How will hotel properties make profits this year?

Generally, we look to the chief in charge of operations of a hotel or resort property, the GM, for profitability. All agreed. But where does it all start? It always starts at the top, meaning, of course, with revenue generated by sales. It has to come in at the top to fall to the bottom line. Once all the costs are paid, the bottom line (or profit) is what is left. The more we take in and the less we pay, the larger the profit.

So we need to look at what we take in at the top and make sure it covers the costs, and more. We all know that costs of property operations continue to increase. There is absolutely nothing (except, maybe, gas for your car and other uses) that costs less these days. Just think about it, debt service, leases, rentals, taxes, utilities, maintenance, supplies, advertising, franchise fees, management fees, contractual services, repairs, benefits, and the list goes on. This year, we may even be hit with minimum-wage increases, and in all probability this may very well result in many other wages being increased. So, with all this in mind, it tells us that we just better be in the business of doing a better job in hotel sales.

According to TravelClick, we can expect about a 4.5-percent ADR increase over last year, which is good. We just need to be sure that our sales teams are onboard with the understanding that, in booking groups, we need to work on getting better rates. Sales staffers need to get better at negotiating deals to make sure that the properties represented maintain the expected increase in ADR. It appears that ADR from group bookings have always lagged behind transient travel. That, of course, brings the total ADR a couple of percentage points down for a property. Sales departments should be geared to secure better group rates this year.

Virtual Event

Hotel Optimization Part 3 | January 27, 2021

With 2020 behind us and widespread vaccine distribution on the horizon, the second half of the new year is looking up, but for Q1 (and most likely well into Q2) we’re very much still in the thick of what has undeniably been the lowest point of the pandemic. What can you be doing now to power through and set yourself up for a prosperous 2021 and beyond? Join us at Part 3 of Hotel Optimization – A Virtual Event on January 27 from 10am – 1:05pm ET for expert panels focused on getting you back to profitability.

Here is where the GMs need to include some training opportunities during the usual weekly sales meeting. The sales performance of the staff needs to be monitored to see what works and what doesn’t. We need to look at what procedures are being followed in getting prospects to make the buy decision. Are there objections from prospects? How are they being handled? Many real objections are not rate-related, but perhaps many objections come forward as rates; but are they real? Sales staffers need to understand the business of overcoming objections. Quite often we feel that because of a group booking, we need to offer a rate lower than published rates. Why do we do this? We need to reduce the effort of offering discounts right at the beginning of an inquiry. There should not be a reason for this. We may want to offer valued benefits other than rate discounts. Send for a free copy of our “Overcoming Objections” tip sheet.