Total Revenue Management looks for opportunities to manipulate pricing in order to find the most profitable balance between demand and capacity utilisation. However, although this is a great step in the right direction it is not enough to ensure all Revenue generating streams are applying RM strategies. Total RM is also about designing pricing strategies that optimise total performance of a hotel, even if some revenue streams are not optimised.
The focus of Total Revenue Management would be on Total Guest Spend or RevPAC (revenue per available customer). The aim would be to not look at each line of business individually but as a collective package and select the most profitable mix of customer in relation to their total spend.
Total RM is considered to a degree when Revenue Managers consider a piece of group business. The displacement is measured and weighed up against the total piece of Revenue for the property including Food and Beverage Revenue. Sometimes Rooms Revenue will not achieve its optimal amount as it sacrificed a portion of this for a piece of business that was overall more profitable for the business.
True Total RM would take this to another level and incorporate the displacement against all revenue streams and factor in the displacement of total guest spend not just rooms revenue.
Generally the process to evolve to true Total Revenue Management is –
1. Ensure effective RM strategies in place to maximise RevPAR (revenue per available room)
2. Ensure effective RM strategies in place across all revenue generating streams
3. Implement analysis and optimisation processes that factor in total guest spend and optimises total hotel performance
4. Ensure Incentive structures don’t create silo mentality that can hinder reaching true Total Revenue Management