Who Really Sets Hotel Prices? The Revenue Manager’s Role
Albert BarraMay 22, 2022 · 2 min read
If I were to ask this question at random in any hotel establishment, I imagine I would come across similar answers. Quick off the mark, the first person to reply would say: The Revenue Manager!
Then come the variations, such as “the reservations team”, “the Hotel Manager”, “the Front Office Manager”, “nobody”, “what is Revenue?” etc., etc., etc., depending on who has been entrusted with the risky (and often thankless) task of changing prices.
Allow me to disagree with each and every one of these statements.
As I enjoy controversy, in the sense that it generates debate and, subsequently, knowledge, I dare to say that in most hotels, revenue is driven by guests and executed or managed—where such a role actually exists—by the person appointed by the hotel for that purpose.
It is simple: the decision to book a room or not lies exclusively with the guest, and the combined decisions of all guests at a given hotel will generate booking inputs that feed the Revenue Manager’s pickup, enabling them, in turn, to make the most appropriate pricing decision.
In short, we would always end up stating the same thing (although much is said and little is done about it): the guest is the most important thing.
Allow me, once again, to disagree with this statement, at least in part.
Of course the guest is important! There is no need to elaborate on that certainty. But that does not mean we should neglect other aspects to be considered when planning a strategic, comprehensive Revenue Management implementation:
Then come the variations, such as “the reservations team”, “the Hotel Manager”, “the Front Office Manager”, “nobody”, “what is Revenue?” etc., etc., etc., depending on who has been entrusted with the risky (and often thankless) task of changing prices.
Allow me to disagree with each and every one of these statements.
As I enjoy controversy, in the sense that it generates debate and, subsequently, knowledge, I dare to say that in most hotels, revenue is driven by guests and executed or managed—where such a role actually exists—by the person appointed by the hotel for that purpose.
It is simple: the decision to book a room or not lies exclusively with the guest, and the combined decisions of all guests at a given hotel will generate booking inputs that feed the Revenue Manager’s pickup, enabling them, in turn, to make the most appropriate pricing decision.
In short, we would always end up stating the same thing (although much is said and little is done about it): the guest is the most important thing.
Allow me, once again, to disagree with this statement, at least in part.
Of course the guest is important! There is no need to elaborate on that certainty. But that does not mean we should neglect other aspects to be considered when planning a strategic, comprehensive Revenue Management implementation:
- Continuously updating the list of cultural events, trade fairs and other activities that may affect our hotel’s occupancy
- Constantly reviewing our pricing policy in order to adapt it to the market
- Carefully selecting our distribution channels, as quantity is not synonymous with quality
- Maintaining rigorous control over our room inventory
- Monitoring and understanding our competitors
- Taking a medium- to long-term view, so that we can anticipate demand and avoid underselling our hotel, but...
- Not neglecting the short term, in order to avoid slashing prices