Research in Action: Total Hotel Revenue Management

By Kaitlin Dunn, Writer, Hospitality Sales & Marketing Association International (HSMAI)

At HSMAI’s ROC 2019 event in June, six college and university faculty members from hotel schools across the U.S. and Canada presented research in areas related to revenue optimization in the hospitality industry. During one of the presentations, Dr. Gabor Forgacs, an associate professor at Ryerson University’s Ted Rogers School of Hospitality & Tourism Management, discussed his research “Total Hotel Revenue Management,” which focuses on current practices and future trends of total revenue optimization in hotels.

Working with Starwood Hotels & Resorts Worldwide’s Alice Zheng, Forgacs conducted in-depth interviews with a dozen industry leaders, academics, and revenue professionals, questioning them on their knowledge of total hotel revenue management and its use at properties. The research found that there is a growing awareness and strategic direction to embracing total hotel revenue management and gradual progression at the property level. However, the research also found that there are identifiable impediments to implementing it, including:

1. A lack of revenue personnel with experience and qualifications. According to a summary of Forgacs and Zheng’s research, most interviewees were concerned about whether will be sufficient revenue professionals to practice total revenue management in the future.

2. Technology challenges. The most pressing issue with regard to technology is the management of multiple revenue streams — particularly the seamless interfacing of data between systems.

3. Departmental conflicts. Departmental silos impede the alignment of objectives and incentives as well as a clear reporting structure for who has the final say in rate, inventory allocation, etc. According to the summary of the research, interviewees agreed that while the final decision maker on pricing and group sales should be the revenue manager, director of revenue, or general manager and that the revenue manager should have more authority than a sales manager, there are still hotels where the revenue management department reports to the sales and marketing department in the chain of command.

4. Organizational culture and employee education. Forgacs said that a lack revenue culture and a need for training to operationalize corporate strategic goals are two areas in which hotels can improve to achieve success with total hotel revenue optimization.

Categories: Revenue Management
Insight Type: Articles, Presentations