In-house vs Outsourced Hotel Revenue Management: Which is Best?

Revenue management today is more than just a buzzword in the hospitality industry. Accommodation providers from all around the world are buying sweepstake tickets to this strategy of boosting revenue.

Those who have already incorporated revenue management for their hotels are reaping tremendous benefits. But the ones who didn’t and want to bet on it now seem to be in a dilemma.

Revenue management is great. But what should I go with — in-house or outsourced?

This is by a long chalk one of the biggest questions that hoteliers have when it comes to revenue management.

So, what’s the answer? What should hotels go with? This is exactly what I am going to discuss in this piece of article. I will try to provide you with crystal clear information and help you do away with the dilemma of in-house vs outsourced hotel revenue management.

What is Revenue Management in Hotels?

Revenue management in hotels is a way of understanding and analysing guest behaviour and booking patterns in order to price hotel rooms to boost revenue growth.

It involves tactics such as optimizing a hotel’s presence on OTAs, opening new booking streams and applying dynamic pricing strategies. All of it to sell the hotel’s inventory to the right guest, at the right price, through the right channel and at the right time.

P.S. – I am sure; you must have read this in my previous blogs as well. However, it’s a good practice to have a gentle glance at the concept before we move ahead.

What is In-House and Outsourced Hotel Revenue Management?

In-house revenue management is exactly what it sounds like. Hotels hire revenue managers to curate strategies to enhance the revenue of that sole property.

On the other hand, outsourced revenue managers are certified experts that work remotely for your hotel’s revenue growth.

Now, you must be wondering, “both do the same thing. I don’t see any significant difference.” But that’s not the case at all, and that’s the reason this blog has been written.

So, if you have been in a dilemma for quite some time now, this blog is for you.

In-House vs Outsourced Hotel Revenue Management

In-house and outsourced revenue management have one prime goal— of course, to boost revenue. But the approach, the load on your wallet, time and a lot of other things differ — they have their own set of pros and cons.

In this section, I will be shedding light on various such aspects of in-house vs outsourced hotel revenue management. And what makes them different to a great length.

Cost

Cost is one of the first and foremost things to keep in mind when you’re planning to incorporate revenue management at your hotel.

Meaning, you have to compare what would cost you more or whether you’ll be getting the desired ROI.

So, if you compare in-house hotel revenue managers with outsourced, the latter one has a bit more advantage. I’ll tell you why.

The average salary of an in-house revenue manager varies based on their expertise and experience in the field. 

Now, when you outsource a revenue manager or revenue management service, there is a fixed cost irrespective of their expertise and experience. Simply put, the revenue manager working for you could have more experience than an in-house expert or vice versa.

However, according to some resources, outsourcing is affordable and costs 75-80% less than hiring in-house revenue personnel.

Word to the wise: In-house revenue managers are little on the expensive side but that doesn’t mean it’s a red flag. They are good at what they do. It’s just that if you want to save some extra pennies and get results at the same time, then outsourcing should be your call.

Expertise and exposure

Talking about expertise, in-house revenue management experts work for a sole property (the one that hired them).

But on the other hand, a remote or outsourced hotel revenue manager works with multiple properties from various regions. Meaning, s/he has more exposure to working on various problems, which in turn helps them come up with effective strategies.

This is, indeed, a BIG advantage for such revenue management professionals which also benefits hotels.

Availability

I think availability matters a lot. And it sort of depends on the hotel’s requirements. 

So, if the revenue management department at your hotel only needs to work on a fixed timing then in-house could be your choice. Because in-house professionals work within a fixed shift in a property. It could be 9-5 or any other shift and they get paid for those working hours.

But if you’re a hyperactive hotelier who even tweaks pricing at odd hours or who needs assistant even after regular work hours, the outsourced revenue management services win the race here. Because most of the service providers give you 24*7 on chat, mail, and call availability. They are always there to assist you.

Therefore. If you happen to choose the best revenue management service, ensure that you do your research on the requirement as well as the service providers.

Data

The most prominent thing a revenue manager needs in order to make informed decisions about hotel pricing is DATA.

Both in-house and outsourced hotel revenue management professionals will have access to data. But, then again, there’s a catch.

When it comes to in-house experts, the amount of data they get to work with is limited. Not to mention, it also depends on the hotel and its strategies to gather data.

But when it comes to outsourced revenue managers then have access to a tremendous amount of data. Working with various properties allow them to gather different types of data that could be used for any sort of pricing strategy.

Also, this gives them a competitive edge in the industry. 

Efficiency

When we talk about efficiency, in-house experts can be efficient to an extent. The logic behind this is one person has a certain threshold limit. S/he cannot work more than that; also, they might not want to, considering they get paid for only 8 to 9 hours.

But when you opt for revenue management from a service provider, you are actually buying a service. You’re just paying for the service and the desired result, anything in between is their part.

Meaning, the service could use more than one revenue manager for your hotel.

Do you see the difference?

The service providers job is to deliver you the best results. And for that, it will make sure that things run efficiently.

This is certainly a major advantage over in-house revenue managers.

Strategy

A strong strategy is what hotels need to improve their bottom line. And to come up with one, you need a lot of insights.

But again, the strategy that in-house hotel revenue managers use is mostly different from the outsourced ones. 

To curate tactics, it requires insights. While in-house hotel revenue managers are limited to insight related to that sole property, outsourced revenue management services are a little ahead in this as they are in constant contact with OTA managers and different hotels with different problems. 

This helps them gain extra awareness of various scenarios.

For example, if you want a run promotion, you need to understand what sort of promotions are going to deliver greater results. OTAs are always on point when it comes to this, and when you work with them, you get to know the special promotions they are running. These promotions then are applied to your property to earn bookings.

Guest Experience

Even though in-house revenue managers have their set of advantages, outsourcing revenue management services are second to none when it comes to the guest experience.

Now you must be wondering how a remote expert can offer a better guest experience.

Well, this is how it works.

When you opt for a revenue management service, you as a hotelier allow yourself to have enough free time at the hotel. You don’t have to constantly be in touch with your revenue manager; rather streamline processes, save man-hours, and reduce cost.

You can now focus on maximizing staff productivity. And in turn, allow them to utilize their talents to improve the guest experience.

Simply put, you focus on your staff and provide a better experience to the guests, while the revenue manager works on boosting your revenue.