increasing coins under monopoly hotel pieces reflecting importance of hotels monetising new offerings

The pandemic has served as a reminder about many aspects of our business and certainly, for hotels, one constant reminder has been that additional revenue must be generated in more ways than simply raising room prices.

NB: This is an article from Siteminder

In the past 18 months, when every extra dollar has counted, the ability to drive fresh ancillary revenue streams has been vital, and has inspired a completely new level of innovation and creativity from many within the sector.

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There’s no doubt, hotels today still rely heavily on occupancy to drive non-room-related revenue at their properties. However, more than ever, owners, franchisees, GMs and management companies are placing greater emphasis on new potential revenue offerings, and spaces such as hotel gyms, meeting rooms and oversized lobbies that aren’t having a positive impact on the bottom line.

When approaching these spaces as a hotelier, there are a number of important things to be considering.

The first step: Understanding how you will measure your successes

First and foremost, as conversations around monetising new hotel offerings are approached, it’s important that everyone in the business is speaking the same language, and that you are being guided by a consistent yardstick, from the outset.

I have long encouraged our industry to move away from taking a RevPAR (revenue per available room) approach to measuring overall hotel performance. Taking a TrevPAR (total revenue per available room) approach, or the less room-centric RevPAM (revenue per available meter) approach, are both ways to provide a more holistic insight into the performance of your business.

While a RevPAR approach works for budget or simple accommodation concepts, it fails to take into account the many factors that come into play when calculating the net operating income of more complex hotel businesses. Conversely, the upsides of taking a TrevPAR approach (i.e. dividing the total revenue of your operation by the number of available rooms) are many. Firstly, it allows for a clearer picture of the performance of the entire business, across departments, which is important as you look to monetise new offerings, and secondly it opens the business up to a deeper level of data analysis. For example, being able to see which guest geographies and segments (e.g. French families) are driving the most total revenue throughout their stay, will allow you to gain a clearer understanding of who you are best served selling to, and how your pricing should be varying throughout the year.

For another perspective, and for those who are looking to maximise the use of previously dead and lesser used space within their property, a RevPAM approach is useful to give you a breakdown of how certain areas of your property can be better maximised, by the meter.

Being aligned on measurement is vital to being able to define the success of the new initiatives you implement, beyond room sales, and across departments.

Making a decision on what to offer

For owners and managers, there are three guiding principles to follow when actually making a call on either what fresh offerings to monetise, and/or how to better utilise the space that your business has available:

1. Firstly, it’s important to think about your ideal customers, and be clear on the segments that you want to attract, with a long-term view in mind. A cohesive community is key to driving up average spend, and you want to be creating spaces that your target segment is keen to use and feels comfortable in.

Across the world, there are a number of businesses that are creating thoughtfully crafted places for specific segments. One SiteMinder customer, edyn, for example, has been successful in attracting guests who crave the ‘whole-property’ experience – not just a bed. Their aparthotel concept, Locke, aims to create an urban sanctuary for guests, by connecting them with the local community, both through the way that their buildings are designed, and also via the yoga, music performances and product launches that are on offer for guests to take part in.

Read the rest of the article at Siteminder