Raising the BAR

Hotels can boost their bottom line by increasing revenue or decreasing costs however increasing revenue does not just mean raising rates.

There is enormous revenue potential in the existing demand and market rates if we apply appropriate revenue management strategies to maximise the utilisation of space and inventory better. Costs is another important area to manage that can see revenue gains however, utilising Revenue Management to increase revenue is highly more profitable than a decrease in costs. This is highlighted in the Airline Industry where a 1% increase in passenger revenue is 3 times more profitable than a 1% decrease in fuel costs. This statistic highlights not to focus just on cost control at the expense of revenue management however achieving both an increase in revenue and decrease in costs is a goal to aim for.

Costs are not just the costs of acquiring business such as OTA’s, travel agents and marketing dollars (as these also generate top line revenue) but include variable and sometimes fixed costs to get the biggest impact on the bottom line. Things such as an efficient air conditioning system as approximately 50% of an operational budget goes on cooling and heating.

In addition all employees are apart of your Sales & Marketing Team. Ensure employees both back and front of house know how to identify an enquiry as a potential piece of business and forward it to the correct area. Encourage employees to generate ideas that increase revenue and decrease costs & reward them by saying thank you.

Hotels should save the better deals for direct bookings, low cost value added amenities, reduced premiums or enhanced services for their customers and work together to create a more strategic platform for OTA agreements.

Categories: Uncategorized