The Utopia of Total Revenue Optimisation
- 3 min read
Over the past months Afrodita Dobreva, one of the excellent students of Hotelschool The Hague, conducted research on the topic of “Total Revenue Optimisation” and its application within the hospitality industry. On this topic, she worked together with major players of the Dutch hospitality industry, such as Accor, Bilderberg Hotels, NH Hotels, Starwood, Westcord and KL and under the supervision of Hotelschool The Hague’s Dr. Van der Rest. On 30 September she finally presented her findings during the Research Café at the The Hague Campus.
In its core, each hotel is a form of organisation. By definition, an organisation is a group of people working towards a common goal. But in the complex reality of today’s business world, this is not always the case. Often, employees working for the same company have contradicting targets to achieve, even though it is proven, that the closer the management goals and subordinate goals are, the better an organisation performs overall.
Keeping the theory in mind, Afrodita went to interview different major players in the Dutch hospitality industry. There she found out, that three different conflicts occur in most hospitality organisations in regards to revenue management. They arise between the revenue department and respectively- the sales, the finance and the operations. For example, the sales team in a hotel is evaluated on occupancy figures (meaning volume), whereas the revenue managers are evaluated on revenue maximisation (meaning price). If the revenue manager wants to reach his/her target on RevPAR (revenue per available room), this often goes with sacrifices towards the occupancy rate. Thus, evolving in a conflict!
The conclusion is, that the hotel industry still has a long way to go until reaching the total revenue optimisation, due to such internal conflicts. Nevertheless, some measures have already been taken such as the introduction of TrevPAR (Total Revenue Per Available Room) targets, which pushes all employees towards one common goal.