Limited Service Hotels Drive Profits by Outsourcing Revenue Management

When automobile manufacturers develop a new car, they offer consumers a base model and provide multiple luxury add-ons for those who want to further customize them. That translates to options that appeal to as broad of a market as possible. However, the goal of the car manufacturer remains consistent no matter which vehicle is sold: to maximize revenue.

Similar to the base model of an automobile, limited service hotels don’t typically encompass an overabundance of luxurious frills with more limited room types and minimal F&B and meeting facilities. However, just like their fancier 5-star counterparts, their goal is also to boost profits month over month.

And one highly effective way for limited service hotels to support revenue growth may be to outsource their revenue management services. This type of outsourcing works well with hotels that have a high degree of standardization, but are not equipped with the most advanced tools, technology or people. For these businesses, there are three main considerations when implementing a revenue-management-for-hire model.

  1. Financial benefits

Cost benefits are the main motivating factors for owners of limited service hotels. Outsourcing revenue management means gaining valuable experience at a fraction of the cost of other options. The insights gained help the hotel to reduce payroll, turnover and shortage concerns. This also helps maximize the investment of hiring and training staff.

The benefits to payroll affect other areas of the business. Money saved means increased financial flexibility and excess cash flow for sales, marketing or property maintenance. Additionally, since this sector experiences aggressive growth, a for-hire model allows new properties to immediately benefit from revenue management analytics and strategies rather than waiting to hire and train an onsite revenue manager.

  1. Performance management

It’s common to worry about not having a revenue manager in house, but fortunately in this segment, performance management can often be done just as effectively via outsourcing. In some cases, it’s even more effective. How so? Consider the professional quality of automated and extremely accurate reports and the invaluable insight they provide.

Hoteliers will work with a virtual revenue management team to produce complex analytics, summary dashboards and benchmark reports. The robust historical and forecast data is used to create an automated strategy that helps ensure that limited service hotels keep up with demand, changing market conditions and competitor pricing. Bottom line: Hoteliers can feel confident with a strategy that supports business growth.

  1. Cultural influences

The revenue-management-for-hire model offers many benefits to the company culture. An onsite revenue manager may be less knowledgeable and embrace a traditionally reactive approach. The for-hire model, on the other hand, offers a proactive, objective viewpoint with detailed forecasts reaching 365 days into the future. It’s really a win-win.

Furthermore, outsourcing means quick deployment of new programs, upgrades and reports without the need for training staff. This creates a streamlined revenue strategy that allows onsite teams to allocate time to other important functions, like customer service. With more time, better reports and an efficient process, hoteliers focused on limited service hotels with limited onsite revenue management resources would be wise to consider a for-hire model.

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