FIU Revenue-Management-2020-Final

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Visionary Leaders Forum

Singapore October 24, 2013

REVENUE MANAGEMENT 2020

TALENT, TOOLS & TECHNOLOGY

Institute for Hospitality & Tourism Education & Research A division of Chaplin School of Hospitality and Tourism Management, Florida International University

1 REVENUE MANAGEMENT 2020 TALENT, TOOLS & TECHNOLOGY

Few industries are so heavily reliant on the delicate blend of top-notch talent, state of the art

technology and responsiveness to sometimes fickle consumer trends as is the hospitality and

tourism industry. Change is constant and the pace at which it occurs is accelerating

exponentially. To assist industry professionals in keeping pace with this rapid industry evolution,

the Institute for Hospitality and Tourism Education and Research (IHTER), a division of the

Chaplin School of Hospitality and Tourism Management at Florida International University

(FIU) launched the Visionary Leaders Forum. Held in Singapore on October 24, 2013, this

invitation-only inaugural forum provided a platform for intellectual 'peer to peer' exchange,

professional networking and collaboration. At the forum, an impressive array of senior

hospitality leaders gathered to speak candidly about the difficulties of staying current,

competitive and profitable in today’s challenging lodging and tourism industry arena –

particularly with respect to revenue management.

In a similar fashion to what is occurring in the United States and Europe, hotel revenue

management concepts and practices in Asia Pacific are rapidly evolving. The discipline of

revenue management is in transition from a ‘rooms-only’ approach used to maximize revenue

from overnight guest room operations, to an integrated approach which considers all aspects of

the hotel asset (physical, technological, management), that can be leveraged to drive optimal

revenue and profit performance.

Following on from IHTER’s successful annual Revenue Management 2020 – Talent, Tools &

Technology seminar in Miami inaugurated in May 2013, the Visionary Leaders Forum separated

the group of 18 executives into three investigative groups. Each group was tasked with exploring

one of the three assigned topics while guided by a moderator:

• Topic 1: Revenue Management Leadership & Talent, moderated by Mike Hampton,

Dean - Chaplin School of Hospitality and Tourism Management at Florida International

University

• Topic 2: Optimizing Profits with Total Revenue Management, moderated by Grahame

Tate, Managing Director, Asia Pacific – IDeaS, A SAS Company



• Topic 3: Revenue Management in the Digital Age, moderated by Patrick Andres, Vice

President & Regional Managing Director, Asia Pacific – Travelport

Key issues and findings of the group’s investigative discussions are presented in the following

paragraphs.



Revenue Management Leadership & Talent

That statement shared by one of the executives at FIU’s

Visionary Leaders Forum in Singapore, embodies the evolution

that the discipline of revenue management has undergone over

the past several years. From what had been a relatively traditional

‘inventory management’ job scope, today’s revenue management

professional faces new opportunities and challenges in a position that requires one to be far more

analytical, strategic in approach, and technology-savvy. Today’s revenue manager has a much

more visible role in the fundamental viability of the hotel operation, in many cases functioning as

the virtual cornerstone of the effort to drive results and optimize profits. That type of

responsibility can create enormous pressure on those holding the revenue manager’s position.

The group of professionals delving into this topic, with Dean Hampton at the helm, engaged in

lively discussion regarding the challenge that hotel operators and owners face in being able to

attract and retain talent with appropriate skills. Key points brought to the fore during the

discussions are outlined in the paragraphs that follow.

The group identified, as the fundamental skills of the revenue manager today, the ability to

facilitate communication among stakeholders and to influence decisions based upon the research

and analysis which is the foundation of the revenue manager’s work. These skills were identified

as being particularly necessary when managing upward.

The group acknowledged that, while most revenue managers are able to successfully capture

critical data to drive decisions, the ability of the revenue manager to translate and process

complex information and to funnel it to the appropriate management levels in a clear, concise

and effective manner is very often a daunting challenge. Keeping in mind that key decision-

makers within management and ownership might have backgrounds in areas of operations, such

as Food and Beverage, which have traditionally not been in the revenue management loop as

well as the fact that, frequently in the case of ownership, stakeholders have no hospitality

operations background at all, working with these individuals can be trying – demanding patience

“When I started, my title was that of Space

Controller.”



and the ability to explain clearly at a level that is understood by all. Functioning effectively in

this situation requires confidence and effective communication and group leadership skills. Many

of today’s revenue managers are relatively young and, as a result, somewhat intimidated by the

prospect of influencing and, in some cases, directing the actions of more senior management

team members.

There was strong group consensus on the following:

• Talent acquisition and retention in the world of revenue management is a global

challenge, one that is also impacted by both national and organizational culture. In Asia

for example, one might find that the ability of revenue managers to persuade senior

management and influence superiors may be inhibited by the presence of traditional

Chinese cultural norms.

• On a much broader basis, crossing international lines, there is often a gap between

‘legacy thinking’ – revenue management focused solely on Rooms division revenue

generation and that of the revenue manager who is incorporating Total Revenue

Management (TRM).

• Overly ‘traditional’ management that may lack full appreciation of the fact that revenue

management culture must be woven through the fabric of the entire operation

• Traditional management, with many years of hands-on industry experience, may not have

full appreciation of the need for a new revenue manager to be more strategic in price

optimization and, to do so, requires full access to evolving technology surrounding

distribution and customer experiences.

• The communication breakdown is a two-way street. The group acknowledged that many

young revenue managers seem to lack an appreciation of the fact that the hospitality

industry remains an industry in which service excellence distinguishes hotels and brands

and that evolving technology cannot replace the fundamental importance of the human

factor and meeting guests’ needs.



The group recognized, at the outset, the need for the revenue manager to be strategic and

analytical in terms of managing and analyzing data. At the same time, and as discussed earlier,

the discussion centered around the fact that talented young revenue managers often lack an

understanding of the operational aspects of a hotel. While the revenue managers are obligated to

consider soft or qualitative data

like customer profile and buying

patterns of the guest for

decision making, which can be

subjective and difficult to

measure and express in key

figures, there is greater need for these managers to integrate hard data with the hands on

operation of the hotel property. In short, technology should be revered for its ability to enhance

the revenue management process, but not so revered that it negates the need to understand the

basics of the hospitality industry in terms of process and goals to provide service and drive

customer loyalty.

Opportunities for students and those just beginning their careers in hospitality and tourism

management abound. However, the group discussion focused on the lack of a clear career path or

career potential for those entering the revenue management discipline. In this light, the group

discussed the fundamental topic of “what attributes make for a great revenue manager?” Some

offered that there is a need to focus career potential on ‘passion’ for the business and that career

progression needs to be well-rounded within the hotel and throughout operations, particularly as

it relates to TRM. Another point highlighted the fact that several hotels use the retail sector as

recruitment ground to source new revenue management team members given that industry’s

focus on consumer behavior.

In closing the session, Dean Hampton gently reminded the group that, in the case of university

graduates entering the world of hospitality management, young professionals should be able to

focus on a revenue management career without losing sight of the fact that they should “shoot for

the top” realizing that anyone has the potential to progress through their career to the point of

achieving a top CEO position.

“We need a process to merge and manage all the hard data without losing sight of the qualitative aspects of soft data for

decision making”



Optimizing Profits with Total Revenue Management

Compared to the US and Europe, hotels in Asia are typically larger full-service hotels with large

public spaces including food and beverage outlets, meeting and banquet areas, recreational areas,

etc. In Singapore, where hotel development costs are very high placing great pressure on the

financial feasibility of hotel developments, a TRM approach is the one option that hotel and asset

owners have used in order to see greater improvements in their return on investment and profits.

This group agreed that it was crucial to identify precisely what is meant by TRM: Total Revenue

Management (TRM) is about finding the most profitable mix of business for the entire hotel

asset and measuring total guest spend and profitability per market segment, thereby enabling

hotels to discover and maximize profitability across the entire property, not just via the rooms

operation. With TRM, the aim is to optimize all available revenue streams, including conference

and meeting space, food & beverage, retail outlets, spa and other ancillary services.

This group of leaders, moderated by Grahame Tate, Managing Director, Asia Pacific for IDeaS,

A SAS Company, explored how TRM is used to enable optimization of profits from meetings

and events business. They took the approach of looking at the subject matter as it relates to

strategy, process and people.

Strategy & Process

The group acknowledged the

opportunity for the role of a

hotel’s revenue manager to

evolve into that of an asset

manager, providing greater

leverage to hotel operators and owners. The discussion centered on trends in mixed-use

development and the various life cycles of a hotel property. It was noted that, as the revenue

management discipline evolves, it needs to be woven into the fabric of not only the operating

hotel, but into the very design of the hotel. Thinking about revenue maximization should begin at

the genesis of the hotel development itself.

“While revenue management performance benchmarks and best practices exist for guest rooms, there is no recognized

industry best practice for TRM”



A comment was made to the fact that mixed use developments in particular present enormous

opportunity to maximize revenues and profits, and that different stages of a hotel’s life cycle may

dictate a different approach and focus on the various components of TRM.

The group entered into a robust discussion focused on industry best practices and benchmarks for

total revenue management. What is the right measurement to analyze the success of TRM for

mixed-use properties, keeping in mind the different market segments and business mix? What is

the right measurement given a property’s life cycle – new versus mature product? The questions

remained unanswered within the group. There was a call for more research to support the

industry in terms of such standards and best practices. The leaders also want to see further

integration of revenue management into strategic planning at the early property development

stage, and for General Managers with focus on the big picture to be incentivized appropriately.

As hotels contemplate and deploy TRM initiatives to improve profitability, corporate and

business meetings & event companies are increasingly implementing ‘Strategic Meeting

Management’ programs to control costs and streamline their meeting and event processes. With

companies and planners becoming more strategic, data centric and process driven, there is

greater need for tighter integration of hotel management systems and closer collaboration

between hotel sales, marketing, distribution and the RM team than ever before.

Focus on People and Talent

In a discussion similar to that taking place at the Revenue Management Leadership & Talent

group, the executives in this group emphasized the need for graduates entering the industry to

have a TRM mindset, as well as the willingness and ability to become a commercial manager

(intended to mean someone with a broad scope of the business, beyond that of just room

revenue). This is something that will be critical to the success of any curriculum preparing

future revenue management leaders. Acknowledging the challenge that many may face in

reporting to traditional revenue management thinkers, the need for additional revenue

management training designed for General Managers and Department Heads was underscored

throughout the forum.



Revenue Management in the Digital Age

Moderated by Patrick Andres, Vice President & Regional Managing Director, Asia Pacific for

Travelport, this group of executives took on the topic of the evolution of hotel revenue

management in the digital age.

The changing landscape of the digital world has had a tremendous impact on the travel and

hospitality industry. From ‘Boomers to Bloggers’, widespread use of the Internet has created a

number of market conditions that are ‘game-changers’, presenting both opportunities and

challenges for hotels trying to stay current, competitive and profitable. Growing trends driving

these game-changing conditions and events include search, social, mobile and channel

convergence.

Because social media has put so much power into the hands of the consumer, this group

immediately focused on “the customer” – the hotel guest. The consensus among the group was

that, with all the heavy use of technology, we cannot lose sight of the fact that the customer is the

reason for the existence of the hospitality industry.

One of the problems facing the industry, in the mindsets of the participants of this group is that

some revenue management systems are designed around sometimes irrelevant or nonsensical

customer segmentation. The group stressed that guests’ expectations need to be addressed at an

individual level and we need to be careful not to indiscriminately put guests into “buckets” for

the sake of convenience and ease of analysis. Even at the General Manager and Department

Heads level, the group was of the opinion that there sometimes is a lack of understanding and

appreciation of customer needs that is fundamental in the revenue management function. Such an

understanding and appreciation goes well beyond managing data, it is essential for revenue

managers to understand the nuances of customer segmentation and how to price in response to

these nuances. An example would be the need for revenue managers to have a full appreciation

that the frequently returning guest needs to be given special consideration – not just treated as an

element of a “market segment”.



Armed with a smartphone and other mobile devices, consumers are becoming more and more

sophisticated. They want to be able to get current and accurate information on demand and on

the go wherever they are. One executive noted that whereas revenue management meetings were

previously held once a week within her organization, today the revenue management team must

make pricing decisions on a daily

basis based on the frenetic pace

of changes in consumer

sentiment. Yet, with focus on the

guest, the group called for a shift, acknowledging that whereas meta-search is currently driven by

price comparison, making everything a commodity, there is a need for it to evolve into an

intuitive booking system to enable “fuzzy” search by budget, preference and experience.

No conversation about revenue management in the digital age is complete without discussion

centered on the impact of the online travel agency (OTA) on pricing. This group’s discussion

became even broader in scope in consideration of the number and complexity of the mix of

distribution channels within the hotel industry. A noted anomaly in China for example is that

whereas OTAs generate a significant number of bookings, the travel agent market is still strong.

In many cases it is in fact cheaper for consumers to buy from the travel agent than online.

“We should be pricing to the consumer, not the channel.”



Summary: Time to Recalibrate & Refocus

Despite the fact that each of the groups was tasked with exploring a different theme – either

talent, tools or technology, there were common threads that ran through the discussions.

1. Responsive And Meaningful Customer Segmentation: There is a significant need for

more meaningful customer segmentation, supported by tightly integrated hotel

management systems and business intelligence tools to allow hoteliers to see the big

picture, spot the opportunities, and be confident, fluid and more responsive to customers

as individuals with different needs and motivations.

2. The Need for a Total Revenue Management Approach: Particularly in areas like Asia,

where stratospheric real estate development costs together with the rise in mixed-use

development projects, there was consensus that there will be an inevitable shift of focus

to a Total Revenue Management approach. However, participants agreed that the industry

is lacking in sufficient performance benchmarks and best practices to move us forward

and that more work needs to be done to make TRM effective.

3. New Set of Performance Metrics: Revenue management in the Digital and TRM age

requires a new set of performance metrics. Tracking revenue per available room

(RevPAR) and revenue share of the market (RGI -Revenue Generation Index) is no

longer sufficient and should be replaced and enhanced with new key performance indices

(KPIs) that consider multiple revenue streams and all associated costs of distribution by

channel. Only then can we make informed and responsive decisions on the type of

business to accept in order to maximize profitability (not just revenue) across the entire

asset.



4. Redefined Role for the Revenue Management Professional: Operators and owners

should engage revenue management professionals and asset managers at an earlier stage

in the hotel's technical design and development and maintain their reliance on such

individuals throughout the life cycle of the hotel asset. The "if you build it - they will

come" ideal does not work in today’s challenging development and operating

environment.

5. A Commercial Mindset: The new revenue manager must be a strategist: understanding

consumer behavior, analytics and Total Revenue Management. Develop future hospitality

leaders with a holistic and commercial mindset (one with a broad business scope beyond

just rooms revenue) to optimize the total asset, while at the same time provide

professional education to senior management to prevent unintended 'traditional and

legacy thinking' from stifling growth and long-term career progression of younger

professionals.

Conclusion

Rising above and beyond the individual comments made by the group of leading hospitality

professionals at the Visionary Leaders Forum held in Singapore, there was a palpable sense of

urgency. This sense of urgency reflected the group consensus that the integration of Revenue

Management in the hospitality industry has already changed the way we do business and that this

new business model must continue to grow and be nurtured if the hospitality industry is to keep

pace with other businesses competing for a finite amount of investor capital in the modern

business world. Fundamental to this growth and nurturing process is recognition that Revenue

Management – and key individuals performing the Revenue Management function -- must be

elevated in the mind of industry leaders so that it is recognized for what it is – indispensable to

the future success of the industry – not just a brick in the structure of the hospitality industry, but

the new cornerstone.



Attendees

- Patrick Andres, Vice President & Regional Managing Director, Asia Pacific – Travelport

- Anna Au-Yeung, Head of Partner Marketing, Asia Pacific – Travelport

- Fabian Bartnick, Senior Consultant, Asia Pacific – IDeaS a SAS Company

- Simone Champagnie, Executive Director - Institute for Hospitality and Tourism

Education and Research at FIU

- Bernadette Dennis, Director - BD Concepts/Managing Director – HSMAI Asia Pacific

- Craig Fong, Founder & Director – CF Ventures Pte Ltd

- Siv Forlie, Vice President - Revenue Management - Shangri-La International Hotels

- Mike Hampton, Dean - Chaplin School of Hospitality and Tourism Management at

Florida International University

- Jeannette Ho, Vice President, Revenue Management & Analytics, FRHI Hotels &

Resorts

- Puneet Mahindroo, Director, Revenue Management, Asia Pacific – Four Seasons Hotels

& Resorts

- Jurgen Ortelee, Vice President, Revenue Performance – Pan Pacific Hotels Group

- Shailesh Pallipuram, Director of Revenue Management – Operations and Pricing, Asia,

Middle East & Africa – InterContinental Hotels

- Jagdish Sandhu, Assistant Vice President, Revenue Management & Distribution – Silver

Needle Hospitality

- Philip Schaetz, Senior Vice President, Sales & Marketing – Dorsett Hospitality

International

- Christine Tan, Vice President, Sales, Asia Pacific – Trust International

- Grahame Tate, Managing Director, Asia Pacific – IDeaS a SAS Company

- Maria Taylor, Regional Vice President, Revenue – Meritus Hotels & Resorts

- Maunik Thacker, Senior Vice President, Marketing – Marina Bay Sands

- Christine Toguchi, Managing Director – MacroVision Network Pte Ltd.

- Richard Wiegmann, Chief Operating Officer – Trust International

- Stefan Wolf, Senior Vice President, Revenue & Distribution Strategy – Onyx Hospitality

Group





Our Presenting Partners

Thank you to our partners without whom FIU’s inaugural Visionary Leaders Forum could not

have taken place.



Authors

Gregory T. Bohan ISHC, BS Cornell University, MS Florida International University Visiting Assistant Professor Chaplin School of Hospitality & Tourism Management Florida International University

Gregory T. Bohan is lead instructor for graduate level Feasibility and undergraduate level

Revenue Management and Operational Control classes at the Chaplin School of Hospitality &

Tourism Management. Prior to joining the full-time faculty, Mr. Bohan had more than 35 years

of hands-on hospitality industry experience including directing consulting practices for PKF and

Pinnacle Advisory Group and as developer/owner/operator of his own full service country inn.

Simone Champagnie Executive Director, Institute for Hospitality and Tourism Education and Research (IHTER) Chaplin School of Hospitality & Tourism Management Florida International University

Simone Champagnie joined FIU in 2012 after serving over three years as Director of Alumni

Relations at Broward College and spending over 10 years in the international travel and tourism

sector. In her role at the Institute, Ms. Champagnie directs all business enterprise activities for

the Chaplin School of Hospitality & Tourism Management.

Christine Toguchi Managing Director MacroVision Network Pte Ltd Project Consultant for IHTER at Florida International University

Christine Toguchi is the Managing Director at MacroVision Network, a

management and training consultancy company that specializes in Customer Relationship

Management, Loyalty, Multi-Channel Distribution, Revenue Optimization and Sales &

Marketing. She was the founding Managing Director at the Hospitality Sales & Marketing

Association International, Asia Pacific Chapter and is currently Director at Large.



About the Chaplin School of Hospitality & Tourism Management

Florida International University's Chaplin School of Hospitality & Tourism Management has

been distinguished as one of the top hospitality programs in the U.S.. More than 2,000

undergraduate and graduate students from across the United States and around the world choose

FIU for its outstanding reputation, advantageous campus locations, expert faculty, rich

curriculum, and fast-track career opportunities in the international hotel, foodservice and tourism

industries. In August 2006 FIU unveiled the first US School of Hospitality and Tourism in

Tianjin, China. The Marriott Tianjin China Program is FIU’s largest international program, with

a capacity for up to 1,000 students. For more information about Florida International

University’s School of Hospitality and Tourism Management, visit http://hospitality.fiu.edu/.

http://hospitality.fiu.edu/

Documents

FIU Revenue-Management-2020-Final