Revenue Maximizing Strategies: the profit is in the planning

Building revenue and cutting costs were the primary themes of the “Better Planning, Bigger Profits” Operations session offered at the Caribbean Hospitality Industry Exchange Forum (CHIEF) held in Puerto Rico a few weeks ago. In this article we will go over some of the key factors discussed in influencing a hotel’s revenue and ensuring its financial success.

Focus on the Metrics

When evaluating your hotel’s profitability, the accurate evaluation of your distribution channels (OTAs, direct booking, corporate relationships and travel agents) is vital. The three metrics listed below are a great way to ascertain each channels profit breakdown:

• Channel’s Gross Revenue: total revenue generated by that channel in a specific time period.
• Customer Demographics: types of guests generated by that channel
• Channel Costs: total costs associated with running the channel

In this manner, the hotel can determine the customer acquisition cost per channel (channel costs divided by number of guests) and pin point the true profitability of the same. Viewed from this perspective a direct booking may not always be the most lucrative channel.

Quality Reviews = Higher Revenue

There is a clear link between guest satisfaction and financial performance. Hotel revenue managers, when analyzing data in their property portfolio can compare their pricing to competing hotels in order to identify opportunities for price increases. If a hotel has a much higher reputation than its similarly-priced competitor, that hotel’s rate can often be raised without losing occupancy. The quality distinction however, needs to be clear and evident in order for the price distinction to be justified.

• Keep a close eye on your reviews, online and offline.
• Re-writing your properties description on a review website or distribution partner to emphasize the quality of the experience.
• Ask guests throughout their stay at your property to leave an online review on a specific source.

You Only Get What You Ask For

Train your staff to ask for great reviews and ask for the upsell. Do not leave it up to change. Create a system your staff can use to draw in the guest’s attention at the right moment, educate them on the service, give them social proof and then justify the cost. Do not skip any of these steps.

• Offer a service guide to guests before arriving to your property to inform them of all the amenities they can pre-book while staying with you.
• Offer incentives to front-end employees when an upsell is made.