From the previous post “Revenue Management Success Begins With The Right People” it should be apparent that having the right resource to drive the business is the first priority. Following the post I’ve had several colleagues reach out and express the difficulty they are having finding a great revenue management professional.
The role of revenue management is in high demand with a relatively small supply of qualified global resource, which can make if difficult to attract and retain a great revenue manager. The big brands figured this out some time ago and have developed programs to grow talent internally, which has worked well for each brands needs. Mid-sized chains and independents don’t normally have this same opportunity, combined with the scope of the role along with the compensation being smaller hiring qualified people is a challenge. As a result many times hotel operators will fall back to accepting a person who can fulfill the tactical elements of the job.
Rather than settling with a less talented resource which hurts your business look for options to acquire what your business needs. Here are two alternatives to consider; each can be defined in many ways to help drive your business forward.
Option 1: Centralize the Revenue Management Function
The mentality that hotel revenue management has to be on site to be impactful is not valid in today’s world. In fact there are strong arguments to support revenue management being off site. for instance the level of focus and efficiency can be dramatically increased as a result of the revenue manager not being pulled into the daily operation of the hotel.
Moving to a centralized model requires the right setup including processes, communication plans and technology. There are centralized models that can support 1 revenue manage to every 2 to 3 hotels up to 1 revenue manager for every 10 to 20 hotels all depending on the structure and roles defined.
One of the largest benefits beyond the focus is the ability to have positions available that are more attractive to perspective resources. Great revenue managers want to be challenged the more impact the role can have the more attractive it can be. By centralizing you can also move to a shared cost model which does two things:
- Reduces the cost per property
- Increases the funding available to attract talent
The big brands have worked with centralized revenue management for years with great success; the same can be achieved at all sizes of hotel portfolios.
Option 2: Outsource the Revenue Management Function
That’s right hotel revenue management is a candidate for the outsource model; while not the traditional technology or development outsource model. Outsourcing or hiring experts outside of your organization to perform roles that are required in your business has been on going for years.
The model that works best in the hotel revenue management world is hiring an expert who can lead your team and perform the role on behalf of your property. I am a supporter of two models depending on the need.
- If it is a large group of properties that do little to no revenue management then look to hire an expert with other resources behind them to execute in the tactics.
- If it is an organization that has some revenue management experience in house, look to an expert that can focus on your business including developing your people. This way as performance improves you are also building an in-house team that can step up to the expectation as they grow.
Both options are viable and proven; so much so that companies like IHG and Carlson have a program available to their franchises to outsource revenue management to a centralized team run by the brand.
Business performance is a no excuse world, you have to constantly pursue ways to grow your business. As revenue management is a large part of this area, relentlessly strive for improvement both in how you conduct business and who you hire to drive your business forward.
Which ever way you go be honest and do not settle for a mediocre ending, your business is too important to allow that to happen.
If you are not sure where to start send us a note.