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Rate Integrity is essential to business #verify-insurance-carrier-information

Mike over at Hraba Consulting has a great post about maintaining rate integrity and the importance of a Revenue Manager to your company.

I know, in these times, you cannot maintain total rate integrity without looking like an out of touch management group.  Others try to maintain their rates by laughing at their clients and just being rude, something so pompous and idiotic I need to quote it here. CMO Scott Williams, from Morgans Hotel Group (on behalf of the Clift in SF) said it professional as can be:

You can bury your head in the sand, discount your rooms, piss your brand away. But we are a luxury brand and we will act like a luxury brand. I’m going to look back at this recession and say ‘we didn’t just drop our pants.’

He has a way of making a point, doesn’t he?  It is a valid issue, no matter how garrish, classless, and totally out of touch he is. (Even using that “L” word can get you in trouble. The current “luxury” fiasco that has everyone up in arms, from groups to spas.) Not everyone is maintaining rates with such bravado. Choice Hotels seems to be doing a great job.

Whatever the case, the question is clear. Where the heck are our revenue managers?

Well… after reading this article that suggests group rates are higher than transient/FIT rates (based off Star numbers), we might be able to guess where they are…out of work.

Is it possible that a significant amount of hotels pulled the plug on the pricey, but imperative, revenue manager? I have heard of a couple properties letting them go, or restructuring so a Rez manager *becomes* a rev manager at the same payscale…. but I am starting to think they have all been fired from the hotels that actually had them, possibly due to the economic problems we are experiencing. That’s my best guest, and it might be wrong…. but they seem to have gone *poof* and vanished.

I know the industry has been slow to grasp the concept of revenue management. As I mentioned, many still think it is a reservation manager under the Rooms Division, but that’s a majour mistake. If this new trending information isn’t enough to help hotels realize that it is imperative to have one, I am not sure what will get the industry to really take notice. A Revenue Manager has the final say on negotiations with the Director of Sales and Rooms… as well as reports directly to the GM so their experienced leadership can help helm the ship….but it is vital to have one, and it simply seems the concept of paying one an appropriate salary has fallen by the wayside.

In an effort to conserve on salary, it seems that more Revenue Managers have popped up with the same pay they had as a rez manager… seeming to be some off-handed consolation from archaic leadership just trying to get a grip on the new position, and blindly filling it (“doesn’t cost me a cent? sounds like the same thing to me.” mentality). But a title does not a Revenue Manager make. It simply means they don’t “get” what a revenue manager is, or does.

What’s more, the revenue management job is so intensive, so incredibly complex, and constantly changing in the *very* real time (the best revenue managers I know work 24 hours a day, basically)… I think a proper revenue manager should possibly be the highest paid person on a hotel team, short of the GM. Might be a big statement, but even I don’t totally understand revenue management…. and I know these people are vital – possibly more so than the rooms manager.

So why do we know there is a problem beyond Group rates being higher than Transient/FIT rates?

Well.. No rate parity at all in majour markets (Las Vegas, Miami) and boutique markets (anyone look at rates in Monterey, CA the last couple months?). What’s more, Revenue Management has taken a noticeable hit that has been trending since before this total economic meltdown, and polls suggest that thoughtful rate control has turned into a panic of sorts.

Ownership wants market share, even if it is out of step with the rates, often thinking “a full hotel is a happy hotel”. This is where the pressure for Revenue Managers comes in… listening to the owners even if it is against their own best interests (lack of rate integrity kills future biz, and it will bite the person controlling it in the rump down the line).

With the economy, Rev Managers took a hit and now there is a dirth of any real control at all. It’s frustrating to see. A lot of missed opportunities here, and a lot of smart people (like HotelSphere’s *incredible* post) are seeing that. I think this is an anomoly, and nothing more? At least… I hope it is.

The real question is “Can our business work like this long term”? I highly doubt it, which is why 2009 has got to be the year that Hotels cry out “PARITY!!” as a battle cry, and remain completely focused on integrity (Page 3 of this New England Hotel Mag has a great primer for Rev Management and maintaing rate integrity).

I know, as an owner and manager, you want to employ a lot of people. What’s more, you especially don’t want to let valued staff go in this economy. But it is what we do when times are rough, and we need to maintain rate for the longevity of your business rather than trade for occupancy for a handful of employees. You won’t be able to employ them in the future if you drop the bottom out now, and what’s more – of the staff you do have left you won’t be able to pay a good wage. This all degrades fairly quickly, and is obviously more complex than I could ever explain in this space (or totally understand).

So what do you think? Do you, gentle readers, think they are still out there feeling constant pressure to listen to ownership, or did hotels let them go in droves when the downturn happened? Is the industry just not getting “revenue management” yet? I would love to know your thoughts.

Until then…. do whatever it takes to suck it up now. Rather than panicking and having to pay a grave price in the near future (that may last longer than the downturn), do your due diligence, measure, watch, and manage. Emotional rate management doesn’t help your business, and you don’t have the money to lose right now.

I have never been a big fan of paying with credit…. and in this situation it is just one post-dated check that your hotel shouldn’t write. Don’t pay now with something you won’t be able to get back later. It’s a bad move, and you need to trust your revenue manager much more than you are now. Or better yet, hire one.