Why now is the perfect time to outsource your Revenue Management
By Daniel Parker
Why now is the perfect time to outsource your Revenue Management
When the Coronavirus pandemic hit, the focus all became on essential workers. They were the front line to help protect us against the pandemic, keeping us safe and able to move forward. When looking at hotels, revenue management has always been an essential worker on the front line of ensuring that hotels remain profitable and keep getting heads into beds. This has become even more pronounced in the COVID-era. Every penny counts for many hotels, as they battle lower occupancy and falling rates. A strong and coherent revenue strategy is essential to keep hotels open and moving forward, bringing in guests even in the lowest of demand periods.
That said, with hotels hurting for cash-flow, it may be time to address the idea of hiring an outsourced Revenue Management team. In this article, we’ll break down the key points to why this makes sense in the current climate.
Getting more for your money
We’ve all seen our hotel revenues take a big hit throughout 2020, and this has left a much-reduced operating capital for many hotels. Many GMs and Owners have had to make gut-wrenching decisions to furlough or relieve staff of their duties, leaving hotels running on a shoe-string staff. With operations often remaining in position so they can service the guests that are still arriving, and the extra attention now required towards cleaning in the COVID era, many hotels have found themselves having to let go of their revenue management department, and have someone else at the hotel handle it whilst staffing has to be reduced. Whilst this may be a smart decision in the short-term, having a non-revenue manager handle the hotel revenue can slow and stifle a hotel’s chance at a swift recovery.
This is where outsourcing your revenue management can come in. Instead of the cost surrounding a full-time employee (benefits, tax, salary), you simply have a monthly payment to a revenue management company, who provide you with a revenue management team who will work for your hotel. This will save you thousands of dollars a year, take away the stress of potentially hiring or firing an employee, and allow you to have someone dedicated to your revenue management again.
Knowing more than the property
Properties needing revenue management support also typically struggle to get much market intel, despite those provided from their OTA market managers which can sometimes be skewed data and not all that useful. External revenue management companies typically have a large outreach into many markets, and contacts in many data companies meaning in addition to the revenue management services, they also provide you with industry trends, initiatives and innovations that you may previously have not been able to access. By outsourcing revenue management, you are able to get eyes on not just your property, but the wider micro and macro markets and national trends. This is an invaluable addition to their services that typically shouldn’t cost you anything else.
Getting a team instead of one
Having an on-site revenue person is great for some properties, but when you only have one member of your revenue team, it can be a lot for one person. Revenue professionals on site are constantly being pulled into other meetings, other directions, assisting with the front desk, numerous tasks which take their mind and attention off what they’re being paid to do, to make the hotel money. Outsourced revenue management does not have this problem. They are free to focus solely on the revenue for your hotel and providing you with the best return on investment. To boot, their teams are not just one person, you’re getting a revenue manager and analysts, a whole revenue team for the cost of less than one full time on-property revenue manager.
This increase in personnel also allows for an increase in diversity of thought. Revenue Management teams are constantly acquiring practices and knowledge across the full spectrum of hospitality products. From economy to luxury – limited service to full service – and city center to resort, revenue management teams are able to apply learned practices to a property’s unique needs.
No more concerns about staff transitions
Congruent to the above, we also know that in today’s work environment there is a lot of movement from hotel to hotel. Revenue managers join your hotel, get up to speed and then will leave for the next opportunity that comes their way. You can avoid the stress of having to hire, train and adapt to the frequent fluctuations in staffing that can blight a revenue management department. When you outsource your revenue management team this takes away the stress of that. If there’s a change in staffing at the outsourced firm, they will assign someone else just as capable to your hotel meaning no drop in service, results or staffing.
Better Commissions with Third Parties
When you are a single hotel, or a small chain it can prove very tricky to negotiate attractive deals with OTAs, tech providers or any partner you wish to work with. You can end up dealing with junior account managers without any real say or ability to offer attractive deals. By outsourcing revenue management, you are more-than-likely working with a company that has a significant portfolio of hotels and thus strong contacts with several tech providers and OTAs. Utilize this to help them negotiate a better commission price for your hotel, or a more attractive financial offer with other third parties. This is something you would not be able to achieve if standing alone as a hotel.
Now may be the perfect time for your hotel to outsource your revenue management. The positives are numerous, and it’s a great move to help safeguard the future of your property and put you on track to succeed and capitalize on the market recovery.
Premiere Advisory Group has a dedicated revenue management department standing by ready to assist you with experts situated in numerous markets. Revenue management is evolving and is no longer is just a case of rate yielding. Revenue management now requires an approach that institutes a complete 360 degree strategy that emphasizes strong distribution channel optimization.
We here at PAG do just that. We combine traditional revenue management with distribution innovation to improve not only your RevPAR, but your cost of acquisition, channel mix and NOI. Reach out to us at firstname.lastname@example.org and see how can help you supercharge your revenue performance and put you on the road to success today.