Potatoes made me a better revenue manager

And why restaurants have menus...

I know what you’re thinking.

“Paul, you were a security manager, not a revenue manager.”

For those of you that haven’t closely followed my career since it began in 1987, I’m happy to let you know that I’ve done a lot of things that don’t show up on my CV.

Security managers, in my humble, unbiased opinion, are kind of like potatoes. We can be used in all kinds of ways.

But that’s not where I was going with this…

Let’s go back to 1997.

I had been hired as a consultant in Stavanger, Norway. ( I’ll share the backstory another time.)

In a move to make their back office functions more efficient, the hotels had merged their reservations departments. Instead of each hotel handling its reservations, one department would handle reservations for all three.

It wasn’t working out well, so they hired me. Yes, it was probably because the managers were friends that felt sorry for me and knew I needed a job, but it was hopefully also because they knew I had a track record of making things work.

I didn’t know much about how to run a reservations department, but I was a pretty good listener and the team did have some useful suggestions on how things might be improved.

In those days, Stavanger was a boomtown for hotels during the workweek. The Norwegian state oil company was headquartered there and they were by far our largest client. Their contract guaranteed their employees rooms in our hotels on 24 hours advance notice.

The problem for the hotel reservations team was that on busy days, they quickly sold out of standard single rooms at the company corporate rate. When guests called to make a reservation and standard single rooms were sold out, the reservations team just overbooked standard singles at the preferred rate. Of course, that added to the overbooking issue that the front desk would have to deal with later. Premium rooms and suites went unsold but were filled with guests from the overbooked standard room lists.

With the number of bookings that came in just before the 24-hour deadline expired and the number of guests that showed up in the later evening hours, I strongly suspect it was a game people played.

“If I book late and arrive late, I have a good chance of getting an upgrade.”

When I asked the reservations agents why they kept overselling standard rooms, it turned out they were driven by a lack of knowledge and fear. They knew that the contract with the oil company guaranteed rooms on 24 hours’ notice, but they didn’t know it simply guaranteed them a room. If standard rooms were sold out, we could sell them any available room at whatever the going rate was.

Once we straightened that out, the next challenge was fear. They were afraid of how callers would respond if they were told no standard rooms were available and all that could be offered was a suite at five or six times their usual price.

I brought in a colleague that had worked in a large hotel in a busy city to help show the local associates how to sell expensive suites and rooms at proper price points. She was fearless, but I kept looking for a way to make things easier for the reservations agents to avoid the sometimes difficult discussions they had to have with the powerful people from the important client.

You know, the one’s that answer every challenge from a lowly hotel employee with “Do you know who I am?”.

The solution came while I was having dinner in a local restaurant.

In those days, potatoes accompanied almost every evening meal in Norway. Most often they were boiled, but in some restaurants, you could choose how you preferred to have them cooked; e.g., boiled, baked, fries, etc.

When taking my order, the server that evening asked, “What kind of potatoes would you like?”

“Mashed, please.”, I said.

“We don’t have that.”, said the server. She waited for my next answer without offering any suggestion as to what they did have. That switched a light on in my head.

With the great idea bulb still shining brightly, the team was trained to sell the premium rooms when standard rooms were sold out by offering them like choices on a menu.

“We have business class, junior suites, or one-bedroom suites. Which would you prefer?”

Some guests questioned this, but the team was surprised at how many didn’t and just picked from the menu that was offered. Guests that did question the menu were informed that more choices and lower rates were likely to be available if they booked further in advance.

Two things happened. Booking lead times increased which helped the hotels better manage their operational staffing levels and the average room rate increased because guests were paying for upgrades, rather than receiving them for free because the reservations department oversold standard rooms.

One thing didn’t happen. Guest satisfaction, including their views on the booking process, didn’t decrease. The team had been worried that guests would be upset at having to pay a higher rate. Most were businesspeople though, and they understood. Some were likely lawyers and knew what was in the contract…

Those that needed, or wanted, lower rates started to call further in advance of their stays. Good for their travel budgets. Good for our operational management.

Choice is a funny thing. The light that came on in my head that evening when I asked for a potato they didn’t serve, was something I remembered from my time studying psychology at university. When given a list of options, people often choose from the list, even when their normal preference isn’t on it.

After all, it’s why restaurants have menus instead of just asking patrons what they want to eat. (Of course, some will ask for exceptions; accepting them is dependent on the capability and willingness of the restaurant.)

And that, my friend, is how potatoes taught me to be a better revenue manager!

I couldn’t find any pictures from Stavanger or even one of me and a potato. No worries, I’d rather have a properly cooked “croque monsieur”, a Belgian beer and a hug from my wife anyway. No potatoes necessary!

 P.S. - I know, people don’t phone or fax reservations to hotels anymore! The lesson remains the same. Offer choices instead of a blank slate. That gives you an opportunity to exceed expectations instead of having to explain why you can’t fulfil a wish.

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