Outsourcing Revenue Management
By Juston Parker President & CEO, Parker Hospitality Group, Inc. | October 28, 2008
Revenue Management continues to change rapidly. The days of "right room, right person, right price at right time" have long disappeared. Keeping up with the latest trends and keeping staff well educated is increasingly expensive and difficult. Outsourcing a property's Revenue Management has become a real and viable solution.
Today's hotel guest is savvy, shopping around for the lowest-priced room. The average guest visits five Internet sites before they make their reservation. The playing field has evened out, creating a greater challenge for the Revenue Manager in how they manage inventory and rates. The ability to maintain parity becomes paramount in a successful Revenue Management strategy.
Revenue Managers also present challenges for a property. What is their role? What does their job consist of? In the industry, most Revenue Managers really are Reservations Managers handling the duties of both jobs. This, of course, takes away their focus from both managing revenues and managing reservations. Not exactly a win-win situation.
Now, factor in the ability to compensate and retain a skilled Revenue Manager. While the concept of Revenue Management has been around for a while, the true discipline is less than 10 years old. Yield management of the past has given way to a truly more dynamic specialty. In major markets, an experienced Revenue Manager earns upwards of $60,000 plus incentives, with many approaching $100,000. And with such young, inexperienced managers, many are job hopping with ever-increasing offers. What makes them worth so much? Studies show that a property with an effective full time Revenue Manager makes twice the profit than a property without one.
What is Revenue Management?
In order to see how outsourcing Revenue Management works, let's first drill down on Revenue Management as a discipline.