"Will I even be needed in the future if AI can take over everything?" This question is increasingly on the minds of Revenue Managers as they are confronted with the latest advancements in revenue management technology. Adding to this uncertainty, studies like those from the McKinsey Global Institute predict that up to 3 million job transitions could occur in Germany by 2030*. However, instead of signaling the end of the profession, we see an exciting transformation underway: the role of the Revenue Manager is evolving. This blog post explores the current responsibilities and future developments of this role, providing insights into its ongoing evolution as well as the opportunities and challenges faced by Revenue Managers in the hospitality industry.
The Professional Development of the Revenue Manager
Over the past 40 years, the answer to "What does a Hotel Revenue Manager do?" has remained largely unchanged: optimizing room inventory to maximize a hotel's revenue and profitability. This was primarily achieved through setting room rates, managing inventory, and optimizing booking channels. Often, Revenue Managers develop deep expertise about the market, the hotel, and guest needs over many years. While optimizing room inventory remains the core of the job, the role and responsibilities of a Hotel Revenue Manager have shifted in recent years. These changes have been subtle, a natural evolution. But looking to the future, the profession, like many in the hospitality industry, faces a revolution. With advancing technology, new guest behaviors, and growing uncertainties, the way revenue professionals work has fundamentally changed. Fixed rates and reservation books were gradually replaced by dynamic pricing systems, Excel spreadsheets were supplemented by rate-shopping tools, and revenue generation has expanded beyond room sales. In addition, more and more revenue streams have emerged, requiring optimization beyond just room revenue. Today, a Revenue Manager manages not only rooms but also a diverse range of products and services, many of which cater not only to hotel guests but also to the broader community. From parking spaces and coworking areas to event venues, food & beverage offerings, and wellness and spa areas, hotel revenue management now covers a wide array of sectors.
Opportunities and Challenges of Today
While in the past, seasonal pricing was set once or twice a year, in some markets, prices are now adjusted by the minute, a speed beyond human capability. The manual collection and analysis of relevant data consumes so much time that it often becomes outdated by the time pricing decisions are made, significantly increasing the risk of revenue losses due to poor decisions. AI systems can already handle many of the tasks that Revenue Managers perform. For example, AI excels at forecasting key performance indicators (KPIs), such as expected occupancy and revenue. These forecasts can then determine whether marketing actions should be launched. Imagine an AI system analyzing historical and real-time market data, generating an accurate demand forecast, and then triggering the activation of Google Ads, only until the forecasted numbers align with budget expectations. The automation of restrictions, such as minimum stays, booking windows, and availability, is also possible. These parameters can be adjusted dynamically without the need for constant manual oversight by the Revenue Manager. The McKinsey study confirms that those still manually compiling and analyzing data should be aware that by 2030, about 30% of current working hours could be automated by technology, including generative AI. However, this does not mean that AI will completely replace the role of the Revenue Manager. Systems like Hotellistat automate routine tasks such as price optimization and inventory management, allowing revenue managers to focus on more strategic work. The time saved can be used to anticipate market dynamics and develop long-term business strategies. AI handles the "heavy lifting" of data processing, allowing Revenue Managers to apply their irreplaceable skills in creative offer development, problem-solving, and decision-making. Futurists predict that guests will increasingly demand personalized offerings, further complicating pricing strategies and reinforcing the need for human expertise in revenue management.
The Revenue Manager’s Role in the Age of Digitalization
Revenue Managers have already recognized the opportunities that digitalization and new technologies bring, as confirmed by the Fraunhofer Institute's Futurehotel study. However, decision-makers have so far been slow to provide the necessary resources. Among the Revenue Managers surveyed in the Fraunhofer study, three-quarters (75%) stated that digitalization and technology were important to them. However, only 29% were satisfied with the current implementation, the lowest level of satisfaction across all hospitality roles. It is clear that no other profession in the industry has a greater need for digitalization and technology adoption than Revenue Management.** Now is the time to fully leverage the potential of modern systems and ensure that both current and future revenue managers are trained to develop their unique human abilities in revenue management further. Embracing technology leads to greater efficiency and better meets the growing demand for personalized offerings. In this way, the Revenue Manager evolves from an operational to a strategic key player. The continued evolution of the job profile is an essential step to remain competitive in the dynamic world of tomorrow.
Conclusion
The key to long-term success lies in recognizing change, harnessing it, and actively shaping it, even if this initially runs counter to human nature. The original definition of the role, selling the right room at the best possible price to the right customer, is no longer the central premise. Instead, it’s about optimizing the entire hotel operation, not by manually copying numbers but by crafting tailored and authentic business strategies. Hoteliers and HR departments, it's time for a new job description.
*McKinsey Global Institute: KI beschleunigt Umbrüche am Arbeitsmarkt: Produktivitätsschub von 3% möglich (23. Mai 2024) https://www.mckinsey.de/news/presse/2024-05-23-mgi-genai-future-of-work
**Fraunhofer IAO: Futurehotel - Employee Profiles, Berufsprofile im Gastgewerbe. Heute und in Zukunft (2021).
