In-House Vs Outsourced Hotel Revenue Management: Which One Should You Choose?
Hoteliers A and B meet at a bar. They are having a conversation. Hotelier A asks B, “Have you
heard of hotel revenue management?”
Hotelier B replies, “Of course I have! All hotels need them now!” They both continue with their drinks and talking.
Something strikes B and he asks, “Hey how to do revenue management?” Hotelier A replies, “Actually even I’m confused”
If you are a hotelier, you must have this thought. “In-House Vs Outsourced Hotel Revenue Management: Which One Should You Choose?” To make an informed decision, you will need to understand both.
What Is Hotel Revenue Management?
It involves the use of analytics and performance data to help the hospitality industry predict consumer behaviour.
The ultimate goal is to have the right room for the right person at the right time at the right place. It allows hotels to optimise their room inventory to generate the maximum revenue.
Hotels have no choice but to make use of revenue management. The hospitality industry is a competitive one. You need to maximise yield by making the best use of your room inventory. You need to analyse your room offerings and decide the price of your room.
In-House and Outsourced Hotel Revenue Management
There are two types of hotel revenue management. In In-House Revenue Management, a dedicated Revenue Manager is the staff is hired. They manage one property and are under the direct command of the hotel.
Outsourced Revenue Management, on the other hand, involves the use of a revenue management agency. The relationship is that of an agency. Unlike, In-House, the relationship is that of a partnership.
In-House Vs Outsourced Revenue Management: Which Is Better?
Both have their strengths and weaknesses. A hotelier needs to choose between both options based on various factors. You need to analyse your business and your preferences to choose the best option.
Cost is one of the most important factors to keep in mind while incorporating hotel revenue management. You need to analyse which options provide the best return on investments
In-House Hotel Revenue Managers have an advantage over the outsourced ones in terms of cost. The average salary of a hotel revenue manager is based on their experience.
If one is to hire an Outsourced Revenue Manager, the hotelier has to pay a fixed cost irrespective of their experience and expertise.
However, according to some, outsourcing costs less than the cost of hiring an in-house revenue manager.
Experience and Expertise
In-House Hotel Revenue Management will work for one property. On the other hand, an Outsourced Revenue Manager will manage multiple properties from multiple regions. Hence, the latter has a wider hotel revenue management compared to the former.
An outsourced person has wider exposure to many problems and strategies of hotel revenue management. They can help the hotels come up with better strategies.
Availability also matters as far as hotel revenue management is concerned, and it depends upon the hotel's requirements. An In-House Hotel Revenue Manager works during fixed hours.
If the revenue department requires work during fixed hours then this is a good option.
However, if you are a hotelier who wants assistance at odd hours. Then an Outsourced Revenue Manager is the one for you.
They are available most of the time (except during the sleeping hours of course!). It all depends on your needs and expectations from the hotel revenue management service.
Access To Data
The one important thing that Hotel Revenue Management depends upon is Data. For making any informed decisions regarding pricing and room inventory management, you need adequate data. Both In-House and Outsourced hotel revenue managers have access to data, but there is a difference.
In-House Revenue Managers have a limited pool of data since they are working on a single property. This limits their experience and perspective. They don’t have a wider understanding of the industry.
Outsourced revenue managers, on the other hand, have access to plenty of data. They work on multiple properties and hence, get an industry-wide perspective. They can devise the strategy accordingly.
When we consider efficiency, In-House revenue managers can be efficient to a certain extent. People can work only up to a certain limit. Considering that they get paid only for certain hours, it makes sense.
Outsourced service providers get paid for the service. You are paying for the service and its desired result. The service provider will do anything to provide you with the best service possible since they are paid based on it.
The service provider will make use of multiple revenue managers to give you the desired results. Service providers will ensure that things are run as efficiently as possible. This is another advantage of Outsourced Hotel Revenue Management.
A strong strategy is required to improve as well as maintain the bottom line. To come up with strong strategies, you need to get a hold of insights. The strategies that an In-house revenue manager uses is different from that of an outsourced revenue manager.
An In-House Revenue Manager has insights into a single property only. They can collect data regarding that property only. Outsourced Hotel Revenue Managers, on the other hand, have information regarding many properties. They have worked with different problems of different properties. This enables them to provide more insights.
For example, if they are working with promotions, they also understand which promotions have worked for different properties and which have not. You can apply those insights when devising promotions for another property.
Even though In-House Hotel Revenue Managers have their set of advantages, outsourcing hotel revenue management can provide a guest experience like nothing before. You must be wondering. “How can a service provider working remotely provide a great experience to the guests?” Let us explain.
A hotelier who outsources revenue management to a service provider will have time free from his hands. He can use this time to provide better services to the customers. You can save time and reduce costs.
You can now focus on improving staff productivity and improving the guest experience.
To Sum It Up…
The hotel industry is dynamic. You need insights, performance analytics, and inputs to survive. The strategies to manage the hotel industry have become more complicated and hence, you need specialisation.
Outsourced Hotel Revenue Management can help you in generating the maximum revenue. Which model to choose is ultimately the choice of the hotelier.
Bigfoot Hospitality will provide you will all the hotel revenue management solutions you need. We will ensure that your property increases its reach as well as revenue. Reach our blogs to gain more knowledge about the hospitality industry.