EFT Amsterdam SpecialHyatt International Hotels & Resorts is investing a lot of time and money in training processes and the nurturing of a revenue management understanding...

Published: 28 Nov 2006

EFT Amsterdam Special

Hyatt International Hotels & Resorts is investing a lot of time and money in training processes and the nurturing of a revenue management understanding...

Hyatt International Hotels & Resorts is investing a lot of time and money in training processes and the nurturing of a revenue management understanding, culture and behaviour in among its hotel’s relevant teams, apart from investments made in technical systems and tools, according to with Siv Forlie, director - revenue management, Europe, Africa & Middle-East, Hyatt International Hotels & Resorts.

In an interview with EyeforTravel.com’s Ritesh Gupta ahead of Revenue Management and Pricing in Travel Europe 2006 to be held in Amsterdam, Forlie spoke about challenges for RM professionals, difference between reactive and proactive revenue management etc. Excerpts:

The greatest pressure on RM professionals is the ever increasing complexity and variety of competencies they need to master in order to optimise revenue. In your opinion what’s the biggest challenge when it comes to RM?

Revenue managers have in my opinion two equally important jobs to do to achieve their goal of maximizing revenue:

(1) Develop the most effective strategies to increase revenue, and
(2) motivate corporate executives and managers to implement those strategy recommendations.

Every decision a revenue manager makes affects company profitability and because of this, the position demands a professional competent in their ability to manage both people and revenue.

What factors do you think are critical, for an organisation like yours, in today’s environment to optimise revenue management?

Business- and Market Intelligence. A critical factor is definitely to use all the business- and market intelligence tools that Hyatt has invested in over the years and develop clear strategies. With no clear strategy, you have no thorough understanding of customers needs and wants, you can not anticipate market trends, you can’t tell how you measure up to your competition - and consequently it will be impossible for you to deploy the right revenue management tactics.

The needs of a hotel can change by season, month, week and even by weekday vs weekend, this has to be reflected in pricing to impact customer behaviour. What do you think is the key in handling this?

Demand forecasting, market segmentation, marketing strategies - and finally an optimal segment mix forecast (occupancy forecast). If you don’t know where you’re going - you are never going to get there....

Why has Performance Measurement now moved into the main arena and do the fundamentals of PM need to change?

We should not “over-measure” our performance, but some measurement figures should certainly be included when looking at a hotel’s performance. We have now been talking about RevPAR for some time - I think it is imperative that we start talking about GOPPAR and profitability when measuring performance.

Can measuring historical performance help you gauge improvement or does `a rising tide float all boats?

Measuring historical performance is important to observe trends - but it is equally important to always look into the future and observe change in trends and / or demand.

How sensitive is RM systems forecast quality about frequent price adoptions in a dynamic pricing environment? How can forecast quality be ensured?

Murphy’s Law: “To make a mistake is human - but to really mess things up you need a computer.” To ensure the forecast quality - and subsequently the restrictions and pricing decisions proposed by the RM System - we need to monitor and perform sanity checks on a very regular basis.

What’s on your agenda?

During the conference, I will be addressing the important difference between reactive and proactive revenue management.

Reactive opportunistic revenue management is often evolving around the short-term optimisation of high demand periods. We are focusing more on the long-term, proactive revenue management based on clear strategies built on more accurate demand forecasting, price integrity and profitability measurements.