Destination properties such as ski and beach resorts are proving to be more resilient in today’s environment because they offer the guest something that smaller, more compact hotels cannot: space.
Multicampus resorts, ski properties offering self-contained chalets or resorts offering beachfront cabanas are all able to provide a spacious guest experience that enables travelers to get away with their families while also maintaining social distancing.
“I think now people have a lot of fear of going into closed spaces and big buildings. Our resorts are spacious and provide space between the guests, so this is going to be one of our [unique selling propositions]. This is definitely the focus for our resorts in the Caribbean,” said Diego Fernandez Perez De Ponga, corporate director of revenue management, Palladium Hotel Group.
When you have a resort product, which often comes with various room types and multiple seasons, revenue management can become even more complex. Add in demand that fluctuates widely and is now often very short-term, and you have a very specific set of revenue challenges.
How can resorts and casinos ensure that they are driving profitability in today’s uncertain trading conditions? What tactics should they pay most attention to? And as we come out of the current pandemic, how can you make sure your systems are ready to respond to the new market?
1. Manage Ancillary Revenue
Revenue per available room remains the No. 1 metric for measuring revenue success, but nowadays, hotels need to also look at total revenue management.
At many resort properties, pricing decisions are not only based on room demand. Other revenue streams need to be considered, such as golf and spa revenue, food-and-beverage or in the case of a ski resort, ski passes and lift tickets. Michael Anselmi, VP of revenue strategy & business development at Boyne Resorts, explained how this adds up. “Our average length of stay is four days. So perhaps we should be discounting the fifth day or giving some program of fifth day stay free or sixth day stay free because we're not getting that anyway. Let's try to push it. And when we have somebody stay six days, it's one additional lift ticket; it's maybe one additional rental [of ski equipment] or two additional meals.”
Hoteliers who expect to succeed must adopt a revenue-management system that allows them to have a better understanding of their business so they can focus on maximizing all profit centers, not just rooms.
2. Understand Shifting Seasonality
Many resorts still operate with rates for two seasons: low and high. But today, traveler demand has completely new triggers and patterns. Resorts need to be more flexible to the market conditions before them. Demand is more volatile now. Successful resorts will be the ones that look for new opportunities or new markets to tap into.
Helios Hotels, located in Spain, opened its resort in Majorca, Spain, this past February because not only does this coincide with carnival season, but because one target market is cyclists and the cycling season on this Mediterranean island also starts then.
Resorts need to optimize their occupancy through an open pricing methodology, which would allow them to analyze a wide range of demand signals, including web traffic and third-party data, build out better forecasts and price with more confidence throughout the year. The ability to run short-term forecasts would allow resorts to be prepared for when market demand changes quickly.
3. Grow Guest Loyalty
In today’s COVID environment, trust is at an all-time premium. Guests need to feel safe and secure in their accommodation choices. Marketing to previous and repeat guests about your new and improved cleaning protocols or how you are ensuring a safe guest experience can drive more direct business. The guest is already sold on your product. They just need to know that their stay with you will be as safe as possible.
Helios Hotels channeled user-generated content through review sites to help boost its direct business over the summer.
“People quickly started to talk positively about the safe feeling in the hotel, and also that they considered that they were having a comfortable and enjoyable holiday. Soon reviews started appearing on different online platforms. It was one after the other, and it was a part of the relative success we have had this summer,” said Kris Vanaerschot, chief commercial officer at Helios Hotels.
Once you have gained their trust, you need ways to capitalize on that; find creative ways to incentivize them to return or visit one of your other properties.
4. Deploy Room Type Rate Strategies
As mentioned earlier, destination resort properties often have a wide range of inventory: rooms, suites, villas, cabanas, chalets. Those able to offer accommodation that enables travelers to maintain their family unit under one roof can and should be pricing competitively on this with room type pricing rules.
“One tactic I've seen work very successfully is to only start selling from the higher room categories up. This makes a massive difference to your ADR. I've seen hotels have a fairly minimal difference in the actual achieved revenue at the end of the month, with a much lower occupancy,” said Jutta Moore, founder, Moore Hotel Consulting.
5. Per Person Pricing
Resorts should consider using an application that allows them to set universal per person pricing as a fixed amount or as a percentage of room rate. This is particularly useful for resorts with a pricing structure that includes F&B; for example, those offering half board, full board or all-inclusive. Knowing that a single occupancy room will consume much less than a double enables resorts to price competitively. Similarly, knowing that a family room accommodating four will consume more in terms of F&B but will require less housekeeping than two double rooms also accommodating four also can help resorts drive profitability.
6. Controlled Automation
Resorts will enter 2021 with pared-down revenue teams being charged to achieve more but with less bandwidth. As such, they will need systems that can provide efficiencies through automation while not giving up total control as the market remains so dynamic. Having a system with controlled automation will enable teams to make the most of their limited resources by automating more generic revenue operations, freeing them up to be more strategic where it counts most.
There is a great deal of pent-up demand to travel. The Pulse Report, published by Duetto, shows continued growth in web traffic as consumers dream about their next vacation. Positive news concerning vaccine breakthroughs could see a strong return to international travel in the summer of 2021. Resorts deploying these six tactics will be able to take the lead in their marketplace. But they need to start planning now. Start getting your resort revenue strategy ready for 2021 today.
Sarah McCay Tams is director of content at Duetto.