Beyond Room Revenue - Revenue Management opportunities for 2021 and beyond
— 23 experts shared their view
COVID has hit the global hotel industry hard. But as with every crisis, new opportunities surface. During the financial crisis of 2008/09, we saw Airbnb and Uber emerge.
Many revenue-generating ideas were born over the past year. From staycation and workation to renting out equipment and even offering outsourced services like housekeeping. Hoteliers have been creative in finding ways to keeping their business afloat.
What was born out of a need for survival might lead to a more permanent shift in a hotel's business model.
The idea of non-room revenue is nothing new and even pre-pandemic was something more and more hotels embraced. F&B or MICE revenue management is still in its infancy for the overall industry but terms like Total RevPAR have evolved from buzzword to serious KPI.
Is now the time to look at non-room, ancillary revenue? Where are the opportunities?
For years, the hospitality industry has discussed the importance of strategies to increase ancillary revenue for hotels. Now with the COVID-19 pandemic and the huge impact on travel demand worldwide, it is the perfect moment for hotels to take this seriously and should be a top priority.
With the current crisis, hotels have realized that they need to create sustainability and greater diversification in the types of revenues from their operations. If and when a crisis like this happens in the future, hotels will need to be prepared to have some other source of revenue that will keep them operating in a scenario of a drastic reduction in demand from travelers. In our view, the great opportunity is based on hotels becoming an attractive demand or draw for the city or market in which it is inserted - even at a regional level.
For example, having one or more restaurants that generate high local awareness and demand, health and wellness, or leisure activities that attract people who want to have a different experience, without necessarily leaving their city are just some of the opportunities to pursue.
Workstations seems also to be a great opportunity for corporate hotels. Perhaps the greatest opportunity is in future projects not yet completed for hotels, or short-term rentals that can still adapt or redesign the project in terms of structure to offer a co-working / hotel/lifestyle product.
Regarding the lifestyle concept, we are seeing a consistent movement of large hotel chains to looking acquire smaller lifestyle brands. Much of this movement comes from the perception of the chains: a lifestyle product has the current best appeal with travelers. These lifestyle brands also have a large impact in attracting non-room revenue, with people from the local market coming to the hotel for happy hours, dinners, social events, and spas, among others.
Therefore, we believe that the current pandemic has greatly accelerated the transformation of the importance of Total RevPar, (making years of discussions become more concrete) and effectively making this indicator become vital to hotel operations.