TDS Europe 2006 special: By EyeforTravel Correspondent<br><br>Revenue management is already effective in optimising reve

TDS Europe 2006 special: By EyeforTravel CorrespondentRevenue management is already effective in optimising revenue using whatever pricing structure is in place.

Published: 16 Jul 2006

TDS Europe 2006 special: By EyeforTravel Correspondent

Revenue management is already effective in optimising revenue using whatever pricing structure is in place.

Chris Silcock, vice president, Revenue & Service Delivery, Hilton International, says, “The move to dynamic pricing enhances this capability but has to be driven in combination with the market rather than in spite of it. The needs of a hotel can change by season, month, week and even by weekday vs weekend, this has to be reflected in our pricing to impact customer behaviour.”

In an interview with EyeforTravel.com’s Ritesh Gupta, Silcock spoke about changes in RM, introduction of dynamic pricing along with customer focused products and other issues. Excerpts:

What kind of changes have you witnessed from revenue management perspective in this region? Accordingly, how has your organisation responded to such developments?

The greatest pressure on revenue management professionals is the ever increasing complexity and variety of competencies they need to master in order to optimise revenue ... our demands on them and expectation from them grow on a daily basis.

Communication, training and education along side the development of technology to support them is our key focus to respond to these changes. A lot of it is driven by increasing complexity in the distribution environment and the changes brought about by the Internet, transparency and price parity are there for critical focuses.

One of the revenue managers told me last year - Over the last years, pricing has become ONE. There is not business versus leisure pricing. You do not have to qualify the caller regarding the purpose of the stay. The dynamic approach of a BAR (Best Available Rate), whether the BAR is positioned correctly in order to convert the demand is the name of the game these days. Whats your taken on this?

It’s true that the introduction of dynamic pricing along with customer focused products has reduced the gap between business and leisure pricing. It has also enabled the simplification of pricing structures, which improves efficiency and our effectiveness in matching the right product and price point to the market. However, business and leisure are different markets with different requirements and we need to continue to focus on delivering products that meet the specific needs of these different customers.

How do you assess operations of your company in this region? What have been the major achievements?

Due to the availability of market information and competitive data through new and innovative methods, that meet the strict competitive data sharing rules across Europe, we have great ways of measuring our success.

Performance against the competition is key as it is the true gauge of market performance. Combine this with specific internal measures and we can pretty clearly understand where we are doing well and where there is opportunity. In terms of executing change in our performance, we ensure we measure what is important, provide training and education to enable our revenue professionals to excel, and also drive company wide initiatives that will drive revenue, profit and efficiency.

Major achievements include our focus on driving efficiency and quality in how we take reservations, focusing on our brand sites to be the preferred method of booking, and constantly reviewing our pricing to ensure we meet the needs of our customers whilst allowing flexibility for our revenue professionals to manage the structure to optimise revenue. We organised eight years ago by creating the role of Director of Business Development at hotel or cluster level, a role which has decision making power over all revenue decisions, regardless of where the business comes from - Sales, Hotel Direct Groups or Individuals, Leisure etc. This has allowed us to manage distribution and pricing with one voice and has clearly given us a competitive advantage.

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

Currently the key factor is people, people, people. We rely on the quality and capability of our people to execute effective revenue management and thus optimise revenue. In addition the buy-in and adoption to effective revenue management practices by the wider management audience, not just the revenue management teams.

Technology is the other key factor, which will allow us to provide the information, intelligence and tools that will enable our revenue management professionals to be more effective in their roles. In simple words, reliable data analysed by competent people who have the tools and decision making power to accept and refuse business based on factual yield decisions and not emotions.

Markets must accept variable and dynamic pricing for RM to truly flourish, Steve Pinchuk, corporate vice president - revenue management, Harrahs Entertainment told me earlier this year. Whats your viewpoint on this?

Revenue management is already effective in optimising revenue using whatever pricing structure is in place. The move to dynamic pricing enhances this capability but has to be driven in combination with the market rather than in spite of it. The needs of a hotel can change by season, month, week and even by weekday vs weekend, this has to be reflected in our pricing to impact customer behaviour.

What are your future predictions for this market as far as RM is concerned?

Revenue management whilst now established in the hospitality industry will continue to grow in its importance in our aim to deliver superior returns. Development and deployment of new technology will remove the current constraints on how we organise and provide us with choices.

Pricing and the focus on profit rather than pure revenue will be critical in driving performance. We are at the centre of the distribution strategy and can impact channel shift to ensure that we reach the highest possible net RevPar. Most people judge hotel performance on RevPar, which is a good indicator of performance but we will increasingly have to think in terms of net revenue contribution ... not every dollar of revenue has the same acquisition cost and revenue management have to understand this and factor it into decisions more in the future.

Whats on your agenda?

Constantly evolving and improving the capability of our revenue teams whilst providing them with the tools necessary to excel in their roles. Basically, ensuring that we are always just ahead of the market.

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