The commercial role in hotels is critical for long-term success

31 August 2021
Every hotel needs a person to be responsible for all commercial activities to drive long-term sustainable revenue. Maybe a hotel could have become successful without marketing, sales, and revenue a long time ago. Today a solid commercial team is critical for survival. It all starts with hiring a commercial manager.

There is an excellent reason to hire a commercial manager and create a commercial team. The reason is that people tend to prioritize solving current problems instead of focusing on preventing future problems. So let's take a look at how to organize a hotel. 

Three critical primary functions in hotels

There are three equally critical primary areas in managing a hotel: Commercial, Guest Experience Management (Operations), and Business Control (Accounting & Finance). Each function requires specific knowledge and skills to reach excellence and contribute to the hotel's success. However, running each part requires a difference in mentality. For example, the planning horizon, strategy and tactics, and short-term versus long-term decisions are very different in these primary functions. Therefore, it is rare that the same person can easily switch between these three roles.

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Reporting structure for long-term success

The need for different knowledge and skills is the primary reason each position reports to the company's head with a complete overview of the three areas. For example, in a company operating one hotel, all roles report to the company's GM/owner. However, the commercial and accounting & finance role reports to the Group CEO in a company managing several hotels. The GM in each hotel also reports to the Group CEO. Finally, in some larger hotel groups, the GMs report to a Group Operations Manager.  

In some job descriptions of open commercial positions in hotels, the commercial manager reports to operations. As a result, there is a high risk of prioritizing a short-term operating perspective. The boss might too often ask the commercial manager to help solve current problems instead of focusing on long-term actions to make the hotel successful in the future. 

The commercial leader

There are already many interpretations of the role of the commercial manager in hotels. The commercial manager is primarily a commercial team leader, including leading marketing, sales, and revenue. Part of the job is to recruit the team members, create a commercial strategy, action plans, and budgets, set targets and KPIs, collaborate with other departments, and report the progress to the CEO. In smaller organizations, the commercial manager will also be part of the team executing plans and activities.

The role of commercial manager as a leader of all commercial work in a hotel is new. Therefore, the job description is critical to clarify the expectations and avoid misunderstandings. However, please do not assume that the title communicates the content of the job and that one person can handle everything from strategy, pricing, and positioning to marketing, sales, and revenue.

Three levels of commercial managers

The first commercial level, a one-person team in one hotel, can only handle marketing, sales, and revenue basics. Therefore, define the basics in terms of activities and the time required to execute these activities. For example, one commercial manager is a good fit for a B&B hotel with 75+ hotel rooms. If the hotel is smaller, the GM will probably handle the basics. 

The next level, a small commercial team, can create a strategy with more activities to make the hotel more visible to increase the reach and bring in more business. The size of the commercial team in a hotel depends on the size of the hotel, facilities, primary target groups, and location. For example, a full-service hotel with 150+ hotel rooms, meeting rooms, F&B outlets, and other facilities needs at least four people, the commercial manager, marketing, sales, and revenue. A four-person team will be able to handle even more activities. To be less dependent on a single person in the group, some of the jobs should overlap.

The third level, a more extensive commercial team in a hotel group, can coordinate and execute activities in several hotels. Every independent hotel group needs to find a unique strategy and define the critical success factors. Hiring specialists for specific functions, such as digital marketing and total revenue management, is possible when the commercial team manages several hotels. With specialists in the team, a hotel group can achieve excellence in driving business and become very successful.

All hotels are unique

There is no one-size organization that will fit every hotel. All hotels are unique, and this requires some thinking before establishing the commercial organization. Every hotel needs a person responsible for the commercial area to focus on activities that drive total revenue. Sometimes this person is the only one focusing on commercial activities and probably needs some help from others. Sometimes this person has a team and access to experts to build a sustainable long-term revenue for a small hotel group. Create your commercial organization because, without one, you will never become successful will your hotel company.

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