Its Time to Train Frontline Staff in Revenue Management Principles

Jul 20, 05 | 7:59 am

Training Frontline Staff In Revenue Management Strategies

 By Doug Kennedy, The Douglas Kennedy Co.  

With the ever increasing proliferation of distribution channels that today’s Revenue Managers have to keep track of, the last thing they need is to have the job of “trainer” added to their to-do list. Yet investing a little time and energy in helping your frontline staff understand the fundamental principles of Revenue Management will help ensure that their actions will be supportive of the overall plan.   

When frontline staffers such as front desk and reservations associates don’t understand revenue management they tend to: 

-         Change rates upon the slightest objection at registration, even when guests already hold confirmed reservations.

-         Override rate restrictions in PMS and CRS systems for callers who simply ask about lower options.

-         Provide special “favors” in terms of room upgrades, often in the spirit of hospitality, to repeat guests.

-         Routinely apologize and make excuses when quoting higher rates, thus positioning them in a negative way. (“All I have left is our $X rate.”)

-         Offer rates that have restricted availability to those who don’t qualify.  

However, once trained to understand the principles of revenue management, your frontline associates will: 

-         Hold the line on price whenever possible at registration or check-out.

-         Quote higher rates with confidence whether over the phone or in person.

-         Resist what is becoming a routine guest negotiating tactic of simply asking for a discount just to check the reaction of our staffers.

-         Position higher rated rooms and rates in a positive way.  (“Fortunately, I still have some rooms left during that time and the rate is $X.)

-         Understand why hotels market different rates according to market segmentation, and how the costs greatly vary according to the channel.    

While most hotels invest countless thousands of dollars each year in revenue management technology, too many still lack a formal plan for training those in the trenches who do battle daily with guests who have been well-trained by the media to negotiate aggressively.  

All this results in situations such as a reservations agent making an ill-fated attempt to convince a guest that a peak-demand rate still represent a good value, when they don’t fully believe it themselves!  Or having a newly-hired, starry-eyed front desk clerk, who got into the business in the first place because she “loves people” feeling deceitful about charging $175 for a room that the week before she sold for $99.  

So if you’re looking to close the loop between your hotel’s Revenue Management Strategies and what actually happens on the frontline, here are some strategic concepts to share with your staff: 

• How our “finite” supply of hotel rooms require us to maximize rate during periods of high demand.
• How the nightly “perishability” of our hotel “product” requires that we offer lower rates during periods of low demand.
• Why we must work both ends of the spectrum during periods of medium and low demand, offering higher rated options via distribution channels that are not rate sensitive, and offering lower rates via separate channels targeted for rate sensitive markets.
• How the “hard costs” of a reservation booking according to the distribution channel.
• How other factors, such as “Revenue Per Guest,” might cause the hotel to sell lower-rated rooms to certain groups even during peak demand.

Of course a favorite analogy of revenue management trainers is how a box of hotel rooms is different from a rack of dresses.  If new dresses on the rack start moving, the store manager can simply order more from the manufacturer.  Or, if no one is buying, the manager can at least move the dresses to the sale rack and eventually someone will buy them for something, even if it is 75% off.  (And with the mark-ups in retail, perhaps even still make some profit.)   

Yet a hotel revenue manager has no such choices.  If our box of hotel rooms for any given night sells out too quickly, we cannot of course build-on more rooms.  So it is therefore important to make sure we sell that box of rooms at the highest rates.  Alternatively, if our box of rooms for any given night doesn’t sell due to us being too aggressive, once the night passes, the inventory is worthless.  (Ask the group if they can imagine saying to a guest “Sir, I have an incredible rate for you.  For just $75, I can rent you the entire Presidential Suite for last night!) 

Once they understand Revenue Management fundamentals such as these, you’ll then want to train your frontline troops on tactics for upholding the hotel’s revenue management decisions by: 

• Positioning higher-rated rooms in a positive way.  “Fortunately we still have some options for you during that time,” or “ what I still have available is...”
• Referencing higher-rates to position lower-rates as being “already discounted.”  “Normally, Sir, these rooms go for $125, but due to (special circumstances) we are able to extend a rate of $100 for the dates you are looking at.  (Note: This helps prevent the guest from even asking about the $75 rate.)
• Explaining why lower rates cannot be extended.  “Sir, the $75 rate is sold out at that time.”  (This works far better than saying “that rate is not available,” which implies that it exists, but the guest can’t get it.)

While Revenue Management Principles such as these represent First Grade to today’s Directors of Revenue Management, incorporating them into your hotel’s ongoing training processes will give your frontline associates the tools they need to make sure the strategies set during your RM meetings will be put into practice in the real-world of a busy front office.  

This article was originally published in www.hotelmotel.com  

Author’s Contact: 

Doug Kennedy

The Douglas Kennedy Co.

www.douglaskennedy.com

Direct:  1 (954) 981-7689