand proposed decisions by the system, have a strategy/vision that you follow and bend everything around it. This way your system follows your vision and not vice versa.
  2. Strive to win a war not a battle

    Revenue management in core is a process that helps a business optimize its Revenue, but "achieving" it is not an end in itself. It is important to remember that a long-term profitability and sustainability is far superior strategy to follow over any short-term gain. Similar to first lesson: know your vision and communicate it to other members of your team. This way you can constantly evolve, adapt and change. For example, you can sustain some short-term disadvantages (on daily or weekly basis) in order to learn and test your environment/market, so you can adapt and in the long run (annually) overtake the competition.
  3. Revenue management is not an island

    Revenue management should be integrated with other aspects of your hotel business, such as Sales and Marketing, FnB, Frontdesk and Operation maintenance. It is important to consider the overall customer experience and how your revenue management strategy impact it. The pandemic is over, but its consequences are not. In the hotel industry one of the biggest issues (at least in Europe) is the lack of manpower in all areas but mainly FnB and Housekeeping. Some hotels had to limit their services due to this "new reality" and RM has to modify its strategy and take into consideration all departmental circumstances.
  4. GOPAR over RevPAR

    Revenue Managers in some cases still look at RevPAR KPI as a holy Grail of its endeavours. But if we look a little bit further GOPAR, or Gross Operating Profit per Available Room, is a KPI which, apart from Revenue, takes into account also all expenses associated with a hotel room, including fixed and variable costs. Shifting RM strategy from focusing on RevPAR to GOPAR may just be a single step to properly adapt your strategy and gain an upper hand over your competitors.
  5. Know your limits at any moment

    It is important for Revenue Managers to have a clear understanding of their hotel's inventory and availability, especially in comparison to the competitive landscape in which they operate. Has anyone in your compset been able to perform a substantial upgrade on their inventory during lockdowns? Has anyone in your compset been able upgrade their services in any way? Or maybe they have been forced to drop some services? Be vigilant, try to go around, visit your competitors if possible and try to establish what are your inventory limits in comparison to theirs. You just might find that pandemic had turned the tables and you suddenly have an upper hand. Or in the worst-case scenario you lost an upper hand. Anyway, there might be a good time to modify your RM strategy or propose an inventory upgrade to your GM or Owner.