Revenue Managers as Agents of Change

Revenue management in its present day format did not exist until the mid 90’s. Propagated as the ultimate tool to optimize seating capacity and revenue in the airline industry it found its way gradually into the hotel industry. Skeptics prevailed for the first couple of year’s as they did not realize the potential strategic approach to managing room inventory and rates had - but they were quickly converted with new measurements, benchmarks and the quantifiable growth patterns of RevPAR. In the past the distribution platform was managed by Reservation Managers under the tutelage of sales and Marketing Directors whose priority was to achieve budgeted sales volume and rates. Until 15 years ago Yield Managers (as they were called during those days) did not exist in hotels, they were viewed highly skeptical as an additional expense item on payroll with no clear functional responsibility, an ambiguous job description and no clearly defined authority. The underlying assumption of revenue management rested on the notion of (a) distressed inventory, (b) unconstrained demand and (c) a perishable product (rooms). Thus the credo of revenue management was born under the umbrella of selling the right product to the right customers at the right time for the right price. It also heralded the end of static pricing and ushered in the age of dynamic and seasonal pricing. Revenue Managers in conjunction with their sales counterparts identified the right target market and their segments, they identified consumer behaviors of these micro segments, determined corresponding price points, understood demand patterns and off they went selling their products.