IN-DEPTH: Interview with Ben George, VP - Revenue Management, Asia Pacific, Hilton Worldwide

Published: 29 Mar 2011

IN-DEPTH: Interview with Ben George, VP - Revenue Management, Asia Pacific, Hilton Worldwide

By Ritesh Gupta

In the past decade, awareness of revenue management (RM) within the hotel industry has grown internationally. And to a large extent the same has been driven by branded hotel chains.

In order to know more about the current perception and the role of RM, EyeforTravel’s Ritesh Gupta spoke to Ben George, VP - Revenue Management, Asia Pacific, Hilton Worldwide. Excerpts:

(George is scheduled to speak at the forthcoming Travel Distribution Summit Asia 2011, to be held in Singapore on May 18 and19 this year).

How do you think the hotel industry has embraced revenue management as part of the organisational culture after all these years? Is it being ensured that RM today resonates with employees?

The previous two years have demonstrated how revenue management can influence demand.

Having said that how much it resonates with the majority of employees is still a big question; whether or not other employees are engaged with it is mainly down to the ability of the Revenue Manager and how they can communicate. They need to be able to take RM information and present it in a way that’s suitable to the audience, it’s no good just presenting a bunch of numbers or excel spreadsheets….they need to be able to speak in the audiences’ language.

RM specialists have been talking about the introduction of automated systems to give revenue managers more time for strategic thinking. What’s your take on this?

The reality is RM is getting more complex every day and Revenue Managers are needing to become more strategic (as consumers are forcing change). In order to be able to do that they need to be able to step back but to be able to do that they need to let some things go. A good RMS will take over many tasks which are normally time consuming. In my view an automated decision-making RMS is no longer an option, it’s an imperative.

It is being propagated that there is a need for RM professionals to become more risk management focused – commercial value of contracts now need to be assigned risk grades. Forecasting activity needs to account for these risk grades as does long term business strategy. How do you assess this viewpoint?

Any good Revenue Manager should be adopting a ‘risk-based’ strategy, if they’re not they’re being too conservative and not pushing rate hard enough.

The job of a RM is to determine a strategy that will maximise revenue and then demonstrate the risk associated with it allowing a decision to be made. There needs to be multiple strategies (with differing risk profiles) for the team to choose from.

The modern RM is no longer the record keeper of the past and instead is far more reactive to market conditions, in tune with sales plans and the RM professionals are being described as decisive forward thinkers who are innovative and creative. How do you think this all is reflecting the approach of RM professionals today as far as forecasting is concerned?

There’s no doubt they have a much wider purview than before, however the submitted forecast is still influenced by GMs who might have a political motive.

Whilst RM systems go a long way in identifying opportunities and maximising revenues they are not capable of business forecasting and this still remains an area where Revenue Mangers have to improve.

Revenue Management practices place a lot of emphasis on capacity constraints, time cycles, and price variables. If one were to go by this view alone, any reference to the "right consumer" is limited only to their ability to pay the optimal price. In some ways, this approach may be deemed to be short term, transactional biased and product orientated. What’s your viewpoint regarding the same?

I think this is a viewpoint that was correct a few years ago. Revenue Managers are not just responsible for the short term. The term ‘the right customer’ is still valid but it’s not necessarily to do with the price they’re paying for the room but the value they give to the hotel in total revenue. This is nothing new, this is something we have been attributing to Volume Corporate customers for years.

Over-bundling confuses customers, and erodes profitability. It’s a balancing act - if you bundle too much value, your profitability suffers; if you don’t bundle enough value, you find yourself further behind tomorrow and planning your next bundle. What do you think is the key to achieving such balance?

We have to be driven by the consumer. Bundling suggests putting multiple items together and I’m not convinced by it. It seems easy to talk about but difficult to do well. Too often hotels do what makes sense for them, bundling low-cost items together that in reality are not what the consumer wants. The message to Revenue Managers has to be “put yourself in the consumers shoes, what do they want”.

Can revenue management tools be applied to ancillary revenue streams in a business, such as hotel food and beverage. Can you elaborate on this?

The challenge with managing non-rooms revenue is data. For the vast majority of revenue streams we simply do not have the data to do complex revenue management, so the tools we use in Room Revenue Management for the most part cannot be used. But there are a number of things that can be done such as menu-engineering, menu-pricing, space management, telephony & Internet revenue management. This is less about using tools and more about using common-sense and the demand data readily available and simple excel spreadsheets. Another issue here is the fact that the average hotel only has 1 Revenue Manager and simply doesn’t have the time to attack all revenue streams.

It is being highlighted that price elasticity measurement is something relatively new in RM and will likely find an application in the ancillary revenues. What’s your viewpoint regarding the same?

The measurement of Price Elasticity is critical in optimising revenues. Is it used on a wholesale basis, probably not. This for me is an example of how RM is continuing to become more and more complex. We need to get our RM systems to build in this capability, with the data they have they should be able to give better data around price point suitability and the impact a price change would have on demand.

Travel Distribution Summit Asia 2011

Ben George is scheduled to speak at the forthcoming Travel Distribution Summit Asia 2011, to be held in Singapore (May 18-19, 2011).

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Marco Saio
Global Events Director, EyeforTravel
E: marco@eyefortravel.com
T: UK +44 (0)207 375 7219