How to maximize revenue at your hotel

(dollar sign)

Rooms might be king when it comes to maximizing revenue at a hotel, but that doesn’t mean there aren’t other ways to squeeze dollars from other departments.

“Rooms can be up to 70 percent of revenue, sometimes more or less,” said Rich Jones, senior VP and COO of Hospitality Ventures Management Group. However, he said that in the lifestyle space the figure is starting to change.

“The mix is getting skewed toward food and beverage,” Jones said. “It can be a 50/50 mix of F&B and rooms because of the strong lifestyle restaurant and bar contribution.”

A big reason for this shift relates to these types of hotels focusing on the local neighborhood and providing authentic experiences, he said. The properties attract a strong mix of locals and guests, catering to both groups.

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But lifestyle hotels aren’t the only ones that can maximize revenue outside of rooms. Many departments offer opportunities so that hoteliers can be sure they don’t leave money on the table.

Dave Ditto, senior vice president of operations at GF Management, said some hoteliers can make their real estate work for them. For example, many asset managers look toward the potential to charge parking fees to get more revenue out of their square footage.

“Your typical GM will say you can’t do that because the comp set doesn’t, but select hotels do have the ability for it,” he said.

Jones agreed parking fees are becoming a way to drive revenue, especially in urban markets where parking is becoming more expensive. In some markets, fees—such as resort, cancellation and early check-out—can help to maximize revenue.

Jones also is seeing success from charging for higher speed, premium internet, with many customers preferring to upgrade from the standard free Wi-Fi speed the brands offer. But that’s not the only way technology can help to maximize revenue, he said.

“You can drive revenue through enhanced [internet protocol] options for meetings, LED monitors with technology to share screens and interactive tools for group meetings,” Jones said.

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Unique Opportunities

To really ramp up revenue efforts, sometimes it helps to think outside the box. Jones and Ditto offered several ways to do so:

  • Underutilized spaces. Spaces that don’t see as much use can be a great opportunity to bring in a complementary service, whether it be via spa or massage.
  • Small-scale F&B. Does your hotel have a large-scale F&B operation already? If so, is it possible to introduce another outlet on a small scale to complement what you already have?
  • Digital signage. Digital signage emerges as an opportunity to use your location and building to sell advertising to others and generate revenue.
  • Create packages. Guests are looking for local experiences, so you can work with local businesses to create packages to sell beyond just a night in a hotel. If you are creative and get the pricing right, packages can be a revenue generator.
  • Positioning. Is your property properly positioned, even its name? A hotel named Hampton Inn Smith Road could see an uptick of 15 percent occupancy if it were renamed to Hampton Inn Airport North, for example.
  • Accounts. The hotel industry has been in some good times for awhile. Take a look at your business. Is it time to push some lower-rated negotiated contracts out to create rooms opportunities elsewhere?
  • Passionate people. You should have a passionate revenue manager or property leader who is in love with rate or inventory on a daily basis. Also, a GM who supports and works together with the revenue manager can have the No. 1 position in the market.
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