The industry has realised that revenue management involves far more than understanding graphs and spreadsheets. The industry has realised that revenue management involves far more than understanding graphs and spreadsheets.

Hotels across the region are joining the revenue management bandwagon and learning first-hand of its true potential. Lee Jamieson explores the development of this relatively new discipline

In recent years, revenue management has become the lynchpin of any successful hotel business operating in the Middle East.

Intense interest in revenue management has been triggered by the maturation of the region’s hospitality industry and the increasingly competitive marketplace. For many years, the Middle East was considered to be a small, fast-growing market fuelled by strong demand, under supply, rising rates and high occupancy — but those days have gone.

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Rapid development and the emergence of major international hotel operators in all of the sectors have created a very different business environment. If the rules of the game have changed then hoteliers need to implement new disciplines and methodologies to retain their market share. Therefore, the need for robust revenue management strategies is greater than ever before.

“The hospitality industry in the Middle East has evolved tremendously after the downturn in the economy,” explains ResNet World managing director, Saahil Mehta. “Prior to the downturn, several hotels were under construction in anticipation of the growth in both business and leisure tourism in the region.

“With the downturn we witnessed a combination of a reduction in demand, lower ADR, and lower occupancy levels, resulting in a decrease in revenue. With this in mind, it is no surprise that revenue management has become a top priority. The truth of the matter is that if you ignore it, you will slowly start to trail behind.”

Time for change

Although revenue management is now being taken more seriously by hoteliers across the region, the discipline is still in its infancy. By all accounts, only a handful of hotel operators have successfully managed to implement a comprehensive revenue management strategy that has been fully embraced in all areas of the organisation.

In reality, most hotels are midway through a process of change whereby the accountability and the principles of revenue management have been adopted, but these principles are operating in isolation from certain parts of the organisation.
“No matter what people say, revenue management is still a new discipline in hotels,” explains Taj Palace Hotel Dubai general manager, Andreas Mueller. “It has only been around for about a decade in our industry, and for the most part, revenue managers in hotels are still relatively junior positions.

“That salaries between sales and marketing directors and revenue managers remain far apart is testament to this. Revenue managers are often senior reservation managers, so we are not there yet.”