by Cheryl-Anne Sturken | May 01, 2016

There's a high-stakes financial poker game going on in the hospitality industry, and it's being played by hotel revenue managers. The aim is for hotels to optimize their revenue and profit margins while developing strategic and competitive sales goals that will keep them, if not ahead of their leading competitors in any given destination, at least on an even playing field.

The role of hotel revenue management has changed considerably over the past 10 years. What once took the guise of a front-office reservation manager who scrutinized short-term booking patterns on a daily basis has since morphed into a much more analytical and strategic function, thanks to the emergence of sophisticated tracking technology.

No longer do revenue managers bury themselves in Excel spreadsheets to assess group and transient business on the books while using the sales team's insider intelligence to determine what might be coming perhaps two to six months out. Today they rely on big data as a strategic asset that drives their decision-making process as they assess requests for proposal across multiple lead-generating platforms.

To better understand this process, M&C asked several revenue managers how they evaluate group business, where the role of sales fits in the process and why RFPs are being held to a higher standard today, even if they come from repeat clients with a long-standing and proven brand loyalty.

The revenue manager's role has changed and is now strategically aligned with hotel sales. What drove that transition?

 Kathy Maher: For our part, last December we decided to sharpen our focus on group business. Wyndham is one of the few hotel companies that decided to make the transition of combining revenue management with sales, and we decided I should take over sales, because I have a sales background.

Early on, I was trained in rates, dates and space, with "space" meaning "location." These three traditionally are divided between the customer and the hotel. For example, if the customer says, "I need to be in Orlando on New Year's Eve," they already have picked the space and the date, so we get to dictate the rate. Or the customer might say, "I want to pay $77 per night for an event of X number of people." We say, "OK, based on those details here is the location we can offer you, on these dates of our choosing." That's a collaboration. If the hotel and the planner can be transparent and work as a team, we all stand to be successful.

In terms of data, today it is much richer, and we can look across the whole industry, which means we can build in demand curves for groups, something we never had before.

 Jill Nunes: The world of big data and analytics is changing our world. We now have sophisticated revenue management systems that predict demand, so we can make more informed decisions for the future, and that has moved us into a more strategic position. We are now even more accountable to hotel ownership groups to deliver upon their budgeted expectations and to clearly articulate and execute on sales strategies. Our time is usually spent working with our sales teams, but, yes, if the need arises, we'll gladly meet with a client, because we like to interact and get out from behind our computers, too.

What does a beautiful RFP look like when it crosses your desk?

 Jamie Pena: For one thing, it has total meeting spend outlined. I want to know if you are going to play golf, have spa treatments, eat in our restaurants, shop in our retail outlets, order room service and whether you have any flexibility in terms of dates.

Many planners are afraid to say they have flexibility, because they don't want to imply they can go a bunch of different ways. But the truth is, anyone who is willing to be flexible will get the best deal. We can, and will, do great things for them, simply because they worked with us and helped us out. For example, you might want to be at our Houston property, but if you are willing to move to Dallas, which would be a better fit for us, we will give you a great deal.

Maher: Imagine you walked into a dealership to buy a car and all you said was, "I want a white one." Well, that's not enough information for the dealer to go on. But if you said, "I want a brand new Volvo sedan, and this is what I am prepared to spend," that's something the salesperson can work with.

Similarly, if a planner wants specifics back from us for their RFP, then they need to tell us what they want, and they need to be flexible. Mere bullet points on an RFP don't work. We need real information we can work with, otherwise they are going to get a lot of "Sorry, we can't help you."

We've all heard of the "ugly-baby RFP." What does one of those look like?

Maher: If an RFP comes over a time where there is a huge transient demand, for say a festival or sporting event, and it includes no demand for meeting space, at first sight it's definitely an ugly RFP. However, if it comes over a time frame when we don't have much transient demand, then we are probably going to want to make sure that our meeting space goes to a group that can also deliver on rooms, because rooms are much more profitable to hotels. There really is no bad business, just business that is sometimes poorly placed.

Pena: It's one with absolutely no information, except a request for dates, space and rates. We don't like to disqualify a customer, but when we see an RFP that has gone out to 300 hotels in 15 cities, that is just the worst, because it means we are going to be putting all of our time into crunching numbers, knowing there is only a sliver of hope that we are going to get that business. It is extremely frustrating to us.