Getting the Most Value Out of Every Guest Booking and Stay

Hotel front-desk staff member checking in a guest while wearing a face mask

In what is sure to be another year of change, hoteliers have to consider new ways to maximize guest value across all available revenue streams—a vast undertaking whereby operators must align all of their organization’s departments behind one unified purpose. Thanks to the diligence of hotel companies and the creativity of operators, hotels have been able to hold on thus far in a market that has not been forthcoming with new business opportunities. However, with rates stalling across the country and ancillary services scaled back to cut costs, revenue-generating options continue to be limited.

Here are four ways hotels can focus on growing their bottom line right now and how to apply these strategies as the economy begins to recover.

Monitor Stay Metrics

It is more important than ever before that hoteliers understand their guests’ average length of stay and how this measures up to others within their specific market segmentation. This way, operators can minimize costs in key areas, such as procurement, while giving hoteliers insight into the best windows for marketing services to guests.

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For example, a recent study by RateGain showed average weekly bookings are taking place over a shorter window of just eight to 14 days, and average length of stay has increased roughly 20 percent over the same period in 2019. Furthermore, Hotels.com’s 2021 Upgrade Report found 28 percent of travelers are more likely to take last-minute trips in 2021, with 29 percent ready to make same-day bookings should the opportunity present itself. Guests are spending more time searching for deals, booking rooms closer to the date of their arrival, and staying on property for more days on average than in the past.

It’s also important to look into market segmentation to understand where guests are traveling to and what is enticing them. While the national average hotel occupancy fell 53.5 percent year-over-year in November 2020, according to a report from the Highland Group, extended-stay hotels held their occupancy decline at just 23.7 percent. This was fortified by an increase in room nights of 30 or more by 15.1 percent through September 2020, while demand for stays of seven nights or more fell 4.5 percent.

These properties typically offer fewer services and therefore incur fewer costs, but the industry has retuned much of its hotel supply to mirror this strategy to great effect. Further analysis of regional data can help operators zero in on the key service elements guests are most interested in and capitalize on them when the time comes.

Reimagine Food and Beverage

Currently, hotels are offering limited food and beverage (F&B) options as the need to manage margins by reducing costs takes precedence over all else, but this is not sustainable over the long term. After reshaping their F&B departments into revenue-generating machines over the last cycle, hotels should not be looking for ways to activate these areas to provide value this year where there was none in 2020.

One challenge for hotel F&B is fluctuating procurement costs in a market that can be difficult to predict. By leveraging stronger data analytics to understand the trends impacting travel and a hotel’s guest segmentation, operators can better understand who their travelers are prior to arrival and manage fixed costs to some degree today, and better over subsequent months. F&B throws a wrench into this strategy by adding several additional layers of complexity to forecasting costs per room. Thanks to data analytics, such a calculation can be made by looking at how guests’ average length of stay has changed year-over-year and budget accordingly.

Hotels must also consider the cost impacts of increasing their F&B workforce, as well as rethinking a return to room service as indoor dining becomes the target of government regulations—and even a social taboo. While the industry is unlikely to return to buffet-style dining any time soon, F&B is a staple in hospitality, and it’s likely to remain so. Specialty in-room dining packages are just one of many potential upselling opportunities available to operators.

Borrow a Fresh Perspective

With fewer staff managing operations, it is inevitable hoteliers will find themselves needing to redefine and reassign on-property roles in the coming years. Operators can capitalize on this opportunity to bring fresh perspectives to their organization’s structure. For example, if a hotel’s former head of sales is now working the front desk, she can lend her insights to improve the way the property presents its amenities and services and its upsell best practices. Revenue managers also have a wealth of insight to impart to colleagues throughout the property.

Now is the perfect time to pool the hotel’s eyes and ears to identify areas for improvement. Room attendants are cognizant of what guests do and don’t use on property, while F&B workers may have a better understanding of how to maintain positive communication with travelers. However, if these departments remain siloed from one another they will be unable to share meaningful information when the time is right.

Hoteliers should strive to resist complacency and embrace the opportunity to try new things in the search for better results. This can only be achieved by listening to new ways of thinking, and accepting insight from workers on the ground floor who are most aware of the business’ barriers to profit optimization. In many cases, the answers to operators’ most pressing concerns are just out of earshot.

Convert, Convert, Convert

With business and group travel down throughout 2020 and not likely to recover in early 2021, many travelers may have become brand agnostic. This may have helped contribute to a rise in activity from online travel agencies (OTAs), but hotels may be missing out on the opportunity to convert many travelers into loyal customers.

OTAs often capitalize on travelers who are unaware of the benefits of booking directly with hotels. However, hotels have the opportunity to directly interact with guests on a personal level during their stay. Access to gated amenities, personalized interactions, and new ways to redeem points helped steadily improve hotel loyalty contributions year over year in the lead up to COVID-19. Once on property, hotels can win guests over.

Onward to a Better Tomorrow

The travel landscape may be more competitive today than it was a year ago, but hotels can still grow direct bookings with sufficient support from brands and strong partnerships. Travel today has become more predictive, higher stakes, and less accommodating of errors. Hoteliers must leverage their partnerships to show guests the value of booking direct, and they must be up front about it. If they succeed, the industry can shift the balance of power toward more profitable direct bookings at the pivotal hours of economic recovery, setting the stage for hospitality’s prosperous comeback.

Hospitality will always be as relevant as the desire for travel, but the industry must be prepared for the long game as it waits for recovery to arrive. With access to real-time data and the experience of frontline staff, as well as the indomitable desire to travel remaining strong, hotels will find a path to recovery in 2021, hopefully sooner than later. When they do, they are likely to emerge as leaders, stronger and more prepared for the future than they were before the pandemic hit.

 


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Mike Chuma is the vice president of marketing, engagement, and enablement at IDeaS.