A Revenue Manager’s Guide to Surviving the Awkward Teenage Years


Revenue management is a relatively young discipline in the hotel industry. Hotels only started to broadly adopt revenue management processes and systems in the late 90s and early 2000s. While the discipline has achieved success and gained visibility over the last decade and a half, it is still relatively new to the hotel industry. In fact, it could be said that revenue management is still in its teenage years.  In a lot of ways, we are acting like it:

  • Hanging with the wrong crowd: Over the past few years we’ve rebelled a bit and started hanging out with the wrong crowd, particularly during the 2008 economic downturn. We snuck out after curfew with a bunch of rogue technology providers who promised a good time reaching new guests through alternative discount channels. “Go ahead, sell 1,000 rooms at 50% off with no restrictions. Everyone’s doing it.” or “Don’t worry, your high paying guests will never find that out you are discounting rooms 30% day of arrival.”
  • Experimenting: We have been experimenting with dangerous things, data things. Some of which our parents have been warning us about, like regrets, denials, and weather. Other new designer data sources are just emerging, like reputation, customer lifetime value, and forward-looking demand. Some may help us price better, some may be fun to play with for a while, but some could eventually kill our forecasts and pricing recommendations.
  • Speaking our own language: Like teenagers, revenue management has invented its own language. As time has gone on, our core metrics have somehow morphed, until we have created amalgamations like GoNetRevProf-POR-PAR-PASH-PAC, which may make perfect sense to revenue managers, but is probably confusing those outside of the RM world.
  • Bullies: Is revenue management being bullied? Maybe. We certainly can feel pushed around a bit by general managers and sales teams, not to mention by the OTAs and other third-party distributors all wanting a piece of the revenue pie.
  • Let's talk about...: Total hotel revenue management, a "hot topic" in hotel revenue management for a decade or more, is just like the proverbial teenage "hot topic", because:
    • everyone talks about it
    • no one really knows what it is
    • but everyone thinks everyone else is doing it
    • so everyone claims they are doing it too
  • What do you want to be when you grow up?: Everyone is talking to us about our future, but we still don’t really know what we want to be when we grow up. As a new discipline, the career path is still forming. Revenue managers have been advocating for a chief revenue officer position, wondering when they could get into a CEO or CMO job, and even migrating back and forth into sales and digital marketing roles as the disciplines converge.

If revenue management is to survive the teenage years to become mature contributing members of the hospitality enterprise, we need to take the same advice as a discipline, that we were all given by our parents when we were teenagers.

  1. Listen to your parents and teachers – sure, it’s a relatively new discipline and things are changing fast, but this discipline is based on a solid foundation of research and best practices. We need to keep these core tenets in mind as we manage through all the change
  2. Get good grades – if we want to get into that C-Suite, we need to perform now, and communicate that performance widely with general managers, asset managers, owners, shareholders, Wall Street – everyone in the community - to get the attention now that will guarantee advancement later.
  3. Do your homework – so much is changing in the economy, in technology, and in analytics. Each revenue manager needs to clearly understand the implications of these changes on their organization and their jobs, and be able to guide their organizations towards the right decisions. Don’t let a vendor or analyst make the decision for you. Figure it out for yourself.
  4. Play well with others - now is the time for revenue management to work cross-functionally within the organization, instilling a revenue culture throughout marketing, operations, and even finance. We can’t wait for organizational structures or incentive plans to line up. If hotels are ever to reach the vision of satisfying total hotel revenue management, every department needs to be working together with profitable revenue generation in mind.
  5. Plan ahead – understand where you want to be and where you want your organization to be five or ten years down the road and start investing in the resources, skills, and infrastructure that will take you there, but...
  6. Be a kid while you can – being a kid is all about playing and experimenting (safely!). As a young discipline, revenue management is still discovering its true potential. There are still many new revenue opportunities out there. Don’t be afraid to innovate, take a few risks, and play around a bit while you still can.
  7. Finally, just because all the other kids are doing it, doesn’t mean you should too! - remember this classic parental saying? It’s very true for revenue management. Pricing is so closely tied to a hotel’s market conditions, business strategy, competitive set, and organizational goals that one size will never fit all. If you blindly follow your competitors, you’ll follow them right off a cliff!

How do I know that this taking this advice will work? Well, I’ve been thinking about this a lot over the last few years as I have been working with revenue leaders from hospitality organizations around the world. If you want to learn more about how to survive and thrive through the “teenage years,” you can find the results of my conversations, research, and thoughts in my new book “Hotel Pricing in a Social World.


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Kelly McGuire

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