Part 5 – Processes

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Creating a Revenue Management Culture at the property involves a lot of work by the revenue team – see the Revenue Journey #3 – Starting with the Foundations – People – and is an ongoing effort in any revenue driven organization. Processes will need to be implemented that help drive revenues. These processes, together with Standard Operating Procedures (SOPs) are the rules by which revenue management is executed at the property.

Every business is run differently and operates in a different type of market. Although many processes and SOPs are similar, they will need to be tweaked to each organization individually to work effectively. Often companies engage consultants to assist in this process.

Processes Supporting Decision Making

The different roles of people in the Revenue Journey were described earlier in this series. Processes need to be established around each of the roles. For revenue decision makers the processes should focus on giving them the ability to make decisions that impact revenue. It is key that these processes are enabling to drive revenue and not to control.

One of the most important process is that of creating regular revenue meetings. In these meetings past decisions are briefly evaluated and guidance for future revenue driving efforts are given. This guidance is then communicated to all revenue influencers.

The revenue meeting happens regularly, usually weekly, on a fixed day and time during the week. This meeting is by far the most important weekly meeting in your property. Decisions made in this meeting will result in the property reaching budget or failing to do so.

Participants should attend, come prepared and participate, without exception. Participants are the revenue decision makers at the property, which are typically the Revenue Manager or Director, the Director of Sales and the General Manager. In some instances, more people attend. However, it should be attended only by the true revenue decision makers.

Processes should be put in place to make sure that only the revenue decision makers can decide on what price to sell or how inventory will be managed. This means that pricing guidelines are set in the weekly revenue meeting and all group quotes need to be validated and signed off by the revenue manager or director. Pricing for all other segments of business is also set in the meeting, like online business, packages, wholesale etc.

In addition, the team will decide on how to manage inventory and what inventory controls to put in place to further optimize revenues. Per definition the revenue manager or director is the person preparing the revenue budget with input from other stakeholders. If your revenue manager does not do this today, you need to review the person’s experience and responsibilities. The revenue manager also prepares the forecast and this topic will be covered further along in the journey.

Other processes that need to be formalized are the communications between the General Manager and the revenue influencers. Whether this is done via email or in additional meetings or in other ways will vary by property. The influencers need clear communication to be able to drive the business for the property.

Processes for the Revenue Influencers

The revenue influencers are usually the ones in front of the customer. They need to be given sufficient tools and guidance and be empowered to be able to proactively and aggressively drive demand for the property. The influencers should have guidance what rates and benefits can be sold, they should have a clear process within what boundaries they can sell freely and when authorization or validation is required.

At the same time these processes should not take up too much time of the revenue decision maker and prevent them from spending time on optimizing revenues for the property. In properties that revenue manage manually there should be selling calendars, rate grids and selling guidelines like group ceilings & floors.

In addition, there may be a group evaluation tool either in Excel or in a revenue management system, to help revenue influencers prepare group quotes.

List of processes

Depending on the size of the hotel, the number of processes that need to be formalized can vary. As a minimum a property, whether hotel or other type of business like car parks or attraction parks should have the following processes formalized:

  • Revenue meeting, with agenda and communication of decisions.
  • Revenue budget preparation
  • Revenue forecast preparation
  • Selling guidelines and calendars for sales managers and other teams
  • Group evaluations and quotes
  • Telephone selling process for the reservations team
  • Evaluation of past decisions
  • Distribution to various channels.

This is just a handful of the processes that a property may have in place and many more can be added. In the next article I will discuss forecasting, one of the most important foundations for good revenue management decisions.

Missed a Part in the Revenue Journey? Read them all here.