But revenue management in a time of shrinking profits for hotels
is even simpler than that for small hotels.
The first 3 elements discussed at The Hospitality Sales and Marketing Association International (HSMAI) conference in Toronto deal with the data. While that certainly is very important, it is most important to large hotels and large chains.
However, the last 2 are where the gold is for the small hotelier.
There’s room on the ‘edges’ to make more money
Alan Lewis, managing director and partner at LEK Consulting, said the hotel industry lags far behind other industries in its ability to drive ancillary revenue and find opportunities to upsell consumers.
He said hoteliers need not even look outside of the world of travel for prime examples of how to find those areas to capture dollars, which he described as “edges.” Lewis noted that airlines, particularly JetBlue, have been able to rearrange seating to sell some customers space in rows with slightly more leg room, which he said has been a “transformational” change for airlines.
“There is a discipline to this mindset,” Lewis said. “These things might not seem exciting, but they’re highly profitable.”
He noted cruise lines and car rentals are also considerably more adept at driving revenue in this way—in part, by necessity.
“Part of the reason (the hotel industry lags) is we’ve enjoyed a long period of good margins,” he said. “Hotels have been a profitable business and have lacked the motivations that other industries had.”
Operations and experience still matter in revenue optimization
In the first of a set of “Lightning round” presentations during the general session, John Beatty, GM of The Dunhill Hotel and The Asbury, said guest experience is still paramount when it comes to getting more money at an individual hotel.
“Happier guests mean better reputations,” he said. “Guest acquisitions costs are high, and the easiest way (to capture business) is to make sure your reputation is positive and guests are talking positively about us.”
In number 4, the “edges” for the individual hotel, motel, or bed and breakfast is the local marketplace. This is where the individual owner can make the “transformation change” that will produce excellent profits.
In number 5, it is pointed out that the guest experience is paramount. Not only do happier guests mean better reputations, it also means they will return more often to your facility if you encourage them to do so. Your inn is certainly your local marketplace, so do everything to make your guests to want to return. Turn them into “raving fans!”
As the author, Sean McCracken, firstname.lastname@example.org, @HNN_Sean, points out, “Guest acquisitions costs are high…” The rule of thumb is that it takes 6 times more time, energy, effort, AND money to sell a room to someone you have never met than to sell that same room to someone who already knows you! What’s not to like about those figures?
Here is to your facility being the dominant hotel business in your marketplace!