Industry Update
Opinion Article 4 June 2020

How to Make Sure Your Hotel is Ready When the Economy Turns Back On

By David Eisen, Director of Hotel Intelligence and Customer Solutions for HotStats

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COVID-19 has smashed into the global economy like a rogue asteroid. And it has left a crater in the travel industry. However, as the dust settles, travelers will soon emerge from the wreckage and start traveling again.

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When the economy does turn back on, the world won't go back to business as usual. Even when demand is restored, the aftermath of COVID will linger and weigh on the decisions travelers make.

Luckily, there are ways to prepare for higher hotel profit in a post-COVID economy. Here are some steps hoteliers can take now in order to thrive when the economy turns back on.

Use Data to Prepare a Hotel Rehiring Plan

With the economy screeching to a halt, hoteliers have had no choice but to furlough workers and let some employees go. The American Hotel & Lodging Association and the U.S. Travel Association recently estimated that hoteliers either have or plan to eliminate 1 million hotel jobs.

Restoring those jobs will require delicacy. As travel resumes, it's the perfect opportunity to strategically fold employees back into hotel positions.

Wondering how?

Start by poring over hotel labor data. Employees are what greases the wheels in any hotel or resort. But some areas of the machine need more (or less) lubrication than others. By looking at hotel labor metrics, hoteliers can pin down which positions are most urgent.

Start by comparing total labor costs to total revenue. From there, dive into more detailed labor spending metrics, such as:

  • Admin and General Labor Costs as a % Total Rev
  • Sales and Marketing Labor Costs as a % Total Rev
  • Property and Maintenance Labor Costs as a % Total Rev

By seeing how labor compares to the money coming in, hoteliers can set up a rehiring plan based on profit.

Refresh Hotel Sales, Marketing and Education Strategies

COVID has left droves of people homebound, and it's resulting in higher internet use than ever. For hoteliers, it's a prime opportunity to build their online presence and solidify their brands. Hoteliers can prepare now by taking steps to increase their hotel's digital presence:

  • Record messages
  • Write articles
  • Create podcasts
  • Plan webinars

Remember, people will be wary of travel at first. Hoteliers can use online content and promotions to reassure travelers that they're in safe hands. By solidifying their marketing foothold now, hoteliers can place their brand at the forefront of customers' minds when they decide to travel more frequently in the future.

Reimagine Hotel Space

Social distancing has abruptly become the norm. And extra safety precautions will linger on visitors' minds long into the future. Hoteliers can use the current pause in travel to prepare spaces to coincide with these new priorities. Here are a few places to start:

  • Evaluate property and maintenance costs to see where spending extra makes sense
  • Create a thorough cleaning plan
  • Look for opportunities to make use of open, outdoor spaces
  • Rearrange common areas to encourage social distancing

Focus on Profit and Operational Efficiency

Revenue per available room (RevPAR) has long been the go-to metric for hoteliers. However, economic dry spells expose the flaws of basing a hotel strategy on revenue alone. Now, when revenue is less available, hoteliers have no choice but to focus on overall hotel performance.

How?

To start, hoteliers can maximize operational efficiency by shifting their attention from RevPAR to Gross Operating Profit Per Available Room (GOPPAR). As a profit-focused metric, GOPPAR reveals the inefficiencies running through every operation within a hotel or resort.

For an even deeper look at operations, hoteliers can go a step further and dig into these metrics:

  • Food Cost of Sales as a % of Food Revenue
  • Beverage Cost of Sales as a % Beverage Revenue
  • Food and Beverage (F&B) Labor Costs as a % Total F&B Rev
  • F&B Expenses % as a Total F&B Rev

By using this data to streamline operations, hoteliers can recoup costs during revenue dry spells. And they'll be prepared for profit booms when demand picks up.

Use Hotel Benchmarking Data to Power on Your Post-COVID Plan

Rest assured, travel will make a comeback. The hoteliers who prepare now, dig into hotel benchmarking data and make plans for the new normal will have a sharp competitive edge. And hoteliers who craft a profit-centered hotel performance strategy will have what it takes to navigate the COVID wreckage and power ahead stronger than ever.

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David Eisen

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