Improving forecast accuracy and dealing with anomalies outside of the RMS remit

IN-DEPTH: Evaluating the business case for greater automisation of RM processes

Published: 12 Nov 2009

IN-DEPTH: Evaluating the business case for greater automisation of RM processes

Revenue management, like virtually every component of the travel industry, has evolved.

The discipline has matured and the industry has witnessed RM’s involvement right from the start of project feasibility and product definition to establishing optimal market mix and the usual demand and capacity management.

In order to know more, EyeforTravel’s Ritesh Gupta interviewed Warren Mandelbaum, head of revenue management, Whitbread Hotels and Restaurants.

Mandelbaum, who is scheduled to speak at the forthcoming RM and Pricing in Travel Europe 2009 Conference in Amsterdam (November 24 and 25), spoke about RM’s role, automation and other issues. Excerpts:

All aspects of RM have become much more complex. How do you think the role of a senior RM executive has evolved as of today?

Warren Mandelbaum: 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 are decisive forward thinkers who are innovative and creative. They should be technically savvy, leaving the tedious task of forecasting to the RMS, using rate shopping tools to ascertain market conditions and the upkeep of channel management to interfaces which seamlessly update rates instantaneously across all booking channels.

The senior RM is wearing various hats throughout the day including that of marketing, sales, finance, operations and RM - utilising their influence and negotiation skills to drive business where it is needed the most. Focus is also spent on justifying the need for rate fluctuations, being flexible and innovative in decisions taken to reach their targets and most importantly maintain clear open communication lines so that each function is aware of its role and contribution.

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. How do you assess the situation today from a hotelier’s perspective?

Warren Mandelbaum: It's very important to remember, even during challenging times, that more is not necessarily better. So being available and maintaining a multitude of extranets that yield little or no business can be turned into a time wasting and expensive exercise. Irrespective of market conditions or competitor presence, it is vital that RMs are continually reviewing 3rd party contracts and business achieved. Non performers should be weeded out, leaving more time to concentrate on those channels that are producing and investigating new, creative booking channels available in the market.

As ever technology too places a role - not only is it a more cost effective and far quicker means of maintaining extranets, but is also the solution to maintaining a larger host of clients if the need arises.

Experts acknowledge that hoteliers have to take a call between their key resources updating several channels manually or to opt for a scenario where the implementation of any pricing decisions is largely automated and thereby freeing up these resources to focus on strategically important issues. How do you assess the situation?

Warren Mandelbaum: From Premier Inn Hotels’ perspective, managing an estate of c. 600 hotels nationwide required automation and technology as a pre-requisite to evolve Revenue Management best practice. Centralisation was a fundamental necessity in order to implement and maintain even rudimentary RM best practice. We would never have been able to take Revenue Management techniques forward without the introduction of automation or centralisation.

Apart from the obvious benefits of being cost effective in the long run and bringing new efficiencies into the operation, automation also gives us the ability to explore new avenues in RM and channel management while ensuring the limited resource that we do have is concentrated on strategy and need areas which matters the most. Working by exception allows us to entrust the RMS with the majority of pricing decisions, leaving the team to concentrate on improving forecast accuracy and dealing with anomalies outside of the RMS remit.

How can a hotel be prepared for the increased workload that comes along with a need to manually update rates? How can one bring in efficiency?

Warren Mandelbaum: Automate, automate, automate. Automation is invaluable to any operation, regardless of the size and type of hotel, centralised or stand alone. The long-term cost effective benefit, coupled with the speed and accuracy of updates are the most obvious benefits. However, automation brings the possibility of enhanced strategies and the maintenance of an ever increasing number of channels which would never be realistically maintained 24/7 by a team running manual practices. With the need to react even quicker than before, taking into account international operations and time differences, it is imperative to deploy some form of automation to keep you abreast of the market.

What role do you foresee of a RM partner from a hotelier’s perspective, especially in the context of ensuring that all the hotel and third party booking systems and distribution channels are integrated and interfaced so that the information seamlessly flows between all systems in a timely and efficient manner?

Warren Mandelbaum: Communication and honesty is key here - from both supplier and hotel. As a hotel, you need to be explicitly precise about your current needs as well as long term requirements, while being realistic on delivery and budget constraints that may exist.

A supplier must be flexible in their approach - very rarely can an 'off the shelf' product meet all the requirements of a hotel. Suppliers must be willing to invest and investigate in the ongoing needs of their clients specific requirements. From experience it pays to have a dedicated account manager from both parties in continuous engagement to ensure that expectations are met in a timely and cost efficient manner.

How do you assess the development of tools in order to give hoteliers back the control and provide them with clarity of what is going on with their business?

Warren Mandelbaum: There are few issues that we need to address here. However much the industry has come on in recent years, we are still lagging behind. Mix in the complication that a number of tools are independent of each other, therefore taking up precious time to manually integrate together. This coupled with the cost can mean that a vast majority of hotels find these tools too expensive to deploy and other too manually intense to use effectively. Like industries before them, hoteliers are going to have to become more assertive in their requirements to suppliers.

How do you measure your performance across various channels and streamline your processes to effectively implement revenue management?

Warren Mandelbaum: A benefits analysis case study for all performance related implementation should not only cover the financial gains, but should also be benchmarked against competitor performance as well as a ROI on any implementation costs. Time, while more challenging to measure, should also be benchmarked. After all if the yields on a very time consuming exercise are very small, however positive - is it worthwhile continuing? Can the process be streamlined to be quicker, or is it worthwhile investing in a whole new approach?

The modern RM should have the flexibility, but more importantly vision to achieve targets and know what steps to take to get there as efficiently as possible.

RM and Pricing in Travel Europe 2009 Conference

Mandelbaum is scheduled to speak about automisation of revenue management processes at the RM and Pricing in Travel Europe 2009 Conference. In all, there are more than 20 speakers including:

  • Brian Hicks, Director Revenue Management EMEA, Intercontinental Hotels Group
  • Carl Oldsberg, Director Revenue Management and Distribution, Choice Hotels
  • Chris Martin, Director Revenue and Distribution, Ramada Jarvis
  • Diana van Roest, Marketing and E-commerce Director, NH Hotels
  • Gerd Tritschler, Regional VP Revenue Strategy, Marriott
  • Harold Kluit, Director of RM and Marketing, Swissotels and Resorts
  • For more information, click here:

    http://events.eyefortravel.com/revenue-management/agenda.asp

    or Contact:

    Simon Carkeek
    Executive Director
    EyeforTravel
    +44 (0) 207 375 7181
    simon@eyefortravel.com

    Related Reads

    comments powered by Disqus