Why Revenue Managers are Profit Managers

By Sabrina Jackson, Senior Director of Product Management, Duetto

Rising operating costs, the continued challenges of changes in demand, and escalating distribution fees mean that hotel operators are looking even closer at their bottom line than ever before. Measuring total profitability, and not just rooms revenue, is the new remit of a hotel revenue manager.

Room revenue only tells you how much money is coming into your hotel. It ignores operational efficiency and how much money a hotel is spending to run the entire operation.

When analyzing hotel performance, Revenue Managers should think of themselves as Profit Managers, because they are in a unique position to directly impact and attract high-value, loyal customers and focus on net cash generated and return on investment (ROI).

To do this they must implement a dynamic revenue strategy, one that considers the following:

1Manage all Revenue Streams

Hotels can boost revenue and profit by focusing on ancillary operations within the hotel, such as food and beverage, meetings and conferences, golf, spa, and parking facilities.

2Measure and Analyze Total Guest Value

Total guest value comprises the revenue a customer brings in from all profit centers, less all costs associated with that customer, including package and acquisition costs.

3Create a Channel Strategy that Maximizes Profits

By understanding channel costs, like commission and transaction fees, Revenue Teams can start creating real strategies and stop treating all channels as equal.

In addition, watching cancellation trends can be an effective strategy.

Ultimately, Revenue Teams should know which channels are the most profitable and how to maximize their return on investment.

4Create Loyal Guests

Creating and delivering a strong guest experience is at the heart of running a profitable hotel. By knowing your guest, you can build internal sales strategies that boost guest spending. To see a fuller return on investment you need to give the guests the services they want. In the long run, you will profit from loyalty programs with extended length of stay (LoS) and repeat customers.

5Look Beyond Revenue

If hoteliers want a full picture of profitability, the smart move is to monitor more comprehensive metrics, such as TRevPAR and NetRevPAR.

6Unify

Marketing and Revenue Teams

Drive strategy with a unified marketing and profit approach. Run promotions that are targeted at bringing in the highest value customers and create sales incentive programs that create opportunities for upsells in the purchase process and on-property.

Discover more about boosting Total Profitability at your hotel. Download the latest Duetto eBook, How To Boost Your Hotel’s Total Profitability for free today.