Hotel Revenue Generating Ideas: Experts Share Key Takeaways from 2020
When I surveyed blog readers in December, “revenue” came up a lot — given how much the landscape has changed, I knew I needed to write about new hotel revenue generating ideas and strategy.
There’s a lot of talk in the industry right now about ancillary revenue streams, particularly outside of rooms. How do you increase revenue in hotel when you can’t put heads into beds? What do you do when your loyal guests can’t travel and group business isn’t rebooking?
Phew, deep breaths.
I often say that hotel marketers and revenue managers should be BFFs — more than ever, these two functions need to be aligned if you’re going to execute an effective hotel recovery strategy during COVID.
Since I mostly write about the marketing side of things, I decided to ask a few hotel revenue management experts in my network for their thoughts:
What were some big lessons learned in 2020 that you’ll take into 2021 and beyond? Here’s the advice they had to offer fellow hoteliers:
Build customer confidence through transparency
Every expert I spoke with echoed this sentiment: The hotel industry remains focused on caring for others. Trust and consumer confidence go a long way toward building loyalty, especially in the midst of a global pandemic.
Rohit Datt, cluster revenue manager at RBH Management, suggests the importance of aligning yourself with the psychology of your customers.
“Many major brands have built customer confidence by being transparent with COVID-related hygiene protocol and offering flexible cancellation terms,” said Datt. He added that psychology is part of understanding different traveler types and assessing pent-up demand to estimate how occupancy will trend in the year ahead.
All of this relevant info should be made available to the customer at the time of booking.
Sanchit Rege, Director of Direct Channel and Metasearch Strategy for Hyatt in Europe, Africa, Middle East & South West Asia, agreed. He said customers were most impressed by hotels (and companies in other sectors) that provided information about health and safety measures upfront.
If you haven’t already, make sure you’re reviewing and updating your hotel website COVID-19 FAQ page.
Loyalty and experience will drive direct bookings
Transparency helps build trust, but what can you do to keep it?
“Good old service and online reputation,” said Rege. Feedback and ratings from previous customers “remain critical for all hotels to drive repeat business — and influence new business.”
Rege also said that in a post-pandemic future, he expects guests will want to revisit some destinations — giving booking preference to the hotels they know they can trust to deliver that safe, welcoming experience.
Amber Kasses adds a dual perspective as a former director of both Revenue and Sales & Marketing for Accor Hotels. “Now that working from home is so firmly embedded in our workforce, you’ll see a lot more people trying to blend their work and leisure lives as they travel,” she says.
Kasses thinks the “bleisure” market will only continue to grow — and hoteliers would be wise to see it as an opportunity for revenue from upgrades and addons, as well as guest loyalty.
Hoteliers must continue to think creatively
“For those hotels who have spent much of 2020 and even 2021 with their doors closed or occupancy significantly lowered, traditional revenue streams won’t be enough to help them rebound,” says Kasses.
Thibault Catala, revenue management consultant and founder of Catala Consulting, also stresses that in times of crisis, certain soft skills are more important than ever.
Catala says hoteliers should remain agile and be open to constant experimentation and iteration. Other key skills right now include being a team player, being creative, and having the ability to influence internal stakeholders.
To increase revenue in 2021 and beyond, Rege agrees that hoteliers need to be innovative.
But creativity in the hospitality industry has to extend beyond guest rooms — after all, there are plenty of other revenue generating departments in hotels.
Rege advises that hotels should be using total revenue management “to monetize any and all hotel offerings,” from dining outlets and spas to outdoor function spaces and local partnerships.
For guests, combining forces with city tours and local restaurants can add value to the hotel experience. This article from Cvent highlights over a dozen specific ancillary revenue ideas for hotels.
Brianna Rubino, former space revenue manager at Hyatt Regency Seattle, agrees that this sort of thinking is a key, high-level takeaway from the last year in hotel revenue management.
“Consumer and business travel dynamics, on top of meetings and events structure, changed drastically as a result of the pandemic,” she said. “To capture non-traditional revenue, we needed to be agile and creative in our approach. Hoteliers who adapted and repositioned their operations saw relative success in their markets.”
Rubino pointed to a few other hotel revenue generating ideas, like securing extended stay spaces for hospital staff and frontline workers, as well as creating day use rates designed to attract remote-working hotel guests.
“With the rise of work-from-home employees, the market saw a need for quiet spaces — away from makeshift home offices often shared with family, children, and pets,” she said.
Use technology to your benefit (and your guests’)
Improvements in hotel technology can impact both the online hotel guest experience and the day-to-day operations of your hotel business.
For those changing “bleisure” travelers, Kasses adds that a reliable technological experience and working atmosphere will be key to earning trust (and repeat business) from those guests.
I often mention messenger chatbots on this blog and Hyatt’s Rege agreed that this is another area of opportunity for hoteliers right now:
“In 2021 and beyond, we will see Google proliferate its Google My Business product, while also seeing a renewed effort from Facebook to bolster WhatsApp for Business. Both of these vehicles will provide hotels a way to directly interact with customers.”
Seamless communication, says Rege, can mean the difference between winning the booking or not. Even a 24-hour response time, long considered standard, isn’t good enough anymore.
Personalization, he adds, could even open a way to offer custom pricing or offers based on different factors the customer identifies during a chat interaction — all of which can be stored on a seamless property management system with CRM.
Keep your productivity and profitability KPIs in mind
One key takeaway for hoteliers to note is that some of your hotel KPIs have changed.
Catala says to monitor variances week on week to identify recovery trends, GOPPAR (gross operating profit per available room), and number of cancellations vs. new bookings.
He also notes a growing trend in demand-based staffing.
In general, Catala says, many hotels are operating with leaner teams right now and should “adjust accordingly with variables as the occupancy and demand increase.”
Don’t forget that both technology and innovation can benefit your productivity and profitability, too.
Final Thoughts
Remember, hotel ancillary revenue ideas aren’t limited to room promotions.
The experts I spoke with stressed the importance of both earning consumer confidence and practicing total revenue management — finding profit potential in new and innovative places.
Here are a few final takeaways and thoughts from the revenue management experts I chatted with:
Rohit Datt: “Devise a mitigation plan assuming 2021 is still a recovery year. Assume that many events will not go ahead, so hotels can gain much-needed base occupancy using rate yielding strategies applied closer to arrival dates — or over higher occupancy dates.”
Amber Kasses: “The whole world has been reimagined and there’s no reason to think that the hospitality industry can’t follow suit — while still holding true to its customer focus.”
Sanchit Rege: “We've seen OTA channels invest in customer acquisition in an unbalanced proportion and reap the benefits of customer transactions. Two big things that will be tested this year are customer loyalty and brand value.”
Thibault Catala: “There’s a transition from descriptive (‘Here is what happened’) to more prescriptive revenue management (‘Here is how we will achieve our goals’), and that means revenue managers are becoming an essential part of the overall hotel strategy.”
Brianna Rubino: “While we continue to grow and change with the economic conditions, it is hopeful to see our industry leaders care for the needs of others while focusing on new ways to capture revenue.”
What hotel revenue generating ideas have you tried? Are you looking beyond rooms revenue to maximize profitability and plan for recovery? I’m curious to hear your thoughts!