Balancing the cost and value of “revenue management for hire”

The challenge

Revenue management (RM) has evolved from an innovation to a must-have. In a complex, dynamic marketplace, an experienced revenue manager with access to powerful analytics can substantially increase revenue and profits. In contrast, when the revenue manager is missing or untrained, revenue and profits suffer. But the time and effort that brands and management companies expend on hiring, training and retaining qualified revenue managers takes energy away from other revenue-generating activities. Meanwhile, management companies struggle to build a bench of talent that can flex across multiple brand systems, while maintaining margins for their owners.

One of the world’s largest hotel brands was having trouble scaling its existing revenue management services to meet franchisee demand. Franchisees without access to revenue management services from their management companies had bought into the value of the program, but the company was struggling to hire and train qualified revenue managers quickly enough to accommodate the program’s growing market. And for some smaller hotels that had expressed interest, the price point was out of reach. As a result, many franchisees were left without professional revenue management.

How could the brand rapidly expand its RM-for-hire team at a price point that allowed franchisees to earn a return on their investment?

The solution

ZS’s revenue management for hire service provided a global staffing model, allowing the hotel company to swiftly scale to meet franchisee demand. ZS worked closely with the brand’s existing, world-class revenue management team to bolster their systems, strategies and processes through a combination of training sessions, shadowing opportunities and revamped standard operating procedures and service-level agreements. With these efforts, ZS was able not only to match the high service bar established by the existing brand team, but also to leverage its analytical prowess and to collaborate with the team to improve their overall performance. Better yet, augmenting the company’s internal revenue management team with ZS revenue managers gave the brand tremendous flexibility and agility to scale the service according to franchisee demand. The ZS team built powerful analytical tools that wrapped around the brand’s existing tools and solutions, driving efficiency and effectiveness by quickly uncovering revenue opportunities in response to a constantly changing marketplace.

Today, the ZS revenue management team engages with franchisees daily. They work with hotel owners and general managers on typical revenue management activities such as forecasting, building demand influences, pricing and inventory management. Through this close collaboration with on-property teams, ZS uncovers gaps in demand generation and keeps teams focused on revenue opportunities. With an emphasis on growing revenue per available room (RevPAR), ZS expanded its services to include helping franchisees analyze and respond to transient and group RFPs.

The impact

More than 600 hotels in North America were able to access revenue-management-for-hire services at a price point that made sense for them, on a far more expedited timeline than the brand could have achieved on its own.

Participating hotels experienced consistent RevPAR increases compared to hotels that didn’t use the program, and individual hotels saw increased revenue because of the service, too. Even during the COVID-19 pandemic, the experienced revenue management team was able to grow RGI an average of 7-8% across the system.

“In the first four to five months, we started seeing growth in our year-to-date numbers,” one hotel owner said. “My RevPAR was up 12% in one month. That’s the biggest change right there—the money.”