Boost your bottom line


Three ways to maximize revenue without exorbitant upfront costs

Recent years have been challenging for revenue leaders in the hotel industry. First, elephant in the room alert, there was the pandemic. Then, in 2022, the industry proved to be busier than expected, but resources were tight, putting pressure on revenue managers to do more with less, said Suzanne Swafford, associate partner, revenue optimization, at Strategic Solution Partners.

“We’ve all just been working to survive for a long time now,” she said.

The pursuit of revenue is an eternal one regardless of industry, but building revenue without large investments that undermine revenue growth remains a perpetual, common challenge. In the current climate, revenue experts say the hotel industry is placing a renewed emphasis on guest experiences, often using technology tools to help with the sales and management of those revenue sources.

“Everyone’s really focusing on the customer experience now and creating great memories for these guests,” said Abe Salam, founder and CEO of Epic Revenue Consultants.

Experts see a variety of revenue sources that are getting the attention of hotel operators. Some popular ones include early check-in and late checkout options; featured food and beverage offerings; partnerships with local businesses for discounted services; pre-arrival room upgrades; on-premises stores, such as those offering travel staples and snacks; and a variety of packages.

upselling opportunities


Upselling practices that may have been set aside during the early parts of the pandemic are more common again, Swafford said.

“We’re back to speaking about upselling at the front desk and at the time of reservation and with emails to upcoming guests, focusing on upselling to room types, upselling to different bedding types, using selling strategies on different room types to generate revenue that way,” Swafford said. “Packaging is starting to come back – parking packages, packages with air and resort destinations. Event and activity packages are really coming back into the market. I’m starting to see some group interest in meeting packages that I didn’t see during the past couple of years when they just wanted the bare bones rate.”

Salam said the “booking funnel” offers revenue opportunities that hotels increasingly are exploring. In particular, customers who book on a hotel’s website can be offered options for their stay that improve their experience with an added cost. For instance, Salam said hotels are offering early check-in times and food and beverage activities, such as a chef tasting menu, when guests book online. Salam noted that a higher perception of value and great reviews based on excellent customer experiences allows operators to “push” the pricing side and increase revenues.

“These are great ways for hotels to improve the overall guest experience, and they’re not upselling them once they get there – they’re upselling them before they even arrive at the property,” Salam said.

Salam said a common trend he sees in the hotel industry, particularly with independent, boutique hotels, is prioritizing opportunities to monetize new guest experiences when possible with the aid of technology, including cloud-based property management systems that can connect with other technology partners. Technology can not only make the customer experience “smoother,” but it also can increase ancillary revenues for hotels in a streamlined process, Salam said.

technologys starring role


Joyce de Kruif, senior industry consultant, IDeaS, said technology plays an essential role in revenue management in the hotel industry today.

“For most destinations in the world, 2022 was the year of recovery, which we will see continue into 2023,” de Kruif said. “I think we can all agree that with the robust recovery we see in most parts of the world, forward-looking revenue intelligence has never been more important. We have always been hungry for data in revenue management, but I’m inspired to see that we’re entering a new era where revenue management is re-emerging as a strategic discipline that intertwines all areas of revenue, sales, distribution, marketing, and the data supporting these strategies. These new times call for new tools, such as advanced revenue intelligence tools.”

Salam said an accessible, appealing, and effective direct online booking process is a key way technology can help maximize revenue. When prospective guests opt to book directly with a hotel rather than with online travel agencies, hotels don’t have to sacrifice large percentages to the booking agency.

Salam said a challenge for hotel operators, particularly those who run independent boutique properties, is scrutinizing the various technology options and understanding which ones fit their particular operation and can offer the most value, including bolstering revenues.

“I tell all my clients, there’s three things you need to look at when making a decision on a tech stack,” Salam said. “The first is, ‘Is it going to drive more direct bookings?’ Because direct bookings equal better profitability for the hotel. Second is, ‘How am I going to be able to sell and increase my ancillary revenues?’ That’s add-ons at the time of purchase, like an early check-in or late checkout. And third is, ‘Does it enhance my customer experience?’ Because enhancing the customer experience will then result in higher conversion for you as a hotel, which then results in higher pricing.”

De Kruif said operators often analyze data at a high level, but there are opportunities to analyze performance at a more granular level to boost revenue, such as through a better understanding of demand and utilization by room type.

valuing the details“When reviewing hotels’ property system set up, we come across hotels with a plethora of room types that are a legacy or were created solely for operations-management purposes rather than on what is going to make the property the most money,” de Kruif said. “Revenue managing and displaying all these room types in a shopping experience is a cumbersome task and creates confusion with bookers that most likely won’t book the premium room types. Famed psychologist George Miller suggests that the magic number for displaying your options is seven, plus or minus two, which is how many options our mind can process at a single time. Therefore, analyzing your room types and looking for opportunities to regroup or merge room types with similar demand can mean a double-digit increase in conversion, which has immediate and long-term impacts.”

De Kruif said operators frequently look to new markets for new revenue sources, but “small steps can lead to big changes.”

“Revenue leaders are always on the lookout for new opportunities but, often, we’re looking for that one big opportunity rather than making small adjustments to our strategy that may turn out to be a leading change,” de Kruif said.

De Kruif recommends hotel operators take a close look at their existing market segments and “drill down into what opportunities within those market segments still exist.”

Similarly, Swafford said hotel operators can fall into the trap of chasing new solutions to build revenue when older, reliable ones continue to be effective, such as straightforward email marketing efforts. She recommends “going back to the basics” and routinely reviewing what is working and what isn’t, as well as completing a thorough SWOT analysis of competitors to ensure you understand their approaches and the broader environment.

“We’ve gotten so far into what we think is going to work that we’ve forgotten to do what actually has been working,” Swafford said.


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