Decentralization: the hidden barrier to Revenue Management

Centralized or decentralized Revenue Management: a complex issue, as it affects both the effectiveness of the RM approach and the power and influence dynamics within the organization.

Price is a powerful lever, so it naturally attracts desire for control.

This is all the more true because while mastering it is a profession in itself, that of Revenue Management and Pricing, its superficial understanding is accessible to everyone. Everyone knows what a price is, everyone has a more or less informed opinion on the subject. We see prices every day and feel legitimate in defining and managing them.

Let’s say it clearly from the outset, if the challenges differ across industries, the conclusion is the same: the right approach to our profession can only be centralized. For two fundamental reasons.

Centralization enables professionalization and optimization

Centralizing allows for the structuring of an expert team, sharing the same tools, methods and metrics. Teams learn together, gain consistency, ensure coverage, specialize by areas (allotment management, special offers, group pricing…) and avoid the loss of efficiency caused by isolated initiatives.

The limits of the decentralized approach

In a decentralized approach, losses of efficiency and expertise are common, with everyone, for example, trying to automate recurring tasks on their own and in their own way. Each person struggles with their own pricing grids, rate codes and segmentation. The result is becoming a Swiss army knife, a tinkerer, not an expert.

A coherent RM strategy goes beyond local optimization

Revenue Management is not a series of opportunistic actions: it is a global pricing strategy, a pricing DNA that must remain consistent across a hotel chain, a group of campsites, a cruise line, or an airline for customers who may potentially engage with multiple sites.

Customers (both B2C and B2B) expect a uniform logic:

• Harmonized pricing grids

• Consistent commercial conditions

• Aligned Early Booking mechanisms

• Clear segmentation

Of course, within a hotel chain, the strategy can be adapted differently depending on the property, just as it varies according to dates. But in the same way that you wouldn’t change a Revenue Manager from Tuesday to Friday simply because the customer mix varies by day, no hotel should have its own “personal” RM as an exclusive asset. The RM approach requires a certain level of perspective that goes far beyond simple local, day-by-day optimization.

The main barrier? Management and influence dynamics

So why isn’t this centralized practice more widespread? Most of the time, it comes down to managerial reasons. Decentralized RM can take different forms, but let’s take the most common example in the hotel industry: when a hotel manager is incentivized based on their revenue, they want to control all the levers themselves. Delegating pricing to anyone especially a central corporate team is out of the question.

And the argument often comes back: RM & Pricing in its “ivory tower,” disconnected from the field. People justify their position, defend their territory. As if you had to live within a two-kilometer radius to do good work. A skilled pricer, a competent Revenue Manager, is first and foremost a numbers person. There’s no need to live in the hotel to set Min Stays, adjust prices, or measure OTA performance. Collaboration with Operations is always useful and RM takes into account field feedback, such as competitor moves but this is not the core of their work.

The problem is, of course, less pronounced in transportation. An airline pilot is in command like a captain on a ship, but not over commercial or economic performance issues.

The evidence: centralization in practice

Across nearly 300 Revenue Management assignments carried out, the conclusion is clear: decentralization reduces performance, sometimes drastically.

We strongly believe that a mature discipline like Revenue Management requires specialization both of the teams:  the Revenue Managers and of the RMS solutions they choose. It is also the RMS that enables the connection with Operations teams (automated reporting, emails, shared meeting materials) and frees up time for decision-making and the pedagogical approach needed to communicate them.

Conclusion 

Beyond the major chains, the most ambitious hotel groups have understood this: from 5 or 6 properties onwards, centralizing RM becomes a major lever for growth and performance, provided teams are equipped with a cutting-edge RMS.