Revenue Management Education

27 May 2015

(from left to right: 1) Larissa Koupriouchina, HTH lecturer and researcher Revenue Management; Dr. Zvi Schwartz – UD Professor; Dr. Sheryl Kline – UD Professor and Department Chair.

On May 1 and 2, I attended an inaugural Revenue Management Education (RevME) Workshop on teaching Revenue Management (RM) at the University of Delaware. The field of revenue management has already made billions of dollars in profits and prevented bankruptcies. The need for competent revenue managers who use data analytics to predict customer behavior and maximize profits, is growing rapidly.

The initiative was launched in order to facilitate a dialog among a selected group of RM university educators and key industry players. During the workshop we explored how to best prepare our students, the next generation of hospitality leaders, for a career in an industry where RM plays a major role.

I felt honored when I received a personal invitation to participate in the event, to deliver a presentation and to act as moderator for a session on monitoring Revenue Management performance.

After a warm welcome of the Dean Bruce Weber, the workshop started by exploring topics and trends in Revenue Management education where all participants were invited to provide their input. Several key topics and needs in education emerged as a result of this interactive exercise guided by Dr. van der Rest. We could see that there were many overlaps and participants from education and industry shared very similar views. For example, participants agreed that the field is so dynamic and that current educational materials are insufficient and there is a need for updated sources and educational cases.

During the second session a panel of industry representatives discussed Revenue Management skills the industry expects our students to acquire. The panel consisted out of:

  • a Vice President of Revenue Management Americas East from Marriott;
  • a Director of Revenue Management - New York Hilton Midtown (the largest hotel in Manhattan at 1,985 rooms and second largest, only to the Javits Convention Center, in meeting space with more than 150,000 sq. ft.);
  • a Director of Revenue Management Systems Training & Implementation at Starwood Hotels & Resorts Worldwide;
  • a Director of Revenue Management from Hyatt (Hyatt Regency Orlando with 1,639 Total Guestrooms and over 315,000 sq. ft. of indoor and outdoor meeting and entertainment space);
  • a Regional Talent Acquisition Manager from Hyatt.

 

The panelists shared their views on what students need to acquire. All participants agreed that there is a need for qualified revenue managers. Among the qualities necessary for the Revenue Manager, a panelist Mr. Tim Heling, Revenue Director from Hyatt Regency Orlando mentioned hunger to continually question everything, being self-motivated, competitive, analytically driven, ability to lead. Panelist and a certified revenue management executive Calvin Anderson, director of revenue for Hilton Worldwide, explained that in order to compete, there is a need for revenue managers who can improve market visibility and drive direct revenues using tools like predictive analytics, location-based marketing and social media advertising. Vice president of Revenue management for Marriott international Jeff Borman said that students should focus on “the ability to merge different sources of data” and be able to handle dozen or more (!) sources of data. Just as important, he said, is explaining those findings to others in a clear way. It is key for the students to develop an “ability to take data and translate them into something meaningful. If you can get the students to figure that out sooner their career trajectory will skyrocket”. One other interesting insight was that in many leading chains Revenue Management is proactively driving other functions, including finance, marketing and operations!

Technology and Business intelligence solutions play an increasingly important role in Revenue Management. During the workshop there were two sessions dedicated to exploring how providers of RM technology and business intelligence can be integrated in the classroom. It was a fantastic opportunity to have their input and to interact with: Regional Sales Directorfrom TravelClick, STR, Rainmaker and IDeaS (providers of Revenue Management systems) on how their technologies can be integrated in a curriculum.

Forecasting was selected by the workshop organizers as a key theme of the workshop, due to its utmost importance for Revenue Management. During the workshop there were two sessions related to forecasting. The first session was on “how to teach forecasting”, where leading universities had opportunity to share their approaches on how they teach this important topic. Pricing, inventory and cascade of other decisions in a hotel depend on the quality of the forecasts and ultimately drive the bottom-line performance. Therefore it didn’t come as a surprise that many leading schools teach forecasting for half of a semester!

At the end of the first day, I delivered a presentation on Monitoring Forecasting Performance. Even if it was the end of the day, there were many questions and a very lively discussion on the topic. Both industry and education supported my concerns about the way forecasting performance is measured at the moment. During Q&A part of my presentation, one of the Revenue Management System providers expressed an interest to initiate a research collaboration and to explore it further. I had a satisfaction to share the results of my research and felt good to get positive and very enthusiastic reactions from the industry on the usefulness of my efforts. I was glad to see that system providers (IDeaS and Rainmaker) were interested in exploring this topic and agreed on importance of it.

The day was concluded at the Vita Nova Restaurant where the students in Hotel, Restaurant, and Institutional Management gave us a fantastic opportunity to indulge in the local cuisine. During the event there were numerous opportunities to network and to exchange ideas with RM education field and industry (representatives of Ecole hoteliere de Lausanne, Virginia Tech University, London School of Hospitality and Tourism, Penn University, Purdue University and Revenue Directors from Hilton, Vice president of Knowledge Management from Ideas/SAS, Senior Vice President Research from STR, Client Manager from Rainmaker and others). I had an opportunity to exchange opinions with Dr. Gabor Forgacs, the author of one of the books we currently use in our RM course – “Revenue Management: Maximizing Revenue in Hospitality Operations”.

During the second day of the workshop we discussed how to teach “setting controls”, further explored how solution providers can be integrated in the classroom and listened to a very insightful presentation of Mr. Tim Heling, Revenue Director from Hyatt Regency Orlando. The property mainly works with conventions business, therefore the decision horizon for the revenue management team is now 2016-2022 booking window! There are so many factors that might impact the future, and yet there is a need to make some important decisions now. Again, this presentation confirmed that forecasting is a very important topic in real-life business environment.

Mr. Heling also mentioned that Revenue Management in Hyatt Regency Orlando is leading many other departments and is taking proactive steps to drive NOT ONLY Revenue, but also profit. Mr. Heling shared an example that if for example he or anyone on his team walks in the hotel and notices that a housekeeping department is not working efficiently, they can and they will do something to improve it. It seems that Revenue Management is taking more and more leading role and guiding decisions not only related to revenue, but connected to efficiency, cost optimization, etc.

The workshop concluded with an open session aimed to collect feedback of the participants on this first edition of the workshop. Both industry and educators acknowledged the usefulness and uniqueness of this event. The group was enthusiastic about making this event periodic and involve more industry players and other educators.

What set this event apart from any other academic or business event on Revenue Management I attended in the past, was the fact that educators and industry players were gathered in the same space discussing and evaluating what is taught at the moment and what are current and future needs.

There are three key lessons I would like to share:
Lesson 1. Forecasting is a cornerstone. Organizers selected it as one of the key topics for this inaugural event. Top universities teach forecasting for approximately half (!) of the semester. The quality of the forecasts influence many other important decisions.
Lesson 2. Excel skills are a must have! One of the Revenue Directors acknowledged that if a candidate doesn’t know how to use Pivot tables, VLOOKUP function and advanced graphing functionalities, he will not continue the interview with that candidate!
Lesson 3. Exciting career opportunities. One of the Revenue Director recently interviewed 20 students from a top US university, but could not find even one suitable candidate for the internship position, while opportunities to make a good career are excellent. One of the Revenue Directors said that a graduate with good RM knowledge and right attitude and motivation can realistically earn around 250,000 dollars (!) within first few years after graduation. The industry is “hungry” for good candidates and these are golden opportunities both for educators and above all for our students in this dynamic and fascinating field.

I would like to use this opportunity to thank Professor Schwartz for invitation to the workshop, the workshop organizers for covering accommodation and workshop participation expenses and NWO grant for covering the travel expenses.

I want to use the insights I gained for education and research in this dynamic field. There will be a compilation of electronic presentations from all the participants that agree to share their presentations. As soon as the access is granted, I will share it with our RM teaching team.

It was a valuable and unique experience and I believe there should be a continuous dialogue between industry and education. I hope this article will motivate our student to pursue career in this exciting, competitive and dynamic field. If you would like to hear more, please feel free to contact me.

Larissa Koupriouchina,
Lecturer and Researcher Revenue Management