To outsource, or not to outsource

So what?

Revenue management is at the heart of a hotel’s commercial success and a key driver in optimising operating profit . As a General Manager responsible for the P&L, the thought of outsourcing this integral function may seem unthinkable.

But the days of simply flexing rates to reflect changes in occupancy are behind us. The role of the revenue manager is becoming more complex. New technology and changing booking behaviours require a more sophisticated understanding and approach to revenue management strategies. And with ongoing pressure both at property and group level to reduce costs, the idea of outsourcing the revenue management function to a third party is gaining acceptance. While outsourcing is not suitable, for all, there are many benefits to be had.

Experience, expertise and an objective perspective

By outsourcing your revenue management function, you are buying into valuable experience, often at a fraction of the cost. You are tapping into a broad depth of specialist knowledge, with experience of creating revenue and distribution strategies across many property types. Direct access to this level of expertise and experience provides an objective perspective on your revenue strategy, challenging standard practices, and bringing valuable learnings you may not otherwise have access to, to ensure you are achieving optimal results.

Growing demands on the revenue management function

Emergence of new technologies and disruptors in the market place are adding increasing complexity to the role of the revenue manager. The surge in the use of mobile as a travel planner, changes in booking patterns and developments in revenue management technology are just some factors that now require consideration.  To excel in revenue management, there is the requirement to  understand how these developments can impact your business and adapt your strategy accordingly. As these advances are in many cases outpacing the investment in the training required to keep abreast of these, the risk is that revenue management strategies fail to reflect the complexities of today’s distribution landscape.

Understanding the marketing strategy

It is not uncommon within a hotel for the marketing and revenue management functions to operate independently, often with different and conflicting core objectives.  Awareness is growing however, of the need for co-dependence between both departments for optimal profitability.  This demands a new set of skills for the revenue manager – and a deep understanding as to how marketing strategies, and associated costs of acquisition should shape the distribution strategy. Also, as customer expectations now demand a level of personalisation we have never seen before, revenue managers need to ensure pricing supports this.

 

Working with these shifts in the revenue management function is something outsourced revenue management teams encounter every day – and this is where outsourcing can bring huge value. It may not be suitable for all properties- but it can often provide a cost effective way to ensure your pricing strategy is best equipped to navigate the challenges and complexity of revenue management today.

For more information on outsourcing, or any of our revenue management services, drop us a line or call on 07768 904 076 to discuss further.

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