EVEN IN SUCH an unprecedented crisis as the current pandemic, opportunity can be found for hotels to make extra profits, according to a blog from HotStats. It’s a question of careful planning and searching for previously undiscovered sources of revenue.
The article discusses six ways to make the best of a bad situation.
Establish a Baseline
Hoteliers should review basic occupancy rates and revenue needs of the hotel to find a break-even point.
“By finding a break-even point, hoteliers can see how much wiggle room they really have during a crisis. When you nail down your immediate needs, the operation becomes agile,” the article said. “In turn, hoteliers have the flexibility to adjust and profit off the shifting market.”
Focus on Long-Term Gains
Planning long-term goals is one of the best ways hoteliers can prepare for a crisis, the article said. That includes retaining repeat guests through good customer service.
“It’s five times less expensive to keep an existing customer than it is to attract a new one,” the article said. Service recovery accounts for how well a team handles customer concerns. Especially in the hospitality industry, the more quickly and thoroughly the hotel staff is able to address visitor concerns, the more loyal customers will be.”
In a crisis, customers who are watching their spending are more likely to use services from companies to which they feel loyal, the article said. It’s also good to make sure your hotel is receiving good online reviews.
“Online reviews can drastically affect a hotel’s reputation. During a crisis, when money is leaking out of an operation, reviews may seem like a small concern, but they contribute to long-term business and can lead to a revenue uptick when hotel demand picks back up.”
Pore Over Expenses
Get a clear idea about your hotel’s costs to determine where to cut and where to invest. The most common cost generators include payroll, utilities, maintenance, food sales, leases and operational expenses.
“As the competition blindly hacks at programs that may be in more demand than ever, hoteliers with a firm grasp on spending data can see which departments are eating into their budget and which are chugging ahead at a bargain.”
Adjust for Long-Term Profit
Adjust hotel operations to achieve the highest efficiency to increase revenue.
“Remember, revenue is just one piece of a hotel’s financial picture. It only accounts for the money coming in. This means that during a crisis, hoteliers can come out ahead by tweaking operations for profit,” the article said. “Start by measuring deep profit metrics, such as GOPPAR. This metric will reveal how much money is running all the way through the hotel’s operations and making it to the bottom line. By cutting back and shifting investments for more profit, hoteliers can rev up returns during a crisis. Plus, when the economy turns back on, that extra cash will flow directly into the hotelier’s pocket.”
See where the demand goes
Examine metrics to uncover new demand trends that can be cashed in on.
“For instance, the COVID-19 pandemic stamped out demand for in-person services, such as spa operations,” the article said. “At the same time, it seems to have bolstered demand for outdoor recreation, including golf operations. The sooner a hotelier recognizes these new trends in demand, the further they can pull ahead of the competition.”
Monitor revenue by department to determine which departments might be struggling and which are seeing increases.
“With that, hoteliers have a blueprint for profit-driving decisions.”
Benchmark to Pull Ahead
“During a crisis, hoteliers can get their feet on the ground, gauge demand and predict trends with data. In order to find opportunities in any crisis, hoteliers first need to access hotel profit benchmarking. With deep insights in view, you’ll have the roadmap that leads to more opportunities in chaotic times.”
In a previous blog, HotStats laid out five ways hotels have been changed by the pandemic.