Importance of Outsourcing Revenue Management
Revenue management plays one of the most vital roles in the hotel industry because it enables hoteliers to optimize on ways to carry out their business to improve financial outcomes. To do this the right way, only teams of professionals with the required skill set and knowledge can execute it efficiently.
What is Revenue Management?
It’s the practice based around utilizing and analyzing data in order to gauge demand, optimize product availability and choose the correct pricing strategy to generate enhanced financial results. In other words Revenue Management is:
“Selling the right room, to the right customer, at the right moment, for the right price, through the right distribution channel, with the best cost efficiency.”
What is the importance of Revenue Management?
Revenue Management is an important concept in the hospitality industry, solely because of the nature of this field. With regards to hotels, rates are variable and different customers are willing to pay different prices for the exact same room. This is chiefly reliant on when the customers require the room, at what point have they made the booking and the channel that they have used.
Having said that, hotels have a limited number of rooms to accommodate guests at a given point of time. Therefore, to ensure maximization of revenue hotels, one must make the right decision in terms of distribution, pricing and ensuring that they sell the highest possible number of rooms, at the best price point. Hotels tend to charge more money during strong demands and charge less at points of low demand. However, anticipating the demand to optimize pricing requires vigilant analysis.
The need to Outsource Revenue Management
Revenue Management is a proven concept that helps to optimize revenue and improve financial performance. Hence, strategizing on revenue management has become a necessity for hotel owners. Additionally, hotel revenue management requires specialized knowledge, analytical skills and a working knowledge of the market.
Hotels are generally faced with two main choices. The first option is to recruit a full-time revenue manager to work internally. However, this involves heavy investment in technology to allow the manager to work efficiently. The second is to outsource revenue management to a third-party that specializes in the same area. Hotels benefit from market knowledge, up-to-date information, strategies and technologies when they outsource Revenue Management which helps them get an edge over fellow competitors.
Chief Benefits Of Outsourcing Revenue Management
Boost In Financial Results
The prime benefit for a hotel to outsource revenue management is the ability to generate increased revenue. When the task is assigned to the correct company, with help of the latest technology, current trends, working knowledge and data analysis, they will be able to do a better job.
The aforementioned data which may include previous financial figures, bookings and event information will help the Revenue Management company to generate the best possible financial results.
Beat Your Competition
When revenue management is outsourced to a third party who has the right expertise, hotel owners gain an immense amount of advantage over their competitors. This is especially applicable to the other competitors who do not have revenue management strategies in place or who try to do it by themselves.
Increased Focus On Day to Day Operations And Sales
Running a hotel is one of the most complicated tasks which involves dealing with a number of challenges daily across several departments such as housekeeping, food & beverage, marketing & sales et cetera. Therefore, outsourcing revenue management not only helps you gain profitability but also significantly reduces your workload. Hotel managers will be able to carry out their responsibilities more efficiently and concentrate on delivering top-notch service and generate loyalty.
Revenue management is now a common term in the hotel industry, especially when it is outsourced since it brings down the costs associated with it. Make sure to hire experienced teams who have the right level of expertise and experience to improve your chances of success.