As disruptors like Airbnb is transforming the entire hospitality industry with a wide range of services, not just lodging accommodations, the industry C-suite and decision makers have to move away from the traditional revenue management strategy in order to better maximising their profit.
Non-room areas hotels can further develop to enhance revenue generation
Filling out as many rooms as possible with the most optimised pricing for each room has always been the main focus of the hospitality industry. Over time, customer behaviour begins to shift, guests now are looking way beyond the traditional services. This means other aspects like food and beverages, housekeeping, events, etc. now also play a role in enhancing the guest experience.
Today, non-room revenue accounts for up to 50% of the total revenue. As such, the modern revenue management system today has evolved to a more holistic approach that requires the collaboration from all functions within the hotel instead of each department operates independently. This approach is known as total revenue management.
First, we’ll look at a few areas that hotels can develop to increase their non-room revenue.
Food and Beverages
Hotels and resorts nowadays, particularly high-end ones, no longer serve exclusively to their guests. They have opened up their cafes, restaurants, and bar services to cater to the public.
There are various creative methods hotels can think of to attract more visitors such as food festivals, wine tastings, culinary workshops, or the most basics of all, happy hours, special occasion promotions, all-you-can-eat buffet, etc.
In order to ensure a steady stream of revenue from this particular non-room function, hotels should concentrate on attracting the locals as the majority of tourists want to experience the daily things that the locals like to do, even if they only come to experience your bars or restaurants.
Depends on the types of your property, you can either rent out your common areas for conference or banquet functions.
Demands for a place to get together are always present. While large-scale hotels rent out their spaces for big events that last several days, small hotels can still utilise the same strategy for smaller functions, such as business meetings, graduations, baby showers, birthday parties, etc.
Regardless of event type and the size of your property, the possibilities are endless.
Parking lot, kid centre, pet services
These are the additional services that can contribute to the non-room revenue. You can be as creative as you want when advertising these services to the public.
These services make use of the underutilised facilities, such as secure parking lots, which tend to be difficult to find in the city centres. People are willing to pay a higher price if the space is closely monitored, easy to get in and out so they can leave their vehicles to run some errands for a couple of hours.
The same goes for the demand for a babysitter and a pet sitter. These two services may seem like out of place but can work wonders for hotel guests or the locals. Having a full-blown pet grooming centre is not within your hotel capabilities? How about having someone to walk your guests' dogs? The extra mile you walk can all be worthwhile in the end.
Foster organisational culture to achieve successful total revenue management
The concept of total revenue management encourages the hotels to find the most profitable combination of room and non-room activities based on the overall value.
For example, guests that stay at the hotel during a business trip have a tendency to use the hotel’s bar/ restaurant to meet up with their clients or request a private meeting room.
Requests for non-room services can happen at any level, at the reception area where the guests check in and out, on the phone where the guests order room service or online.
To be able to increase profit across the entire property requires hotels to fully utilise their data. With the right analytic tools, Revenue Managers will be able to examine the pattern to match the customers with the most relevant services for their next stay.
More and more hotels are realising the benefits of having a holistic revenue management approach. Besides increasing total income, hotels can achieve deeper engagement with the guests and deeper brand loyalty.
Having said that, the key to successful total revenue management is to have it embedded into the organisation’s culture, something the industry identifies as the foundation for other new initiatives that increase total hotel profits.
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