Revenue Management is Dead. Long live Revenue Management.

Over the past decade, the evolution of revenue management tools has been nothing short of impressive. This progression, logical and inevitable, reflects how neither the hospitality industry nor revenue management can escape the AI revolution.

These tools now combine deep learning with big data to automate tasks that traditionally required manual intervention: from precise demand forecasts, instantaneous rate adjustments and optimized displacement cost calculations, to smart inventory management, including effective overbooking strategies. This technical efficiency far surpasses what human intelligence alone can achieve.

But with these advancements, there’s a massive elephant in the room: how must the role of the revenue manager evolve? The question is straightforward, and every organization and hotel must confront it: if a large portion of what used to be a revenue manager’s responsibilities is now automated, what’s the added value of the revenue manager? What is our unique selling proposition (USP) as individuals in an organization or hotel?

Four Pillars for the Future of Revenue Management

In my opinion, there are four key pillars that should shape the role of tomorrow's revenue managers—four guiding principles that can form the foundation of their roadmap to continue driving meaningful impact and sustained growth.

1. Strategy before tactics

I’ve always been struck by how tactics-focused revenue management tends to be. Revenue managers often dive straight into discussing the tactics they've deployed to achieve results, but few begin with the overarching strategy. Strategy is the "what" of your game plan; tactics are the list of specific actions that help you achieve that strategy.

With most tactical operations now largely automated, revenue managers must shift their focus to defining, articulating, and continuously challenging the strategic objectives they set for their properties. When it comes to driving revenue, objectives typically fall into one of four categories:

• Value Strategy: Focus on maximizing ADR (Average Daily Rate) to drive revenue.
• Volume Strategy: Prioritize occupancy to boost overall room nights.
• Stabilization Strategy: Maintain performance in stable or low-growth markets.
• Transformation Strategy: Leverage business mix to optimize Results.

While a comprehensive breakdown of each strategy and its corresponding tactics could fill an entire publication (stay tuned for that!), this simplified framework addresses the essential question:?What am I truly aiming to achieve??Once that’s crystal clear, the right tactics will naturally fall into place. This strategy mapping should be a top priority for every revenue manager. Ensure that you have a well-defined strategy guiding your hotel throughout the entire selling period and that the tactics deployed align seamlessly with that strategy.

2. "Revenue is Vanity, Profit is Sanity"

Though it may sound paradoxical, revenue management should not be solely focused on revenue. I’ve always believed that our role goes beyond simply generating revenue—it’s also about understanding its impact on profitability. There are numerous ways to drive revenue, but some approaches erode your margins. In revenue management, there’s a difference between sustainable growth and ‘doping.’ Relying too heavily on OTAs for instance can be a quick boost, but it ultimately erodes your margins and profitability

Revenue managers have a crucial role in managing the topline-to-profit drop-through. Our job doesn’t end at revenue generation; it’s also about protecting the margin. Here are two approaches on how you can better manage how your generated revenue transforms into profit :

• The Basic Step: Ensure your strategy and tactics favor three key elements—always prioritizing ADR over occupancy (when you have the luxury to chose), optimize average length of stay, and monitore your distribution costs.
• The Advanced Step: Move beyond RevPAR, recognizing it as a means to an end rather than the ultimate goal. Instead, use KPIs that incorporate cost management. While GOPPAR is the ultimate KPI, it might shift focus too heavily toward cost structure. I rather recommande the use of two KPIs : NetRevPAR (RevPAR minus distribution costs) or ARPAR (Adjusted Revenue Per Available Room):

ARPAR=(ADR?Variable?Costs+Additional?Revenue)×Occupancy

ARPAR strikes the right balance by transforming what is too often a purely topline and accommodation-focused discussion into a broader total revenue management perspective that also factors in variable costs, in particular those revenue managers can influence ( housekeeping and distribution costs mainly).

3. Balancing Short-term results and a Long-term revenue vision beyond algorithms

One of the most significant insights I've gained over the past years is that the properties that will best weather tomorrow's market turbulences are not those with the best historical results, but those that have built a robust business mix over time—particularly with a foundation of high customer lifetime value (CLV) clients: repeat guests, a strong share of direct channel revenue, and a solid B2B corporate base.

AI systems are designed to optimize short-term performance because that’s what they do best. However, a revenue manager’s role is now, more than ever, to go beyond just the immediate performance metrics. It’s not just about filling rooms for the next month; rather, it’s about crafting a broader vision for the business mix, ensuring that the property is positioned for sustainable growth over the long term. This is where the revenue manager’s role is evolving. The future of the job isn’t simply about analyzing data or adjusting prices—tasks that AI can perform faster and more accurately. Instead, it’s about developing a proactive commercial strategy that can adapt the customer segmentation mix to maximize long-term value.

Revenue managers therefore need to collaborate more closely with sales teams, engaging in ongoing dialogue and actively supporting efforts to include a diverse set of clients and distribution partners that bring both immediate and long-term value to the property. I often say that revenue managers should move away from the mindset of “is this client/distributor profitable for me, should I take it or reject it” to a more strategic approach: “How can I adjust my strategy to make room in my mix for all important clients while minimizing any compromise to my short-term gains?” This shift in perspective ensures that the hotel is not just optimized for short-term gains but is also set up for success in the years to come.

4. Get Geeky or Get Left Behind

Let’s face it: revenue management is inherently a geek’s job. Its beauty lies in the balance between having a strategic vision, being a relational leader, and being a tech-savvy expert.

The current revenue management systems demand that we spend significant time understanding how they function, continually assessing ways to optimize their performance, and embracing this technical component as an absolute necessity, not just a "nice-to-have." A common misconception is that AI can learn and adapt without human intervention. In reality, AI is only as good as the collaboration between its capabilities and human expertise.

Beyond revenue management systems, the sheer number of tools available today—PMS, CRS, channel managers, rate shoppers, rate parity tools, market benchmarks (Demand 360, STR, etc.), upselling tools—requires a clear vision of how each one fits into the bigger picture. And revenue management have a key role to play in creating synergy and harmony between all these systems.

No, revenue management is not dead. It’s simply evolved into something even more exciting with the integration of AI-driven tools. But the reality is that revenue leaders need to reinvent themselves and adapt to avoid being left behind.

I’d love to hear your thoughts: Do you see AI-driven tools as a threat or an opportunity for revenue managers? Are there other key areas this article didn’t address? Let’s keep the conversation going!