Less is More

by Kelly McGuire and Paresh Bhandari

How often have you heard the question “How can we increase revenue?”, I am sure plenty of times. And how often is the answer: “We need to get the team to start doing XYZ or let’s start tracking this key performance metric and report on it in every revenue meeting”? Sound familiar?

We’re guessing you rarely hear an answer like: “The reason we are not increasing revenue is that the revenue team doesn’t have enough time to focus on generating revenue, so let’s streamline a few of our processes” or “We should stop producing so many reports”, or “Let’s cancel this meeting and give everyone back time”.

Most people naturally think of what they need to “do” to increase revenue, as opposed to what they should “stop doing”. This is because the human mind “Adds” better than it “Subtracts”. A recent study from the the University of Virginia School of Engineering and Applied Science, published in Nature, identifies that across all kinds of contexts, humans rarely look at an object or idea that needs improving and think to remove something as a solution. Instead, we almost always add some element, whether it helps or not.

Think about how this applies to your daily life. When making a presentation or writing an article we always try to add more points instead stripping content away to focus only on the key points, even when all that additional content only distracts from the power of the message. How often have you made a “to-do” list? Ever make a stop-doing list? (Leidy Klotz’s book, “Subtract: The Untapped Science of Less”, suggests that “stop doing” lists can be as powerful as “to do”, but are used much less frequently).

We’ve even recognized this in ourselves. Every time the team identifies a time-consuming activity like creating a report or managing a cumbersome process, we always thought: “Let’s Automate It”. We never stopped first to think whether the process or report were necessary to begin with.

Our industry “adds” often

The hospitality industry, in an effort to reduce costs, is famous for adding workload to its teams, especially for revenue managers (RMs). RMs spend a lot of time doing tasks which are not really their responsibility such as responding to customer reviews, collating data, or creating reports (sometimes the same report in multiple format just because an Owner or GM prefers “their” format), all of which results in distracting them from their key responsibility, generating revenue.

ZS and HSMAI conducted an industry wide study called Voice of Revenue Manager. We asked revenue managers to report the amount of time they spent on various tasks in their scope of responsibility. What we heard was eye-opening:

RMs spend an average of:

· 28 days a year creating the annual budget for their hotels

· 26 days a year responding to RFPs

· 5 hours a week in meetings with stakeholders, out of which ~3.5 hours is spent reviewing past performance

· 18 hours a week collecting data and creating reports

Is this really time well spent? You could argue that some of these tasks do generate revenue for the property, or that they are essential to property operations, but do they really require THAT much of a revenue manager’s time? As leaders, how can we work with RMs to try to reduce non-revenue generating workload? How can we find more time for them to focus on revenue generation?

We have had the opportunity to ask ourselves the same questions. Over the last few years, ZS has setup an in-house, cluster revenue management team which manages revenue management activities for ~650 midscale and upscale hotels in North America. The team looks after optimizing day to day pricing, managing customer and channel mix, and responding to corporate and group RFPs for their portfolio. They are delivering ~6% RPI YoY growth consistently while managing ~30 hotels per revenue manager.

For the team to be effective, it was important that they stayed laser focused on generating revenue. We spent lot of time delegating non-revenue generating tasks, automating key tasks and streamlining processes. But over time we realized that delegating or automating tasks alone wouldn’t help, we need to look at the entire process holistically. We need to critically review activities performed by revenue managers and identify activities which could be reduced or eliminated.

As mentioned, this was a mind shift for us. It wasn’t natural for us to think of subtracting, but through discipline, asking the right questions and being willing to challenge the status quo, we were able to find opportunities to reduce non-essential activities.

Reports

Reports are generally the best example of companies finding it easier to add than subtract. Most organizations produce volumes of reports every day, and the reality is, most of them are rarely used. There are two ways to approach this problem. The first is to step back from the reports themselves and make an audit of what information is important to track, who needs to see it and with what frequency. Armed with this information, you can either go back to the current reports and streamline, or just simply start over again (maybe in a visualization platform instead of Excel?). Of course, a drastic and potentially contentious method is to just turn all of them off (or turn off select groups anyway), and see who complains. You may be surprised to find that no one notices. You may also find that several have a very small audience that either don’t really need the information or could find it on a different report.

Sometimes even the best reports are still a waste of time

We went through a six-month process to audit all the reports that were created for our RM team. During this process we did a combination of interviews, tracking usage statistics and reviewing report content.

Our analytics team had created an oversell report to help RMs identify opportunities to overbook the hotel to mitigate against no shows and cancellations. The RMs loved this report, and we saw an increase in overbooking for our portfolio of hotels. Given the success, we decided to produce this report daily and make it available to all RMs for all hotels every day.

Clearly this report was well used and successful in driving revenue. However, during our audit, the analytics team found that the RMs only accessed the report once a week, and they didn’t review this report for every hotel every week — only during peak periods and special events when they knew overbooking might be necessary.

Instead of asking the analytics team to keep creating the report daily for over 650 hotels, the team worked with RMs to identify which hotels needed the report when. We also reduced the production frequency to weekly. These changes cut the time the analytics team was spending to produce the report in half.

The lesson we learned here is that even successful, regularly used, reports can take up unnecessary time. Question everything and keep repeating this questioning, as needs can change over time.

Meetings

Meetings are probably the second offender in the category of activities that tend to grow, not shrink. There are many circumstances where pulling the team together saves time, facilitates decisions, and streamlines communication, all of which enhances the team’s productivity. There are also many more circumstances where meetings are repetitive and non-value add. With the Zoom fatigue resulting from the pandemic, many organizations are questioning the value of every meeting, and you should too!

You should question every meeting on the calendar: understand the agenda, ensure that the desired outcome is clear, and that it is decision oriented. Updates and minor decisions can be replaced by emails (which also have the advantage of leaving a “paper trail”). We have heard (and tried) many suggestions, including not to have more attendees in a meeting than can be fed by one large pizza, or setting aside blocks of time with no meetings. You need to consider the needs and working conditions of your organization to find the solution that is right for you, but you for sure should empower every employee from leaders to individual contributors to question the value of a meeting, and to raise their hands to ask what their role is and whether their attendance is truly necessary!

Evaluating Processes or Activities

There are administrative processes in many organizations, and many of these are so engrained in the culture and operations that no one questions them. Unfortunately, at times no one even remembers why they have to do them! So, when you evaluate a process as a candidate for either automation or reduction, ask “why” for every activity to see if you can uncover opportunities to reduce steps or frequency, not just streamline them or automate them.

We found that the best place to start when evaluating our internal processes was to ask the team itself which processes they felt put undo burden on them, or that they found particularly “annoying” to accomplish. The team generally has good instincts for things that actually are a waste of time, or that keep them from focusing on the value-add activities. And if you tackle these first, it generally creates a good amount of good will on the team, which always helps!

Even if it is mandated, it can be changed

Our RMs were asked to log the details of their stakeholder meetings on our client’s internal CRM (customer relationship management) system. This was required for two reasons. First, the company wanted area directors and revenue leaders to have access to this information, and secondly, this was a contractual requirement to prove that the RMs held the required strategy meetings with their properties. The RMs spent five minutes per property per meeting updating this information on the portal.

During one of our listening sessions, the RM team complained about this activity. We committed to reviewing the process to figure out if there was anything that could be done to help. What we realized is that each RM spent ~150 mins every month (5 mins x 1 calls/ month x 30 hotels) updating this information. In addition, we learned that the RMs also sent meetings notes and call recaps clearly outlining discussion points, action items with owners and next steps to all property stakeholders, area directors and RM leaders after every stakeholder meeting. It seemed that this task of updating the CRM system was duplicative, and potentially unnecessary.

Even though the communication requirements were satisfied by the emails, there was still a contractual obligation to update the CRM system. Our first reaction was “let’s just automate it”. However, we firmly believed that this step wasn’t necessary, and wanted to use the automation team’s time to work on something that was. As this was a legal requirement, it took us some time to work through it, but eventually we were able to eliminate this task, reducing the amount of time revenue managers spent on system updates.

We continue to do similar audits every six months to find opportunities across the RM organization. The harder we work to reduce these non-revenue generating, non-value add activities where we can, the more efficient and effective our RMs can be at generating revenue.

The bottom line: Listen to revenue managers. Understand where and how are they spending their time. Identify tasks which are not revenue generating. Ask pointed questions on how these activities help (or don’t). And most importantly, shift your mindset to include reducing as well as adding!