Building revenue and cutting costs were the primary themes of the “Better Planning, Bigger Profits” Operations session offered at the Caribbean Hospitality Industry Exchange Forum (CHIEF) held in Puerto Rico a few weeks ago. In this article we will go over some of the key factors discussed in influencing a hotel’s revenue and ensuring its financial success.
Focus on the Metrics
When evaluating your hotel’s profitability, the accurate evaluation of your distribution channels (OTAs, direct booking, corporate relationships and travel agents) is vital. The three metrics listed below are a great way to ascertain each channels profit breakdown:
In this manner, the hotel can determine the customer acquisition cost per channel (channel costs divided by number of guests) and pin point the true profitability of the same. Viewed from this perspective a direct booking may not always be the most lucrative channel.
Quality Reviews = Higher Revenue
There is a clear link between guest satisfaction and financial performance. Hotel revenue managers, when analyzing data in their property portfolio can compare their pricing to competing hotels in order to identify opportunities for price increases. If a hotel has a much higher reputation than its similarly-priced competitor, that hotel’s rate can often be raised without losing occupancy. The quality distinction however, needs to be clear and evident in order for the price distinction to be justified.
You Only Get What You Ask For
Train your staff to ask for great reviews and ask for the upsell. Do not leave it up to change. Create a system your staff can use to draw in the guest’s attention at the right moment, educate them on the service, give them social proof and then justify the cost. Do not skip any of these steps.