How to Maximize Hotel Revenue in 3 Easy Steps
By David Eisen, Director of Hotel Intelligence and Customer Solutions for HotStats
A hotel operator, a hotel owner, and an asset manager walk into a bar… sounds like the setup to a terrible joke, right? But growing and maximizing revenues is no laughing matter, especially in a listless RevPAR environment. According to a recent equity note from Baird, RevPAR growth expectations in the U.S. have declined by 25 to 50 basis points since the beginning of the year. HotStats data shows that 2019 Q1 RevPAR was up 1.2 percent over the same period last year; in Europe, RevPAR was only up 0.7 percent over the same period.
What better way to learn how to unlock revenue than by asking the experts whose job it is to do just that every day? I spoke to three such people: Johnathan Capps, VP of revenue at Charlestowne Hotels; Harshil Patel, VP at Champion Hotels; and Kristie Dickinson, EVP of Business Development & Marketing at CHMWarnick. Here are three things each of them recommends toward higher revenues.
Johnathan Capps, Charlestowne Hotels
Hire the Right People
With recent improvements in technology and a focus on acquisition cost, the defining characteristics of today's ideal revenue manager have changed. What was once focused on finding analytical entrepreneurs who were self-sufficient and data-oriented has now shifted to finding someone who is a cross-disciplined, inventive leader. An inventive revenue manager can apply their data to finding new channels, developing new campaigns alongside their marketing counterpart, or simply challenging traditional rate structures, room differentials, or sales strategies. The responsibility to generate revenue comes with the obligation of knowing how that demand was generated, and how it flows to the bottom line.
Manage F&B for Incremental Revenue
A hotel's food-and-beverage program presents an opportunity to drive revenue; however, there will be a quick demise if you cut corners or reduce the operation to an afterthought. Hotels interested in remaining competitive must be willing to invest accordingly in human capital and program development. Such investments are critical in driving overall asset value, not only because F&B revenues increase, but also because hoteliers are able to leverage F&B to position a property within its market and drive revenues in the rooms department. Finally, discounting F&B offerings is a great way to increase value perception without compromising the average daily rate (ADR).
Review the Cancellation Window by Channel
Observe what's happening with your cancellations and monitor the types of trends you're seeing. For example, if a channel has a high cancellation rate, it could be displacing other channels that are less likely to cancel and produce more revenue.
"THE RESPONSIBILITY TO GENERATE REVENUE COMES WITH THE OBLIGATION OF KNOWING HOW THAT DEMAND WAS GENERATED, AND HOW IT FLOWS TO THE BOTTOM LINE."
Harshil Patel, Champion Hotels
Assemble the Right Team
We try and take care of all of our team members and recognize them when they are doing a good job. Creating strong team loyalty can save a lot in payroll since it limits turnover, but also: If you take care of your team, they will take care of the guests.
Know Your Brand
It's pretty simple: We like working with brands that have strong reservation contribution as well as strong loyalty.
Be Strong in Sales
We make sure to have a strong sales director for each property, even if they are overseeing a group of hotels in one area. It is not easy for GMs to do outside sales as well as run the hotel. GMs should be taking care of the guests that a sales director draws in to make them repeat customers.
Kristie Dickinson, CHMWarnick
Change Up Your Business Mix
Simply adjusting the mix of business—shifts in segmentation can have a material impact on rate potential without even adjusting pricing within segments.
Strategize Your Sales
Examining sales strategy and team focus: Are the sales people "catchers" or "hunters?" Taking what comes to you is far less profitable than going after the business that supports your financial objectives.
Take Care of Your Guests
Establish internal sales goals and strategies to improve guest spend per occupied room. Offering services that meet guest needs and effectively marketing those opportunities can have a material impact on capture and resulting revenue.
Bonus Point … Benchmark
If you aren't already, benchmarking your hotel against others to compare your revenue performance is crucial. It's not enough to guess; you need solid data to back up your decisions. Take advantage of the mounds of data that exist, monitor trends, and develop a comprehensive revenue plan for this year and beyond.
David EisenMore from David Eisen