Improved revenue management the salvation of European hospitality?

“The European market is fundamentally different [from the American] and much more fragmented, with multi-currencies and multi-languages. That is why European revenue management professionals are embracing the idea of a European revenue management model – especially group directors in chains,” says Mr Wilhelm K. Weber from Swiss Hospitality Solutions, newly appointed head of the HSMAI European Academy.

Having spent the last ten years in revenue and distribution, among others as director for performance revenue optimisation with WORLDHOTELS, where he had the opportunity to work with different systems, chains and individual hotels, among which the Norwegian Thon hotels and Rica, Mr Weber is no rookie in the industry.

“The experience I’ve gained in this line of work comes in very handy today, as partner in Swiss Hospitality Solutions, which is a small consorting company, focused on revenue management and distribution,” he explains.

“What inspired you to take up a career in the hospitality industry?”

“I started working in a hotel during holidays at the tender age of 14, for an extremely innovative general manager, inspiring my initial dream to become a hotel general manager by the age of 30, but I didn’t work full-time until I took up a position at a Swiss ski resort in 1997.”

Standards at last

At present Mr Weber is spearheading HSMAI Europe’s bid at standardising revenue management throughout Europe, with a vast potential for improvement, according to him:

“The biggest benefit people will see as participants in HSMAI Europe’s 15-module revenue management training programme, is that for the first time we see the formation of a European industry standard for the revenue managers’ role. All training thus far has been individually standardised by the various institutions offering courses, be it schools, hotel chains or independent training providers. This is the first time we have something remotely resembling an international standard for revenue managers, with input and support from the industry itself, which is crucial – and something entirely new,” he says, continuing:

“Instead of having a revenue management certificate, we now have the revenue management certificate, which is a huge leap ahead.”

“In what way, do you think, would such standards be useful?”

“Certification and standards are always useful if they improve the employability of those certified. The good thing about this is the industry approach. The hotel groups and chains are aware of the standard from the very beginning, in addition to actually influencing it. Anyone applying for a position with that certification on his or her CV, will be recognised immediately by the HR officer handling the application, and of course the employers’ revenue management professionals will know the standard. So yes, I’m convinced that in three years from now, people holding the certificate, will have improved their employability greatly in the field of revenue management,” Mr Weber replies, convinced that HSMAI Europe is the right tool at the right time:

“I think that HSMAI Europe is exactly the right body for the implementation of these standards, as it is a not-for-profit organisation operating across Europe, and not run by a system or a brand, but rather acts as a neutral body for this kind of certification.”

Better candidate assessment

“What we see now is that revenue management professionals all over Europe are in favour of the idea, as all have been looking for something like this, and it is important that the certification is a European one. There are American certifications available already, inapplicable, however, as the European market is fundamentally different, with multi-currencies and multi-languages, for instance. That is why European revenue management professionals are embracing the idea of a European revenue management model – especially, as you may well imagine, group directors in chains. This will enable them to properly judge the level of the applicants for certain functions – or internally, if they want to build something, they have a clear career path, not only designed by their own chain, but influenced by the experiences of colleagues across all of Europe.”

“Apart from the matter of language, would you say there are other factors distinguishing revenue management in Europe from that of America, for instance?”

“Definitely! We have exchange ratios due to the multi-currency environment, as mentioned earlier. For example, we see that the leisure and hospitality industry in Switzerland is suffering fiercely from a very strong Swiss franc at the moment – and experience effects due to just the European multi-currency environment. The other thing we see, is a huge difference in purchase behaviour, from the Scandinavian north, where people are computer savvy and like to buy on the Internet, to the south, where people still pick up the phone, preferring to talk ‘face to face’, as it were. There are different mentalities, reflected in the various players and business models in these markets. So by comparison, you have the homogenous U.S. giant on the one side, and a multi-segmented market this side of the Atlantic.”

European solutions to European challenges

“We see a lot of good initiatives from HSMAI Europe at the moment. It is good to see the European arm of HSMAI emancipating itself a little from the U.S. model, instead of copying indiscriminately. Also, and this is something I find highly important, we see that HSMAI, which has always been strong in certain European countries, now gains a momentum across all of Europe, resulting in a more European HSMAI Europe, if you will, with a great team of people coming together under the HSMAI Europe brand, forming these initiatives.”

“From a purely financial vantage point, how do you assess the outlook of the hospitality industry for the foreseeable future?”

“The hospitality industry is very much influenced by the financial challenges we’re up against at the moment, as seen in the crucial and dramatic years 2008 and 2009. The future development very much depends on where the European economies are headed. We see certain market-driven factors, such as the Swiss struggle, induced by the strong franc, leading to less people visiting the country, whilst the Swiss themselves find that their favourable currency makes it tempting to leave the country for vacations. On a European scale, however, that doesn’t show up very dramatically. I think that we need to look out for the possibility of a large-scale European recession or a stable, but slow growth, which, in both cases, will have a huge impact on us. Personally I am reluctantly optimistic about next year, but I do not think this is the time for increasing average rates in most markets, even though we probably won’t see the credit crunch scenarios we faced back in 2008 and 2009. The buyer’s market is so much different now, also in terms of destinations, depending on your business segment. We will probably see a lot of light as well as shadow. In my view, the application of revenue management principles in turbulent times is even more important than in four consecutive booming years, for example.”

The Swiss challenge

A representative of world-famed Swiss hospitality, Wilko Weber paints a rather sombre picture of conditions in his native industry, mainly a result of the high standard of living – and a strong Swiss franc, further underlining the urgent need to introduce improved revenue management:

“Most of the corporate buyers in Switzerland are multinational companies, who can easily move a meeting from a Swiss destination to a non-Swiss destination. The most obvious example is Basel, situated directly on the border. We see a shift in meetings and conferences from Basel to other destinations. And then there’s the World Economic Forum in Davos, which, obviously, will remain there, but apart from that, we see a lot of the smaller meetings and events moving from Swiss destinations due to the level of costs entailed, while, on the other hand, it’s so much cheaper to set up meetings elsewhere in Europe, the Euro zone in particular,” he says.

“But the Swiss leisure industry is currently taking the hardest beating, as most of the tourists come from markets where people are paid in Euro. With ski and winter resorts highly comparable to Austria and Italy, people deem Switzerland too expensive, leading to shorter stays, less expenses – or they simply skip the country altogether. At the same time, the Swiss themselves, paid in strong Swiss francs, have the option of considering whether to spend their holidays in the expensive home market or in Austria or France, for instance, where their buying power is much stronger. So these are trying times for the Swiss hospitality industry, with a domestic market largely moving across the borders.”

In terms of an overall European development, however, he is convinced there are ways out of the current dry-spell in certain markets, also pointing out a couple of bright spots at home:

“Viewed from a European vantage point, we’re just talking about a single, limited market, not showing up in the European charts so far. There are, however, a few bright spots, as this trend has yet to be seen in certain city destinations, such as Zurich and Geneva, as opposed to St. Moritz, Davos and Zermatt,” says Mr Wilhelm K Weber, dead set on contributing his share – through the HSMAI European Academy.