Revenue management becomes more strategic and moves to the core of the business

Revenue management hotels

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An interview about the changing role of Revenue Management in hotels – with Thibault Catala, Revenue Management consultant from London, UK.
Thibault Catala
 Thibault Catala is a leading consultant and expert in hotel revenue management, so I was delighted to get the opportunity to pick his brain. Specifically, I wanted his view on what revenue management is all about, how the role of Revenue Manager has evolved and why it will take on even greater significance at the heart of the hospitality business.
Thibault has eight years’ experience in revenue management and it’s abundantly clear that he not only has a broad knowledge of the subject, but also that he is very passionate about his work. Having graduated with a bachelor’s degree in Hospitality Management from Glion Institute of Higher Education – – Thibault worked as Revenue Manager in various hotel groups in Paris, Lisbon and Singapore. Today he’s running his own specialized revenue management consultancy firm in London: Catala Consulting.
Thibault’s firm works with every class of hotel: start-ups, small independent boutique hotels to leading brands. These include Atomize customers. Catala Consulting is now managing close to € 40 million in recurring yearly revenue for their clients.

Q. Why did you choose Revenue Management as your career path?

TC: Mainly because it is at the heart of the hospitality business; it is not simply finance and it is not simply reservations. In fact, it is at the center of everything, which is very exciting. Your challenge is to optimize all revenue streams and that means making sure everyone in the business understands what revenue management in hotels is all about.

Q. What is the most typical work you do for your clients?

TC: One of the most common types of work Catala Consulting does currently for its clients is helping hotels to optimize their hotel technology stack. This involves evaluating different systems on the market, such as property management, revenue management and channel management systems, among others.
There is a huge demand for this kind of service because knowledge of the available solutions varies quite a lot.
I have a toolbox with solutions that I often recommend to my clients, especially from a simplicity point of view. Atomize is one that I strongly recommend based on its ease of use. It’s not a complex system but rather user friendly and above all you do not have to be a revenue management expert to understand it.
Last but not least, we provide revenue management services outsourced, where we take care of all revenue management operations of a hotel.

Q. What would you say are the biggest differences between how hotels worked with revenue management 10 years ago and how they do it today?

TC: I think we have reached the end of the “Revenue Geek” era, when revenue management was only about crunching out numbers and playing with Excel sheets on a computer. A good revenue manager should be out in the field and making sure that the revenue culture is growing at any level of the organization, looking at the short term, of course, but also planning for the long term.
Today, we have a lot more tools and technology available to support revenue managers’ decisions, such as rate-shopping tools, business intelligence tools and automated systems that use sophisticated algorithms to set optimum prices. These tools and systems make it possible to reach a new dimension within revenue management in hotels and the discipline has evolved to focus more on strategy and not just tactics.
We used to look only at setting the price and increasing RevPAR but today revenue managers are more focused on the long-term strategy to drive total revenue (TRevPAR), planning ahead on what we can do with marketing, sales, front office and upselling for example. Consequently, the revenue manager has assumed greater importance.
In general, there is a growing interest in revenue management from hotel owners and this is reflected in a couple of trends. First, the fact that increasingly, revenue managers report to the general manager instead of the Director of Sales & Marketing and secondly, revenue manager experience is more frequently a requirement for landing a job as a general manager.

Q. Is there a risk that this new technology will make revenue managers redundant?

TC: Not at all! Revenue managers will not be replaced by hotel technology; these solutions will instead support and help them to become more strategically minded.

Q. What are the main challenges for anyone working in revenue management?

TC: I like to say that there are no challenges, only opportunities. The level of knowledge and understanding of revenue management varies greatly from one company to another.
The biggest opportunity is the knowledge gap. There is a great potential for education and practice to grow the importance of revenue management within the hotel industry. The added value, that hotels can get, especially independent properties, is huge.
We need to be patient and focus on training. We also need new talents to choose a career within revenue management in hotels. Many people see it only as a specialist position, but revenue management has become a desired career path that can lead to senior executive roles. Revenue Management can also be a new path to Asset Management, Development or even General Management. Education on this is key.

Q. 80-90% of all hotels don’t use an RMS, why do you think that is?

TC: “You don’t know what you don’t know”.
And hotels that do not have a RMS simply do not realize the opportunities that they are missing out on. If you have never heard of a revenue management system and how it can support and help, you will never invest in one. That is the main reason. The level of revenue management understanding is still under development I believe and that’s where the main opportunity for everyone is!

Q. How can we reduce this knowledge gap?

TC: How to educate the market is the one-million-dollar question. We need to create more content and educate the market on what revenue management is all about in the hotel industry. Educating the market is everyone’s responsibility – consultants, systems, hotel operators ,.. we are all in the same boat on this journey. It’s very frustrating sometimes to see how much money hotels are leaving on the table.

Q. What is the most important skill for a revenue manager?

TC: To be a really good revenue manager, you need patience and at the same time you need to be a master of persuasion. You must try out new things and be able to persuade people to go your way in implementing them. I really enjoy working with hotels that are open-minded to trying out new technology and new strategies. That is how a hotel develops, having the courage to trying out something new while maintaining procedures and strategies that work well within the organisation.


Q: What is your view on the different types of RMSs on the market?


TC: New RMS’s have been booming in recent years, and there are lots of different solutions available on the market. Some of these are really good. The key to their success is simplicity. The more complex RMS systems are often overcomplicated for any staff. I’ve been very impressed by the simplicity of Atomize and I believe it’s very efficient and simple for anyone to use.

Q. How do you see the future of revenue management in the hospitality industry?

TC: The main advantage of using a revenue management system is that you gain more time to focus on revenue management strategy rather than tactics. You let the system optimize and handle the price adjustments and you gain a huge competitive advantage since up to 90% of the market does not use a system. You have an automatic machine working 24/7 for you, 365 days a year, by day, by room type. It is simply not possible for humans to do this.
But there are also things that humans can do, and machines cannot, such as thinking flexibly and taking strategic decisions. Revenue management will therefore continue along the path to greater use of technology, while revenue managers will increasingly shift from short-term price adjustments to long-term revenue strategy.
Revenue management will also go from a descriptive approach, which means looking at what happened in the past, to predictive, which means analyzing what will happen in the future, and prescriptive, which means understanding what we need to do to achieve our goals.
The hotel companies that will be successful with revenue management in the future will take full advantage of the complete technology stack that is available on the market. They will leverage smart automation to help them establish a long-term prescriptive strategy, which will be a fantastic support in working towards their goals.

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