Hotel Profitability Improvement To Do List
Click Here to Download the full Hotel Profitability Improvement Checklist
Highly Profitable Hotels owe their success to managing all the facets of their business at a high rate. They understand that driving profit means making the right decisions in all areas, and that those decisions will positive impact other facets of the business. Many operators are great at managing one piece of the pie, like cost control, but still fail to produce high profits. This failure is due to a lack of focus on other key areas of their hotels performance.
This download is intended to give you some ideas of actions that owners, managers, and even hourly employees can take to create a complete Profit Focus.
This part of Profit Improvement is about understanding what is going on in your marketplace.
In order to grow revenue, we need to first know what opportunities exist. The steps listed in this section are designed to help you create a process where you track the right information about your business, gather information about your competitors, and analyze demand generators. You can then use this data to come with an action plan to help you maximize profits in any economy.
A key focus of High Profit Operators is their approach to managing this issue. All hotels look at the STAR Report, but highly profitable hotels use it as more than a report card.
True Competitive Positioning involves taking the market data you have gathered and determining how you compare to your competitors in each segment.
This is the foundation for deciding how much you can grow, what pieces of business to go after, what changes you need to make in your product, and how you will sell against each competitor.
Staffing and amenities
A key to creating sustainable growth in revenue, is determining what services and amenities travellers are looking for in a hotel.
Adding the right services and amenities can help you acquire new business from competitors, or slow losses of existing business leaving you.
Market Dynamics and Competitive Position data is how you determine what changes may be needed. Understanding the types of travellers to your area, where they stay, and why they make that choice will help you add the right services and amenities to get the revenue you want.
Up to this point we have dealt with figuring out what travelers to your area want in a hotel, what they are willing to pay, what you offer compared to the competition, and how you can best compete in the market.
Even once you determine what the right services and amenities are for your hotel, you need to make sure that you are providing them to you guests on a consistent basis.
Guest Experience is the measure of how well you are delivering the desired product. All hotels, no matter how well they are run, receive negative comments. Hotels with high guest satisfaction scores generate a higher number of positive reviews to offset the negative ones. This section of the download will help you understand how to manage expectations, deliver great service, and most importantly deal with negative comments.
Determining what rates to sell each night is definitely a component of Rate Placement and Hotel Profitability Improvement, but it there is much more to it than that.
Highly profitable hotels have detailed plans to manage all of their rates. They vary rates by booking channel and market segment, based on their overall goals.
They set rates according to what they are trying to accomplish, not how many rooms they are trying to sell.
Sales and marketing programs determine their volume strategy, and the rates they list are reflective of their overall revenue strategy.
Regardless of whether they are upscale or midscale, they use negotiated volume sources to fill a base number of rooms, and then use mass distribution sources (OTA’s, Brand’s, etc.) to sell their remaining rooms. Rate is not their only means of driving demand.
All hotels sell rooms. High-profit hotels plan out their room sales, not just take a wait and see what happens attitude. These hotels track when their busy and slow times historically occur.
They track it by day of the week, time of year, and market segment. If their base rooms come from business travelers; they turn off or heavily restrict discounts at times of the year when corporate travelers are most likely to be high. They don’t wait until reservations volume actually get high, they anticipate the volume will be there and close discounts early. They open those channels backup only when they know corporate travelers will not be coming. This allows them to maximize rates when demand for highly rated business is peaking and minimize revenue loss.
Service and Expense
Few hotels have significant overstaffing or overspending. However, it does often occur during peak revenue times, when there is enough revenue to cover up for a lack of solid scheduling and cost controls.
Highly profitable hotels track and understand the variability of profit at different occupancy points. They open and close discount channels not just as rooms sold go up and down, but also as they find themselves at points where the next several rooms sold do not add expense, allowing for more profit from even a discount rate. Managers of these hotels also understand that good expense management comes not from cutting expenses, but from managing the relationship between revenue and expense.
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