During COVID-19 pandemic, nearly 1 Billion rooms have gone unsold every week in the US only. With so much unsold space, hotels had to become creative with their offers and packages. Out-of-the-box thinking is the only way to survive this "Black Swan," but how can hotels get the best out of their spaces? What new ways of selling rooms and ancillary products should the industry implement to be successful in 2021-22?
Hardship sparks creativity. Hotels all around the globe were forced to fundamentally rethink revenue generation during the Covid crisis. Like so often, many successful concepts started with putting the guest at the centre and looking at what (s)he really wants right now, not what it is that we traditionally like to sell (a room night with breakfast). What our guests needed more than ever in the last year was a quiet space to work, an escape from everyday life and simply a real experience as soon as quarantine measures started to relax. This has opened the door for great opportunities in renting out rooms or spots in lobbies as office spaces, creating safe in-room dining packages in markets where restaurants where closed but hotels were still allowed to serve food to their guests, and finally staycation packages with spa or dining experiences included. It's been amazing to see what's possible, when it has to be. I'd hope to see this mindset survive well beyond Covid times.
In the post-pandemic world, I see three significant revenue generation initiatives for the utilization of the hotel spaces:
1. Create co-working spaces: Similar to Roger Smith Hotel's KettleSpace Flexible Workspaces, create work-from-hotel spaces for out-of-towners, digital nomads and local entrepreneurs who do not want to be tied down by office leases. Create Room and Office daily, weekly and monthly packages and promotions, including WiFi, coffee, bottled water, snacks and catered lunch.
2. Utilize unused conference/function space: With the corporate group and netting's markets ramping up with a slower pace than leisure travel, utilize unused fu cation space to offer yoga classes, wellness programs, cooking classes, new book readings and author signing events, neighborhood craft shows, etc.
3. Create “Airbnb-type” of product to compete with the short-term rental players. Vacation rentals now constitute almost one third of reservations for accommodations in your area. In 2020, Airbnb and Vrbo accounted for 29% of total lodging revenue in the U.S. and elsewhere. Add to that vacation rental reservations via Booking's global portfolio of over 6 million properties and …you get the picture. Start by monitoring closely Airbnb's, Vrbo's and other vacation rental properties in your market. Research and identify the rental properties in your neighborhood, and what are their typical amenities and features. Identify your property's value proposition and create a list of all of your property's amenities, services and attributes that, in your view, are better than the average vacation rental in your area. Then review and update the property descriptions on the hotel website, social media profiles, CRS and WBE descriptions, directory listings, GMB, and promotional materials.
Make sure to educate your staff about the key advantages your property has over the vacation rentals in the area: from better location to no cleaning fees to better cleanliness protocols and really high-speed WIFI and free breakfast.
Introduce weekly and monthly rates for both rooms and suites. Promote heavily your adjoins rooms and suites with kitchenettes. How many hotels offer rates for extended stays which are favored by travel consumers in the current environment? A weekly rate is NOT a daily rate multiplied by seven. A monthly rate is NOT a nightly rate multiplied by 30! Make sure that your CRS, WBE (Website Booking Engine) and Channel Manager can support weekly and monthly rates and fire them if they can't.
Every square metre can potentially generate extra revenue for a hotel, but many properties keep only strategizing the bedrooms' revenue.
Ideas? Here are a few:
Upsell rooms and added value packages and items via app and mailing, with tools such as Oaky or UpsellGuru
Review your room inventory. Some could be some like "serviced apartments" concept
- On stay:
Implement a holistic approach to upsell and cross-sell: everyone is a salesperson. Front Office, F&B, Spa, Reservations. Every team member must have a sales approach.
Utilize tools such Hoteligy to position last minute offers to guest staying several days/ utilizing outlets (i.e.: If they've booked a restaurant, the web app positions a bottle of wine at a discounted price).
Sell empty Suite-living rooms as private dining rooms.
Market unused meeting rooms as coworking facilities.
Make sure menu engineering and F&B revenue management is implemented. DynamEat is a great tool.
Maximize the revenue at your restaurant, implementing KPIs such as RevPASH (Revenue per available seat/hr). Work on your space efficiency.
Utilize idle space during restaurant closed hours as working space.
Measure your Spa's team productivity, making sure the SRevPOR (Spa Revenue per Occupied Room) is maximized.
Work to make your Hotel the local hub for groups, associations, clubs, etc... to organize their gatherings at your place.
Sell daily passes to neighbors to your pool, spa,...
Place your parking in online apps, to be used by non residents too.
The answer to this question is actually no different than it was prior to the crisis or will be after the crisis. To continue to find new sources of revenue and new ways of selling, you need that magical combination of data and creativity. The data will help guide you to the opportunities, the creativity tells you how to take advantage of them. Understanding guests needs and desires, travel purposes and the value proposition of your property is still the basis for developing products and offers that will resonate. This part should be straightforward. The challenge in my view will be fostering and sustaining creativity. The extreme challenges and constraints caused by the pandemic required us to look at the business completely differently - and simply not allow us to "fall back" on more well-known and well-tried revenue generating methods. Keeping this mentality as jurisdictions begin to open up, and more "traditional" use of the space is permitted will be a challenge.
Hoteliers should get as many new voices into the discussion as possible to continue to bring fresh perspectives. It couldn't hurt to poll a front desk agent or housekeeper, for example, every now and then. "What if" thinking could also replicate the constraints from the pandemic. "What if" our wedding business suddenly went away? "What if" we had to remove half the furniture in the lobby? "What if" we had a terrace instead of a parking lot? Keep pressure on the team to think differently and new opportunities will present themselves.
Some hotels opted to close their doors while others focused on putting their available inventory in all channels, including vacation rentals platforms. As we see demand return, ideas on how to best utilize space is essential. Think about how your hotel can benefit today's traveler and consider how their needs have changed and will continue to evolve. Understanding today's key trends and how they impact your property, and your customer, will set you aside from the competition.
- Work from home is a trend that may continue. So is the “work from anywhere” movement.
- Health and safety remain a concern.
- Revenge shopping and travel may be temporary but is an opportunity you don't want to miss.
Consider “out-of-the-box” options, even temporarily:
- Can your facility provide office space? Today, not much is needed to set up an office, as long as there is a plug to recharge devices and privacy for calls.
- Do you have daycare options? Those traveling with family, but need to make business calls, could be attracted to this option.
- Meals and snacks are important and not everybody is looking to go outside. Flexible options not only in terms of variety of food, but also location, can attract guests to consume what your property offers.
- Gyms are usually available in most hotels, but do you also offer any type of fitness programs? If you do, you could offer them not only to customers but also local residents. Consider using space in open areas such as that lawn or patio that was rarely used in the past. Even better, you probably already have a certified yoga instructor within your staff, be creative.
- Packages that offer various experiences may be the ticket to bundle different services and gain higher revenue from your customers. Keep in mind families have not seen each other and they have many reasons to celebrate.
Talk to your staff, and clients, and brainstorm on how to use space within your property. You will be amazed by the ideas!
The hospitality industry took a massive hit due to COVID-19. With lockdowns and border closures, there was simply no demand. Over the last few months there have been many creative ways to attract customers to stay in the hotels; Staycations, Workcations, and more. With the industry dynamics and customer behaviour (segmentation) changing dramatically, the industry will need to examine the traditional ways of doing business. It will need to be more;
- Adaptable - Is your hotel marketing, pricing and products adapting to new segments
- Flexible - Is the hotel operation flexible to cater to different spaces and different customer groups
- Agile - How fast is the market response and go-to-market strategies?
The surge in leisure customers across the spectrum of hotels pushes the hotels to think about the experiences these customer seek at the property. With some customers booking longer stays, it requires an enormous degree of operational creativity to provide an extended stay experience which also changes how hotel products are sold. Think #AttributeBasedPricing
The pandemic finally made evident that Revenue Management is not about analytics and crunching numbers only, but a lot about being creative to tackle the evolving needs of our customers' base and convert demand!
When times get rough, seizing every single revenue opportunity that can positively impact the bottom line can be a lifesaver. If we change our perception of the hospitality business being less about just selling rooms and more like a retail business, we will look at our Hotels with brand new eyes and we will discover incremental revenue opportunities we did not realize existed before.
Hotels have plenty of opportunities for retailing and develop a creative approach to selling:·
- Simple room upselling (at time of reservation, pre-stay, at check-in)·
- Attribute-based selling ·
- Cross-selling of services (like restaurant, spa, beach..)·
- Converting underutilized spaces into extra revenue opportunities: smart working rooms, staycations, parking lots rented to the public, luggage storage for a fee to one-day-tourists, rent large rooms for a meeting or a private event…
- Showcase physical products and goods for sale inside the property for extra revenue, rent the public spaces for temporary exhibitions.
- Create synergies and cooperation with local actors to cross-sell experience and activities that can be performed at the property by using the spaces available (eg yoga lessons)·
- Convert a low performing restaurant into a “ghost kitchen”
There are plenty of great ideas in the industry, it is just a matter of finding the right fit for your Hotel. The one-size-fits-all approach of selling is not effective in a world where the customer wants to be reassured and requires a tailored-made offer to be engaged, converted, and retained.
Since the beginning of our industry Hotels have sold "rooms" and this has been their core business.
This fact is like that since this industry become industry.
From my personal perspective, i think hoteliers need to change their mindsets and try to think in square meters instead of rooms.
We are selling sm2 not rooms , and this is because the building where our hotels is .. could be another thing .. a parking space .. an office space or whatever you build with that building.
I think this is key for our mindset and hoteliers need to learn how they can maximize the revenue generated by the hotel and start to look after some new metrics like GOP per sm2 , Income per sm2 and stuff like that ... Remember that owners, investment funds are always thinking in space and profitability (because this space could be another business ... maybe more profitable)
We need to measure what we are selling per space .... because every single sm2 in our hotel it could be sold.
Every single public space could be used like a meeting, every single empty room could be sold like a coworking space, every single sm2 in your pool area could be sold like a space for a day pass user... and so on...
There are a lot of opportunities to increase your revenues, but you need to think out of the box and be really really agile in your sales strategy.
During the pandemic hoteliers have become extremely creative with their offerings. Instead of looking at the limitations many focused on what was still possible and successful initiatives were launched. Let's keep an agile approach in the coming months. In meetings & events we often see one-size-fits-all offerings. During the pandemic and in between waves valuable conversations took place between planners and meetings staff. I recommend to keep the conversation going and to start with “why?”. When you truly understand your future guests, you'll be able to tailor the best offer and leave everyone delighted and ready to rebook.
Next to that our guests and planners have grown accustomed to high levels of flexibility. Until we can finally declare the pandemic history, we'll need to eliminate the feeling of risk involved when organizing an event. Flexible terms for booking and re-booking or cancelling in case things take a turn for the worst will strongly decrease the feeling of risk.
I would also suggest to look beyond the classic idea of meetings & events and rather look at the department as Space as a Service. Doing so allows you to think outside of the box to find solutions for lower demand periods like weekends and evenings.
The last time many companies were designing hotels, meeting space was looked at very differently. Times were good, but most hotel designs still included some meeting space, mostly as a hedge in the event of a downturn, allowing them turn to the MICE segments if their core transient segments stopped producing sufficient volume.
Now, following the mother of all downturns, things are not going as planned. Domestic leisure business is driving the recovery while meeting space sits dark. Most experts agree it will be a while before this segment returns to pre-COVID levels, while others question if it ever will. With this in mind, some hotels are finding new and unique ways to re-purpose this valuable real estate.
One of the most obvious is co-working spaces. But it is important to not stop there. They should be aligned with the needs of business and be incorporated into the hotel's promotional storytelling. Resort hotels can appeal to digital nomads, by giving them the type of office infrastructure they need to be successful and attract longer length of stay business in the process. Any hotel can generate some revenue with it, while giving their guests more opportunity to interact with the local community, but it must be done well. Remember that one of the impacts of COVID was a huge upgrade in many people's home offices. The hotel's set up needs to be at least as good, especially when it comes to connectivity, compatibility and ease of use.
Children's play areas. Set up some soft seating, a few tables and some classic board games or a bucket of Legos. Perhaps even a TV and a few video games. Viola. Parents will love you for it. Maybe even turn it into a poker room once the kids go to bed.
Pop-up stores. Many smaller retailers closed their doors during the pandemic, some never to re-open, but in many cases, they still have inventory to liquidate. Consider creating a calendar and promoting it routinely and perhaps collecting a percent of sales versus a straight rental fee. Choose the right types of stores and it could attract a little restaurant or lounge business too.
Bring in the local community. Sponsor a “mother's morning out” play group or volunteer to host the local Girl Scout troop meetings. Although not likely to generate any direct revenue, the goodwill it would create can't hurt.
Ways to exploit all the hotel spaces in order to drive revenue should be part of the overall revenue management strategies, but in “good times” hoteliers have been mainly concentrated on room revenue. The pandemic crisis has forced us to go the extra mile to drive revenue with the result (or need?) to think out of the box and be creative with any possible resource of the property.
Every hotel is one of a kind, therefore hoteliers should start with the ANALYSIS of their product and spaces and rethink them based on the ACTUAL DEMAND and CUSTOMER EXPECTATIONS and NEEDS.
Therefore, let's understand first of all:
- Who the customers are
- What they are expecting now
- What they need. Do they need something new or different?
Then, let's focus on how to use every possible space of the hotel in order to meet the new customer need or desire and drive revenue. Thinking out of the box will be the key.
Sell the same spaces or rooms for different uses and at different times of the day, combine services together to create and propose an experience to the guest. Put the guest at the centre of the hotel proposition.
Ancillary: The customer journey is a long trip with many touch points and once you have sold your room, another phase starts for the guest: planning the holiday. This is the right time to sell the ancillary services in order to create an unforgettable experience.
Use Technology to sell ancillary and upselling before the arrival or during the stay. Chatbots, web check-in and concierge tools can be employed very well to upsell and cross sell.
Train your staff: Let's do not forget the human part. The FO or F&B staff is continuously in contact with the guests during his stay and has several opportunities to sell while talking with him. It is important to train the team about every possible source of revenue of all departments (not only the one they belong to) and address the guest to it.
Finally, think how to sell your spaces and services to the local market. Where are the opportunities? Maybe this is the time to open F&B services, the spa, the pool, the gym or the laundry to the destination and not only to the hotel clients. Or do the boutiques nearby need open spaces for a gathering or for a fashion show and you have a big garden?