Reasons why Revenue Management is getting more attractive for students

Choosing his career path is not always a piece of evidence. The moment when you question yourself and try to determine what could inspire you every morning is often the most challenging and confusing. While looking at the different sectors and career possibilities, this article will specifically focus on the fast-paced Hospitality Industry. On top of promising challenging experiences, this sector provides a large variety of career opportunities, among which the one of Revenue management attracts attention more than ever.

Why is the Hospitality Industry so attractive?

To understand to what extent the hospitality sector is getting more attention from students, it is relevant to look at the place that this sector occupies in our economy prior to the pandemic. Indeed, the Covid-19 pandemic hardly hit the sector, and pubs, restaurants, and hotels had to shut their doors in many countries. While 2020 has been very frustrating for many businesses, seeing the entire hospitality paralysed for months makes us realize to what extent it is an entire part of our life and embraces a very large range of businesses. According to the World Travel & Tourism Council, in 2019 the Travel & Tourism sector contributed up to 10.4% to global GDP and accounted for 1 in 4 of all new jobs created across the world (World Travel & Tourism Council, 2021).

For the young generation looking to secure a job and a career, the constant needs for people to travel, sleep and eat is the promise of joining an innovative and demanding industry. For those fearing the Covid-19 impact on the sector, the forecasts are reassuring as they expect a return to the 2019 market level by 2024. In addition, customers’ impatience to go back to a normal life and accumulation of savings lets presume a strong rebound of the demand (McKinsey & Company, 2021). Just looking at the hundreds of people queuing at pubs’ doors as lockdown restrictions are eased in the UK, translates into an image of what we could call hospitality’s immortality.

Variety of Career Opportunity

On top of highly contributing to our economy, this sector offers a wide range of employment options, and therefore endless career opportunities. The Hospitality and Tourism industry gathers many sub-sectors including Event Management, Catering, Hotel & related, Restaurant & related, Travel Agency, Passenger Transport, Sport & Recreation (Economic Insight, 2019). We could spend lots of time categorizing the multitude of jobs that the Hospitality Industry offers. A common, but vulgar way of categorizing the different type of jobs differentiates what we call the “operational” jobs from the “office” jobs.  Let’s take the example of the UK, whom 6.9% of the total workforce was employed in the Hospitality and Tourism sector in the three months to September 2020 (UK Parliament, 2021). The Office for National Statistics classifies jobs according to their ‘skill level’ and ‘skill specialization ’ (ONS, 2021). As a result, UK’s Hospitality and Tourism jobs categories included in 2017 (Economic Insight, 2019):

• Elementary occupations (45%), kitchen and catering assistants; waiters and waitresses; bar staff; and leisure and theme park attendants
• Managerial roles (18%)
• Sales and Customer services roles (14%)
• Skilled trades occupations (10%), bakers, flour confectioners, chefs, cooks
• Administrative /clerical staff
• Machine operatives
• Caring, Leisure and other services staff
• Associate professionals

This classification can appear somewhat restrictive when it comes to identifying career paths. Indeed, certainly one of the most valuable aspects of this industry is its flexibility. When looking at what a student in medicine is expected to do once graduated, it is not very complicated to guess it right. However, within the Hospitality Industry, you will never be so sure. This industry is always challenging and giving you the opportunity to experience different fields, as that is what makes its workforce polyvalent and efficient. While an HR Director is unlikely do become a Chef, it is very often that managerial roles are occupied by people that first work on the ground. This cross-development is giving the hospitality industry unique know-how and making it more attractive for people looking to take part in it. Among the career path most looked after, the one in revenue management is always more desired because of its multifunctionality and complexity.

Spotlight on Revenue Management

While the field of revenue management was first implemented within the airline industry in the mid-1980s, it did not last much before other sectors such as the Hospitality start to explore this domain more in-depth. The purpose of revenue management is to sell the right product, to the right customer, for the right price, to the right channel, at the right time. If at first this may sound quite simplistic, you will be surprised to see how often revenue management is used, especially in the hotel industry. A typical day as a revenue manager would certainly not look like any others. The revenue manager is somewhat the hotel orchestra leader in charge of maximizing business’s profitability by aligning competitive prices and demand. On top of using his communication skills, the revenue manager’s understanding of cash structures and customer’s purchasing behaviours help him to identify new revenue opportunities. In other words, revenue manager is the middleman between sales, marketing, and operations.

A revenue management team can be composed of different positions, offering therefore the possibility for beginners to get to know step by step the field. Here are examples of the various roles:

• Revenue Analyst: Responsible for tracking and analysing historical data to support the revenue management team’s strategy
• Revenue Manager: With a more extensive experience, the Revenue Manager is responsible for the day-to-day yield operations and strategies for a single hotel. Scopes of the role include managing team, provide daily, weekly, monthly reports, maintain internal and partnership relationships and optimize processes.
• Cluster Revenue Manager: Same tasks than a revenue manager but applicable to a larger portfolio.
• Director of Revenue Management: Responsible for Revenue Management Standards, development, and implantation of rates.
• VP of Revenue: Responsible for a portfolio across regions at an organizational level.
• Chief Revenue Officer: In charge of brand global performance.

Businesses can choose to operate Revenue Management at three different levels, thus giving the opportunity to revenue managers to choose between distinct working environments. While operating on-property allows Revenue Managers to promote a revenue culture internally, larger groups are more likely to allocate this function to a central team and segment the work by brand and market. The third option refers to revenue management outsourcing. As a consultant, the experienced revenue manager can sell his expertise and manage his client’s business’s revenue. While those three different structures require the revenue manager to perform the same tasks, they provide her/him with different environments with which to interact.

5 Reasons Why Students Are Going for Revenue Management

A position constantly evolving

Revenue management twenty years ago certainly did not look like the revenue management of today. With its roots in the airline industry, the role of revenue manager has evolved with its time and challenges and keeps on taking even more significance within the hospitality business. While first seen as the ‘cruncher number’, the revenue manager does not only play with Excel sheets any more. Instead, he has been allocated the much bigger responsibility of building a ‘revenue culture’ across all business levels, and of implementing long-term sustainable strategies. The complexity of the role is promising to potential candidates to be part of an exciting adventure, through which they will analyse businesses from a broader perspective. From tactical to strategic, the discipline has evolved along with technologies. Today, the future of the revenue manager role is strongly related to the development of new technologies such as rate-shopping tools, business intelligence, automation or blockchain technology. Who is better suited to deal with technologies than the new generation? Those who are in Revenue Management right now, or are looking to join it, are by nature active players looking to make a difference, and not scared to work in hand with technologies.

A Multifunction role

If we had to draw the profile of a student in Hospitality Management, few traits would be automatically highlighted such as his curiosity mindset as well as his multitasking skills. It is sufficient to look at the Hospitality Management School Program to understand that hospitality students are trained from scratch to be polyvalent. Bachelor programs commonly provide students with Hotel operational experience as well as with managerial courses such as Human Resources, Marketing, Communication, Accounting, and now Revenue Management. This discipline is much more than just checking if the business is making enough money. With the example of hotels, revenue management is at the centre of everything as it manages not only the Room department revenue but all revenue streams from Food & Beverages, Banqueting & Events to the Parking. Also, the legal aspect of revenue management is very dominant as they can face ethical and legal restrictions when it comes to pricing. On top of knowing each of the departments, the role requires an understanding of what are the necessary inputs (and their costs) to generate a profit margin. Today, expectations for a revenue manager are both technical and visionary as his duties include leading teams, communicating, and influencing.

Exciting career path

Starting a career in revenue management offers endless exciting opportunities. First, thanks to the variety of responsibilities, a revenue manager is always challenged even in his most comfort zone. Secondly, as said previously, the different environmental conditions between on-site property, centralized or consulting revenue management, give the revenue manager the luxury to perform with different approaches across his career. Being a central interlocutor also allows him to build strong reliable networks which can open him new doors. Reporting directly to the General Manager instead of the Director of Sales & Marketing increase his visibility to hotel owners, and therefore the possibility to take over a General Manager position. The future generation of revenue manager sees potential new career horizons as there is a growing interest in those positions from ownership, asset management and real estate companies. Finally, other industries with similar characteristics of constrained supply, perishable inventory or variable demand, can see opportunities in using revenue management, just like do revenue managers.

Never too far from the operations

When graduating from Hospitality Management Schools most students question themselves regarding which position to apply to and which career path to take. While programs and operational experience end up quite extensive, some students, but not all, have it clear whether they want to follow operational or office duties. Revenue management offers the perfect balance for those who struggle to choose, but still are friends with numbers. The discipline efficiency relies on business cost structure understanding, but as well on people’s customer-oriented mindset. Indeed, in order to set the right price, to the right product at the right customers, the revenue manager must be able to understand and forecast the patterns of each of those three elements. It is therefore not surprising to often see the hotel revenue manager walking by the different outlets or speaking with customers.

Impactful decisions

There is a common human tendency to take quick decisions. But with the responsibilities of a revenue manager better to think twice before acting. In fact, the growing demand for this discipline is in line with the strong competitive landscape which urges the need to react faster. The certain level of control and hands-on provided by this expertise is one more reason for students to be willing to start a career in revenue management. Deciding to increase the price of a room or to refuse to accommodate an event can have a big impact on the business’s profitability but as well on its long-term bookings and customer’s satisfaction. Similarly, the revenue manager uses different Key Performance Indicators to help him to monitor the business performance, including RevPAR (Revenue per Available Room) and GOP (Gross Operating Profit). As a result, working in revenue management can be very rewarding for people always looking to surpass themselves.

Conclusion

To summarize, the increasing interest in revenue management is the result of the growing complexity of business management, combined with the large variety of career opportunities. This curiosity highlights the great potential for the hospitality industry to strengthen the awareness of revenue management in education. It is important to give the new generation the opportunity to join this field for them to play their parts in it.

References

• Economic Insight. (2019). Hospitality and Tourism workforce landscape. Economic Insight. Retrieved from https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/827952/Hospitality_and_Tourism_Workforce_Landscape.pdf
• McKinsey & Company. (2021, 03 17). The consumer demand recovery and lasting effects of COVID-19. Retrieved from McKinsey & Company: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/the-consumer-demand-recovery-and-lasting-effects-of-covid-19
• ONS. (2021, 04 09). SOC2010 volume 1: structure and descriptions of unit groups. Retrieved from Office For National Statistics: https://www.ons.gov.uk/methodology/classificationsandstandards/standardoccupationalclassificationsoc/soc2010/soc2010volume1structureanddescriptionsofunitgroups
• UK Parliament. (2021, 03 3). Hospitality industry and Covid-19. Retrieved from UK Parliament: https://commonslibrary.parliament.uk/research-briefings/cbp-9111/
• World Travel & Tourism Council. (2021). Economic Impact Reports. Retrieved from World Travel & Tourism Council: https://wttc.org/Research/Economic-Impact

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