"Many executives get distracted by the technology that has grown up around RM"
Published: 27 May 2008
Revenue and Pricing Strategies in Travel, TDS Europe 2008 Special
All aspects of RM have become much more complex with various channels and different pricing models to be managed.
The issues of keeping control over the business and at the same time the reduction of the extensive manual work have increased dramatically.
Assessing how the task of a revenue manager has evolved, Chinmai Sharma, Vice President, Revenue Management, Wyndham Hotels and Resorts, told EyeforTravel.com's Ritesh Gupta: "I think the current generation of RM leadership in the industry has evolved significantly over the past 5-10 years. The discipline has matured and we now see RM involvement right from the start of project feasibility and product definition to establishing optimal market mix and the usual demand and capacity management. The advent of multiple distribution channels with their own unique characteristics and costs has made the job of today's RM executive both more challenging and interesting. Today's RM executives also have an equal say in the distribution strategy and strategic marketing as resource deployment and ROI have become more important, especially in today's economic environment."
Duncan Bramwell, Managing Director, Duncan Bramwell & Company said RM, like virtually every component of the industry, has evolved. What essentially grew out of more sophisticated reservations management, supported by some basic spreadsheets, is now a multi-billion dollar business with a multitude of software and technology out there to support it.
"However, many do get distracted by the technology that has grown up around RM - what we must not forget is that we are still a "people-business" and that technology only provides automation and efficiency - technology does not "think" for us, and the best technology is useless in the hands of a weak operator or vague strategy," said Bramwell.
He added that the RM executive of the future will understand that the traditional boundaries between RM, sales and marketing, distribution, CRM, branding and many other functions has become blurred.
"The successful RM is the one who coordinates, aligns and synchronizes all the efforts and plans of these functions into a single, unstoppable revenue capability. After all, the RM has the word "Manager" in the title and that is what people expect to see....we are at risk of alienating many more people further from their belief in RM if we simply continue to over-technology, over-analyse and over-data what is essentially commercial practice," said Bramwell.
The increment in the number of distribution channels has highlighted the significance of channel managers especially when it comes to handling a multitude of manual extranets.
On this, Sharma acknowledged that channel management tools definitely help the average hotelier to play with multiple distribution platforms while maintaining rate and inventory integrity to end consumers.
"The bigger chains however probably don't see it as a long-term solution as they have the capability of building direct connectivity with most major OTAs. I think it's still a great solution for most hoteliers especially in emerging markets like Europe and APAC where the domination of major OTA companies is limited. Some of the other things to consider while selecting distribution channels from an hotelier's perspective are customer acquisition costs, geographic spread of the channel, metrics like LOS / Booking window / Seasonality, on site spend of end customer, the 'Billboard' effect and finally if their partner channel can actually help build their Brand awareness through Mktg Coop and PPC models," said Sharma.
For his part, Bramwell, said, "Web 1.0 and therefore Travel 1.0 was all about the price, and cheap prices at that. The temptation in front of us then was to be everywhere, no matter where that meant. But the web evolves, and we need to too. in the world of Web 2.0 and Travel 2.0 we don't need to be everywhere, we simply need to be in the right places where our customers expect to find us. We need to provide great and rich content, rational pricing and simplicity in booking. Part of the decision where we ought to be will include an evaluation of the those extranets and I would only support participation in non-interfaced extranets where there is a sensible benefit in being there."
He added that the practice of trying to update 15 extranets on a manual basis is usually not worth the time or attention - select those that can work with your technology and work actively with them - passive extranet management has no place in a successful enterprise.
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