Expert’s Voice: Introduction to hotel revenue management

Ever wanted to understand what exactly revenue management is? Kammelh Kishorre, Founder and CEO of RevMutu, explains the concept in depth.

Sales is responsible to generate demand and a hotel revenue manager is responsible to manage the demand.

Ever wanted to understand what exactly revenue management is? Kammelh Kishorre, Founder and CEO of RevMutu, explains the concept in depth.

Revenue management has now become a critical department of any hotel. There are a lot of misconceptions about revenue management. A revenue manager is pictured as some guy sitting in a room and working on numbers, graphs and reports. I have also come across some individuals who believe revenue management is a function of finance and accounts.

Revenue management is generally portrayed as a very complicated subject. In my experience, revenue management is a good understanding of behaviour and predicting the future. If we can predict the future accurately, we can change the future by taking certain actions.

What is the role of a revenue manager?

Nowadays, there is a lot of confusion about what is the responsibility of a revenue manager. As the title suggests: the revenue manager is responsible for the management of revenues coming into the hotel through various channels. In simple words: sales is responsible to generate demand and revenue manager is responsible to manage the demand.

Revenue managers are generally given the responsibility to generate business through electronic channels and in-house reservation department. Yes, pricing and managing online channels is the responsibility of a revenue manager. However, this is not the right parameter to measure the performance of a revenue manager.
A revenue manager’s key performance indicator is RevPAR (revenue per available room) and TRevPAR (total revenue per available room). In revenue management, another performance parameter added is GOPPAR (gross operating profit per available room).

A revenue manager predicts the market and hotel demand through forecasting. Post this, we take actions to change the hotel demand. There are many actions we can take to change the demand level for a hotel. Some of the actions we take are: pricing, yield management – LOS (length of stay restrictions), CTA (closed to arrival), channel management – opening & closing certain channels.

How do we understand the behaviour?

We take a lot of actions in revenue management related to pricing, yield management, channel management etc. A good revenue manager will always measure the impact of any action taken. This step is key for the revenue manager, as the same strategy/action can be copied and pasted if the hotel is in a similar situation again. (Given the other parameters have not changed).

Pace report analysis: daily pace analysis helps a revenue manager to understand the behaviour of the pick up by day of the week. This gives an indication, where the action needs to be taken to bring the pace in line with hotel behaviour and as per market demand.

We perform price elasticity test to understand how the occupancy percentage behaviour impacts at various price points. This test is very critical for every hotel to understand BEP (break-even point). A price elasticity test needs to be done for various demand levels to get a clear and detailed analysis. Example: day of the week, Seasonality, etc.

Kammelh has over 15 years of experience in hospitality and revenue management in the Indian and international market. Kammelh has worked with global brands like Forte Group United Kingdom and InterContinental Hotels Group United Kingdom. During his tenure with IHG, Kammelh worked in various roles from single property revenue manager to multi property revenue manager. Kammelh pioneered a new concept in revenue management in India to support hotels improve revenues and profits. He is currently supporting over 50 hotels across India and overseas.

SHARE THE NEWS

[tweetshareinline tweet=”Ever wanted to understand what exactly revenue #management is? K. Kishorre, Founder and CEO of RevMutu, explains the concept in depth. ” username=”tophotelnews”]

MORE NEWS

 

Interview

Banyan Group’s Philip Lim on growth in a challenging landscape

Banyan Group’s Philip Lim on growth in a challenging landscape
People

Gonzalo Aguilar takes the reins at Minor Hotels Europe and Americas

Gonzalo Aguilar takes the reins at Minor Hotels Europe and Americas
Appointments

Jumeirah appoints new CEO

Jumeirah appoints new CEO
Appointments

Reside appoints brand veteran to lead Residence line

Reside appoints brand veteran to lead Residence line
Appointments

Lamington Group appoints fresh board amidst expansion

Lamington Group appoints fresh board amidst expansion
Appointments

Beaumier appoints Billy Skelli-Cohen as Chief Executive Officer

Beaumier appoints Billy Skelli-Cohen as Chief Executive Officer
Appointments

Timur Sentuerk tapped as new Doyle Collection CEO

Timur Sentuerk tapped as new Doyle Collection CEO
Appointments

Dalip Singh takes the helm at Montigo Resorts

Dalip Singh takes the helm at Montigo Resorts
Interview

Interview: Kempinski’s Christophe Piffaretti on the industry’s key trends

Interview: Kempinski’s Christophe Piffaretti on the industry’s key trends
Appointments

Arthur Jaeger joins Adagio as Chief Development & Real Estate Officer

Arthur Jaeger joins Adagio as Chief Development & Real Estate Officer
Appointments

Minor Hotels welcomes development and luxury officer

Minor Hotels welcomes development and luxury officer
Appointments

The Courtyard by Marriott Pasadena announces new GM

The Courtyard by Marriott Pasadena announces new GM
Interview

Interview: Hyatt’s Anna Corkill on the UK market’s future

Interview: Hyatt’s Anna Corkill on the UK market’s future
Appointments

Massimo Brancaleoni joins Kempinski Hotels as Chief Commercial Officer

Massimo Brancaleoni joins Kempinski Hotels as Chief Commercial Officer
Appointments

Accor appoints new executives to strengthen leadership

Accor appoints new executives to strengthen leadership
Interview

Interview: Viceroy’s development president on driving growth

Interview: Viceroy’s development president on driving growth
Appointments

Rosewood Baha Mar appoints Julien Labays as GM

Rosewood Baha Mar appoints Julien Labays as GM
Appointments

Auberge Resorts nabs former Four Seasons Global President

Auberge Resorts nabs former Four Seasons Global President
Appointments

Southern Ocean Lodge appoints Robyn Bautovich as GM

Southern Ocean Lodge appoints Robyn Bautovich as GM
People

Langham names Jack Xiao as Operations SVP

Langham names Jack Xiao as Operations SVP
{"slides_column":"1","slides_scroll":1,"dots":"false","arrows":"true","autoplay":"true","autoplay_interval":"3000","speed":"1500","lazyload":""}

BEST STORIES FOR YOU

Found this data interesting?

Start a free trial of THP’s database with over 8,500 hotel projects and key contact details.

Related Articles

Banyan Group’s Philip Lim on growth in a challenging landscape

“The biggest challenges would be the same for many of us across industries – slowing world economy, heightened geopolitical tensions The growth opportunities for us remain in sustainability.” - Philip Lim, Banyan Group...

Gonzalo Aguilar takes the reins at Minor Hotels Europe and Americas

Gonzalo Aguilar has taken on the role of Chief Executive Officer at Minor Hotels Europe & Americas, starting 1 January 2025...

Jumeirah appoints new CEO

As it plans a substantial international expansion, hotel group Jumeirah has appointed a new CEO to lead that growth...