It became apparent at a recent Revenue Management conference that not only is there a "disconnect" between the sales department and revenue management but at times, it manifests in outright frustration.

Published: 23 May 2005

It became apparent at a recent Revenue Management conference that not only is there a "disconnect" between the sales department and revenue management but at times, it manifests in outright frustration.

I was the "token" sales person at the conference. Following my presentation on Sales and the Revenue Management Strategy, it became apparent that I had touched a nerve -- that not all was well in the relationship between Revenue Management and Sales. However, the Revenue Managers in attendance expressed a sincere desire to bridge this disconnect.

The Revenue Managers' frustration stemmed from a perception that sales only wants to sell "discounted" rates at inappropriate times, doesn't understand and/or support the revenue management strategy and is primarily concerned with their "bonus" or incentives versus the revenue of the entire hotel. YIKES!

While I believe that this is not a universal sentiment -- it was sufficiently pervasive to prompt this article. The role of revenue management and the sales function should be complimentary -- the two strategies interlocking like pieces of a jigsaw puzzle. I was surprised that in so many cases this is not happening.

There are several areas of "dis-connectivity" that can be identified:

Inappropriate Discounting. It is easy to forget that until the last perhaps twelve months, the industry was pulling out of a deep recession characterized by decreased demand and heavy discounting by hotels in an effort to stimulate demand that wasn't there. This is a mind-set that is difficult to change when it has been SOP (standard operating procedure) since 9/11, almost four years ago. Couple this with meeting and travel planners who were dealing with drastically reduced travel budgets and hammering sales people to give them their best rate. As ADRs increase, those same planners are again "hammering" sales for the best deal they can cut. Discounting the rate is an easy sale to make -- building value into a rate and presenting it as a "good deal" takes a skill set where many sales people haven't been trained.

Bonuses and Incentives. It is easy to make a bonus when demand is high by discounting groups. It is much more difficult during periods of low demand when even discounting probably won't stimulate additional bookings. The issue however, isn't totally the sales department's fault -- it is a question of how management has structured the incentives and bonus plan. A bonus and/or incentive plan that is weighted in favor of rewarding bookings in periods of low demand and less lucrative during high demand periods can offset this issue.

Driving Revenue Across Multiple Profit Centers. This is a specialty that sales brings to the revenue management strategy. Hypothetically, midweek is the high demand period for higher rated corporate transient business but is slow for social and other catering functions and may be the slowest time for the spa. By discounting the room rate a few dollars, a group may bring high catering and food and beverage revenue as well as utilization of the spa during slow periods.

Interface of Sales and Catering Bookings and Revenue Management Strategy. Most sales and catering programs now have the revenue management metrics built into their sales and catering contact management programs. However, the potential always exists to "override" the system. It helps if the sales and catering system interfaces with the PMS system and the RM system as the evaluation can be made in "real time" rather than when the metrics were entered, perhaps months before.

Building and Maintaining Relationships. As most of us know, every relationship is built upon the ability to give and take -- even when it is not always convenient! This is no less true in relationships with clients than it is in personal relationships. Sales brings the strength of profitable client relationships to revenue management strategy. However, there are times when valued clients ask for special favors that may not always be in sync with the revenue management strategy. This can be a test of the relationship between revenue management and sales -- sometimes each department needs to trust that what the other department is doing is in the best interest of the hotel.

There is much more that can be said about this issue and much dialogue that should take place between both departments and management. These conflicts are resolvable with training, imagination and bonus structures so that each department is rewarded in the same way -- based upon the total revenue of the hotel.

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