“Why is it that when we describe the services offered at 3Q , a common inquiry arises regarding hotels entrusting a crucial aspect of their strategies to a third party? Many express surprise that establishments would willingly hand over such a sensitive and pivotal facet of their business, namely revenue management, to an external entity.
In response to this skepticism, I often pose a straightforward question: Do you have a lawyer or a chartered accountant on your payroll ? Aren’t they external service providers as well? And, if so, why not maintain control of these critical aspects internally, given their highly sensitive nature?
The usual retort often boils down to the realization that certain expertise cannot be easily found or hired internally, mainly due to its specialized nature and the associated costs. In much the same way, revenue management demands a unique skill set that may be best served by relying on specialized service providers, just as law and accounting firms provide essential expertise that extends beyond the internal capabilities of many businesses.
In essence, the argument for outsourcing revenue management within a hotel is akin to the rationale behind outsourcing legal or accounting services. The real question should be, ‘Why shouldn’t independent hotels consider outsourcing their revenue management?‘
In the following discussion:
Common Mistakes Made by Hotels
Reasons Independent Hotels Should Consider Outsourcing Revenue Management
The Benefits of Opting for Revenue Management Outsourcing
Potential Pitfalls of Traditional Outsourcing Models
I frequently encounter a perplexing initial response from numerous hoteliers. Generally, we readily outsource specialized areas such as legal, accounting, and payroll management, yet exhibit reluctance when it comes to seeking professional assistance in enhancing our revenue-generation strategies.
I find myself questioning why this is the case. It appears to be more of an emotional reaction than a decision grounded in business necessities. Regrettably, a considerable number of hotel managers seem convinced that they possess the expertise to adequately evaluate a revenue manager’s skills and strategic vision.
I strongly disagree with that perspective, drawing from my own experiences. Objectively speaking, how can someone be deemed a specialist if they lack the necessary technical qualifications? On what basis can one qualify as a revenue manager without a comprehensive understanding of the job’s intricacies?
It’s not merely about adjusting rates here and there, as is commonly misunderstood by many hoteliers. Even within this seemingly straightforward task, there are complexities that demand assurance of a potential revenue manager candidate possessing the right skills and experience.
While the HR manager, Director of Sales (DOS), or General Manager (GM) may engage in insightful philosophical discussions about yield management and business vision, it does not reveal whether the individual in question has the requisite experience and skills (many revenue managers, in fact, lack basic skills).
Discussing revenue management may seem straightforward, filled with theoretical jargon and interesting concepts. However, the crucial aspect lies in evaluating the candidate’s proficiency and ensuring their profile aligns with the specific needs of your property.
This challenge is particularly pronounced at independent hotels, where internal technical knowledge is often limited. Let’s be candid – how can a General Manager, who has never served as a revenue manager, engaged with a Central Reservation System (CRS), updated a channel manager, analyzed segment pick-up curves, or conducted displacement calculations, effectively assess a candidate for a revenue manager vacancy?
Following that comes the subsequent challenge: how do you effectively manage a revenue manager? How do you assess the quality of their work and methodology? Trust me, this is a critical consideration, as minor oversights, if overlooked, can result in revenue loss. Many revenue managers may not naturally incline towards self-auditing their work.
If you lack a clear understanding of your revenue manager’s day-to-day activities, how do you navigate this challenge? Are you willing to rely solely on trust that they are making the right decisions? Putting your faith in the judgment of an individual whose exact role you are uncertain about poses a significant risk.
Moreover, how do you support the continuous development of your revenue manager’s skills? We frequently hear from revenue managers in independent hotels that they feel misunderstood and lack sufficient internal support to enhance their knowledge, insight, and techniques.
Qualifying the skills of a potential Revenue Manager candidate can be challenging. Effectively managing a Revenue Manager without having been one yourself poses difficulties. It’s a specialized skill set that benefits from multiple perspectives and experiences. High turnover is common as Revenue Managers are often seeking career growth. On a related note, the term “outsourcing” carries a negative connotation; I prefer to use “in-sourcing.” At 3Q, we seamlessly integrate into a hotel’s executive team, providing support not only in revenue management and distribution but also in strategic decision-making across various areas—from marketing to front desk operations.
Our involvement extends beyond yield and revenue, focusing on enhancing our clients’ understanding of their business, team performance, and brand building. Business development is ingrained in our approach at 3Q.
Frequently, hotels find that a mere system or individual scrutinizing figures falls short of providing the comprehensive insights needed to truly understand their business performance. Occasional, generic reporting often lacks the depth required for hoteliers to grasp the essence of running a successful hotel business. Without proper guidance and insights, they may struggle to navigate crucial aspects such as revenue generation, surpassing conventional key performance indicators (KPIs) like ADR and RevPAR, and aligning all departments for top-notch output in marketing, sales, and operations within a motivated and goal-oriented environment.
Operating without a unified approach and strategy is akin to having different departments working with compasses pointing in opposite directions. When an external revenue manager fails to engage and motivate other stakeholders within the hotel to achieve common goals, the initial efforts become futile. Goals are jeopardized due to miscommunication and the ineffectiveness of parties involved in revenue management decision-making. This underscores the importance of synchronizing revenue management practices with other departments, maintaining a holistic view of trends and performance fluctuations to maximize potential.
Adopting a fully integrated methodology and seamlessly integrating into the hotel team, aligning with how we approach outsourcing at 3Q for our clients, is the key to the success of any form of externalization within the realm of revenue management.
Our approach tends to resonate effectively with owners, investors, and investment funds that possess a clear mission and vision for their business. Hotel managers with an innovative mindset, eager to push boundaries, often find themselves aligned with our philosophy. 3Q caters to a new breed of hoteliers, as we proudly declare ourselves to be.
If You Want To Increase You Revenue.. .Call Us Now !
Piyush Bhatnagar II Director-Strategic Alliance II 3Q Progressive Alliance