The Most Important Factor for Increasing Hotel Revenue
Hotel owners are always keeping an eye on how to increase hotel revenue. When a hotel management team seeks to increase a hotel’s bottom line revenue there are several factors that are assessed for performance. With a complete understanding of the existing revenue and market opportunities, a plan can be created and enacted to reach new revenue goals.
So, what are the important factors to increase hotel revenue? According to Laura Salisbury, at ARM Hospitality, multiple factors are taken into account when revisiting a hotel revenue plan.
Analyze the hotel’s market
One of the first tasks, Ms. Salisbury recommends when revamping a hotel revenue plan is to take a good look at the scope of the market in which that hotel operates. Her team notes how many hotels are in the market; what are the brands they are in competition against, and will use a variety of tools to assess how the market is performing, including STR Reports and Convention and Visitors Bureau statistics. These notes build an encompassing report to view the hotel market in full scope as it functions on its own and within the larger market.
The hotel management company will look at the particular hotel they are tasked with improving, comparing its revenue against the surrounding competitive hotels. At the same time, the hotel management team will analyze the market to determine demand generators and sources of business in any particular market.
A completed market analyzation report assists the hotel management company in finding undiscovered and underperforming segments. On the opposite side, the process can also identify the top preforming segment(s) which is equally helpful.
Regarding undiscovered segments, the hotel sales team can be provided information and action plans about easy wins that could be possible immediately. However, since not all new business is “low hanging fruit”,” the knowledge of the complete market horizon allows the hotel management team to move to the next step of increasing hotel revenue.
Position Hotel Properly
The marketing work of positioning a hotel correctly is as much an art as a science. The market analyzation report will show where there are opportunities; the hotel management company must then maximize the market opportunities with the correct offers and messages to reach potential customers within the discovered segments.
A savvy management team relies upon experience to understand a hotel’s position within a market. The team will assess the location, facilities and amenities to correctly determine the best course of action to generate revenues.
This ensures that the hotel does not make the mistake of simply slashing rates to increase business. A top-of-market position demands a higher rate. In this case, selling rooms at a drastically lower price cheapens the hotel overall, making it harder to demand top rate during peak periods. A hotel in a lower position within the market should set rates accordingly.
A well-positioned hotel can appropriately manage their rates within the correct comp set to make the most of demand.
Where are the fish?
Once a hotel understands their market and their own place within that market, they can make effective decisions regarding groups of potential customers and where those customers are likely to look for, find and respond to marketing messages.
In today’s digital world the choices for appropriate marketing channels are vast. A hotel with a solid market report coupled with knowledge of their worth within that market makes the pool of potential marketing and advertising channels more manageable. The right information acts as a radar to the right waters, so to speak, and allows the property to better “fish where the fish are.”
Sales action plans can be created and are more likely to produce results. We’ve all seen hotel management groups and sales team that aren’t working from a targeted plan, the results are often dismal and the team wastes time doing the wrong things preventing their own success.
Bringing it together
Seldom does one function or report lead to a single way to increase hotel revenue; rather a comprehensive look at the past performance of a hotel and its market can be assessed to draw out the opportunities and lead a sales team to future success.
American Resort Management works with our clients to develop successful revenue generation. Call us today to see how we can assist in growing your business.”