Not once! Among the dozens of articles and blog posts I have seen about maximizing revenue, not once have I ever seen anyone talk about the steps backward that we must first take so we may then take the steps forward of maximizing revenue. Assuming we want our maximized revenue to be sustainable, we must ensure we have a foundation of basics in place. As my coach always says, “We should never attempt to build a mansion on top of quicksand.”
1. TRUST THE PROCESS
To start, the first thing we must do is to have a budget for the year. Undoubtedly, this will take time if we haven’t created one before, but a budget is part of the foundation for building revenue. The key elements of a budget that help us maximize revenue include:
- Room revenues and expenses
- Administrative and general
- Sales and marketing
- Property operations
- Fixed expenses
- Other income
Having these “basic budget” questions answered as thoroughly and accurately as possible will help identify where to cut expenses, if needed. Perhaps the easiest way to increase profit is to cut unnecessary expenses and keep more of the money that’s coming in.
2. PLAN YOUR ATTACK
The next recommended step is creating a marketing plan that fits within your budget. VNR Management’s marketing plan is simple. The company divides guests into three different segments: group business, individual business, and other. It’s hard to see historical data if your PMS wasn’t set up with these marketing segments, but it will be better to do it now vs. later – or never. From here, you can set goals for your staff to reach based on each segment of guests. There are your two steps backwards: a budget and a marketing plan that fits your budget.
3. ADDING ADD-ONS
Turning our attention to increasing the amount of money that comes in, consider increasing the “other income” in your budget projections. This can be accomplished by adding things like a facility fee, an upgrade fee, a green fee, or a parking fee. Two additions VNR is making include making capital investments to add a podcast studio to one of its hotels and create pet-friendly accommodations. Research suggests taking on pets can increase revenue as there is a demand in the market, and this can be implemented because VNR’s budgeting and forecasting shows that the company will increase profits without necessarily increasing guest count.
4. SHOW ME THE MONEY
Once you create your budget, you now can convert your commission expenses to higher profit channels, such as direct booking instead of third parties. From the budget you’ve created, you can see what is possible to invest in training your staff and then setting direct booking goals for your staff to pursue.You also can train your staff to look for data that helps them become sales agents. For example, if they see an email address for a booking that’s associated with a company/corporate email, they can capture that info to then reach out to the company to see if they want to set up a rate plan for your hotel.
5. GET PLUGGED IN
When was the last time you audited your website? Arguably your single most important sales generator, especially for independent hotels, is your website. Perform a SWOT (strengths, weaknesses, opportunities, threats) analysis to see how your website ranks based on your comp. set. Do you know your conversion rate? Do you know why people are leaving your site? How fast is your website loading? Where are your guests coming from? Answers to these questions matter and can be easily identified when you have a great website.
6. TIE IT ALL TOGETHER
Creating synergies is another way to reduce marketing expenses by promoting local businesses who, in turn, will promote you. For example, if your lobby sits empty after breakfast, you can create additional revenues by hosting painting and sip events. Because we also have strong WIFI in our lobby, we can rent co-working space to people that need a quiet and convenient place to be productive on the go.We’re limited only by our creativity when it comes to increasing revenue, but our creativity expands when we have the basics of a budget and marketing plan in place. I know too many of us don’t invest the time to create a useful budget, but doing so will put us in the minority of having a superior advantage over our competitors, especially when it comes to maximizing revenue without increasing our guest count.