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The Blame Game: When Marketing Blames Revenue Management and Vice Versa

Connor Vanderholm

By Connor Vanderholm

Jun 5, 2024

The Duel of Perspectives

Picture this: Marketing campaigns are in full swing, beautifully crafted, and meticulously executed to entice guests. Meanwhile, the revenue management team is diligently fine-tuning pricing strategies to optimize profits. Peaceful and cohesive like a Paula Detlefsen painting. That is until occupancy rates falter or revenues don’t meet expectations, then the fingers begin to point.

“Our marketing efforts are flawless; it’s revenue management’s pricing strategies that aren’t effective!” claim the marketers.

“Nonsense! Our pricing strategies are on point; it’s the marketing campaigns that fail to attract the right audience!” retaliate the revenue managers.

The blame game ensues, often escalating tensions and fostering a culture of finger-pointing rather than collaboration. “No way, Connor, my team is super professional and would never resort to such politicking to avoid blame.” Here is an open invitation to come sit in on a struggling hotel’s revenue call if you don’t believe me!

Understanding the Root Cause

Marketing departments are primarily driven by the overarching goal of enhancing brand image, engaging with potential guests, and captivating target audiences. Their efforts encompass a wide array of activities, including crafting compelling ad campaigns, leveraging social media platforms, managing public relations, and ensuring the hotel’s polished presence across various channels. The focus is on building a strong brand presence, fostering guest loyalty, and driving traffic to the property.

On the flip side, revenue management teams are entrusted with the responsibility of maximizing profitability. Their focal points revolve around optimizing room rates, managing inventory allocation efficiently, and accurately forecasting demand. Revenue managers meticulously analyze market trends, monitor competitors’ pricing strategies, and manipulate sophisticated algorithms to determine the most lucrative pricing structures. Their primary objective is to strike a delicate balance between occupancy rates and room rates to generate the highest possible revenue.

Amidst the pursuit of excelling in their respective roles, it’s also important to acknowledge the human element at play within these departments. Within every marketer or revenue manager lies a desire to not just perform well but also to secure their positions, thrive in their roles, and advance in their careers. So when faced with challenges or shortcomings, the human tendency to deflect blame often comes into play. Instead of collectively addressing issues, individuals might resort to scapegoating each other when things go awry.

Lack of Synchronized Strategies

The clash between marketing and revenue management arises when their strategies are not synchronized. For instance, marketing initiatives might emphasize attracting a particular segment of guests through promotions or discounts, which could conflict with revenue management’s aim to uphold rate integrity and maximize profits. This misalignment often leads to situations where aggressive marketing campaigns drive occupancy but at the expense of lower room rates, ultimately impacting revenue targets.

Conversely, revenue management decisions, such as implementing stringent pricing strategies during peak demand periods to optimize profits, may clash with marketing efforts aiming to attract more guests through enticing offers. This conflicting approach can cause friction, as marketing teams may find it challenging to promote the property effectively when room rates are perceived as too high for the target audience.

The Need for Alignment

To bridge this gap, it’s crucial for both marketing and revenue management to cultivate a deeper understanding of each other’s roles, challenges, and objectives. Appreciating the delicate balance between brand image and revenue optimization is vital. Acknowledging that while marketing targets demand pockets, revenue management ensures profitability, and both aspects are equally essential for the hotel’s success is key.

By fostering a culture of collaboration and emphasizing the interconnectedness of their functions, these departments can align their strategies more effectively. Regular meetings, joint planning sessions, and shared insights can facilitate a cohesive approach where marketing initiatives are tailored to complement revenue strategies. This alignment ensures that promotional efforts not only attract guests but also contribute to achieving revenue targets.

Should One Department Report to the Other?

The debate over which department—marketing or revenue management—should report to the other is a complex issue. There’s no one-size-fits-all answer, as the hierarchical structure may vary depending on the hotel’s organizational culture, objectives, and operational dynamics. However, understanding the implications of each reporting structure is crucial. I’ll try my best to present the three sides of the argument here, but remember that I own a revenue management company, so you’re going to get some of my opinions!

Scenario 1: Marketing Reporting to Revenue Management (Best Scenario)

Advocates for this structure argue that placing marketing under the umbrella of revenue management ensures a more financially driven approach. By having marketing report to revenue management, there’s a focus on aligning marketing strategies closely with revenue goals. This alignment could result in more cohesive campaigns aimed at targeting specific channels and segments that are underproducing, thereby maximizing profitability.

However, this arrangement may pose challenges regarding creative freedom and brand-building initiatives (if you care about such things). Marketing teams might feel constrained (we wouldn’t want that) or unable to explore innovative approaches that could benefit the brand’s long-term growth. Moreover, overlooking the nuances (how ethereal) of brand image and guest engagement—hallmarks of effective marketing—could potentially harm the hotel’s long-term reputation and customer loyalty. Alright, that last part is actually important.

Scenario 2: Revenue Management Reporting to Marketing (Worst Idea)

Some argue that positioning revenue management under the purview of marketing allows for a more guest-centric and brand-oriented approach. Placing revenue management under marketing’s oversight emphasizes the importance of aligning revenue strategies with the broader brand vision. This structure can facilitate a more nuanced understanding of the market and guests’ preferences, enabling revenue management to make decisions that harmonize with the brand’s identity and guest experience.

However, this structure might present challenges in terms of maintaining a financially driven focus. Revenue management might prioritize guest satisfaction over revenue optimization, potentially leading to missed revenue opportunities or pricing strategies that don’t maximize profitability.

If the goal of your hotel is to make money, then probably don’t consider this structure too long.

The Middle Ground: Collaboration and Alignment (Current State)

Instead of advocating for a strict hierarchical reporting structure, a middle-ground approach emphasizing collaboration and alignment between marketing and revenue management might prove most beneficial. Both departments should function as strategic partners, each bringing its expertise to the table.

Regular collaboration, open communication, and mutual understanding of each other’s objectives and challenges are crucial. Joint planning sessions, where marketing and revenue management collaborate on strategies, can ensure that marketing initiatives align with revenue goals without compromising brand integrity or financial objectives.

Ultimately, the success of a hotel relies on the synergy between marketing and revenue management, regardless of reporting structures. It’s not about one department reporting to the other but about both departments working harmoniously towards a shared vision—driving revenue while enhancing brand value and guest satisfaction. This collaborative approach ensures that the hotel achieves its financial objectives while maintaining a strong brand presence in the market.

Putting a Bow on it

The blame game between marketing and revenue management is a detrimental trap that stifles growth and innovation. To break free from this cycle, fostering collaboration and synergy between these two departments is essential. By embracing open communication, hotels can transcend the blame game and cultivate an environment of cooperation, leading to enhanced guest satisfaction, increased revenue, and sustained success.

As the hotel industry continues to evolve, it’s imperative to recognize that the synergy between marketing and revenue management isn’t just a desirable aspect but a necessity for sustainable growth and success in the competitive landscape.

Remember, in the underground battle between marketing and revenue management, collaboration isn’t just an option—it’s the winning strategy.

Originally published by HotelExecutive in January 2024

About the author

Connor Vanderholm

Connor Vanderholm the Founder and CEO of Topline and a revenue management consultant for Cayuga Hospitality Consultants. As the founder of Topline, he focuses on topline revenue growth while supporting a portfolio hotels with revenue management strategy and task force, plus built a rate shopping tool for business transient. With extensive experience working for Hilton, Marriott, Aimbridge, and Hersha before forming Topline, Connor has been trained by hotel industry leaders. Connor holds a Bachelor’s degree in Business Administration from BYU-Idaho and an MBA from WGU. Connor hold  revenue management certifications from Hilton, Marriott, and IHG and has been published in Hotel Tech Report, Oaky, and Hotel Executive Magazine.

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