For hotel management companies looking to secure new management contracts from hotel owners, the technology on offer can make or break a deal.
NB: This is an article from Roomdex, one of our Expert Partners
Investors own hotels explicitly to make the business value increase, often with a profitable sale as a targeted outcome. But we all know that post-pandemic labor tightening has put a strain on hotel operations. When operations are stressed, there is a downstream impact on property maintenance, guest experience, reviews, and eventually revenue.
Therefore, hotel automation technology has two jobs. First, handle administrative tasks so that staff can maintain and raise service levels, thereby preventing revenue loss. Secondly, the investment in technology needs to generate a return above operational efficiency. Basically, can your technology stack generate ROI (return on investment) instead of simply being an efficiency play?
Historically, the hotel industry hasn’t been the most forward-thinking when it comes to technology innovation. Twenty years ago, technology choice was just a box to check on a management proposal. But the industry is much more competitive today, and proof of return on technology investment is a real differentiator for owners looking for a company to deliver a profitable business.
The growth of cloud-based, API-driven PMS architectures has now allowed hotels to select a best-of-breed fit for their particular property. This means that your technology spend is less wasted on bloated software that doesn’t match your needs exactly. Given this environment, tech stack choices can be a significant differentiator for management companies. By offering financially effective technological solutions, management companies demonstrate their ability to enhance overall profitability.
Frustratingly, ROI can be one of the most clichéd and paradoxical evaluation metrics. Paradoxical as it is frequently impossible to gauge the eventual potential improvements from all capital investments. Take housekeeping for example. It is one of the departments which completes some of the most impactful work in a hotel. Guests immediately notice when rooms aren’t clean, and they aren’t shy about letting hoteliers know. While housekeeping software undoubtedly affords smoother hotel operations, it is difficult to provide a hard and fast ROI figure for hotel owners.
But a tech stack is a sum of all its parts. The total effectiveness of each individual piece of software interacting with one another is greater together than when acting in isolation from one another. When evaluating technology choices, you should consider if it increases the overall ROI of the entire tech stack. Revenue-driving technologies like ROOMDEX Automated upselling do just that.
Show that your technology choices directly drive new revenue
Automated upselling increases revenue by offering additional services or upgrades to guests during the booking process, pre-arrival, or on-site. Being automated, it quickly delivers a positive ROI because it works without the overhead of ongoing human administration. By including an automated upselling solution in your tech stack, you can:
- Increase Incremental Revenue: Automated upselling generates additional revenue by promoting and selling upgrades, add-ons, or premium services to guests. By presenting enticing offers at strategic touchpoints, hotels can capture room revenue above the original reservation that would otherwise be missed. This direct impact on the top line contributes to a positive ROI. And with ABS (Attribute-based Selling) driving the solution, hotels can merchandize and monetize unique room features (not just room type features, but individual rooms) such as a special view or a high room. This is a revenue stream that simply doesn’t exist outside of automated upselling.
- Improve Average Daily Rate (ADR): Upselling allows hotels to increase their average daily rate by encouraging guests to upgrade to higher room categories, premium amenities, or additional services. By leveraging automated upselling, hotels can effectively showcase the value of these offerings and upsell to a larger portion of their guest base, leading to a higher ADR and improved financial performance.
- Enhance Guest Experience: Automated upselling can enhance the overall guest experience by providing personalized and tailored offers. By suggesting relevant upgrades or add-ons that align with guests’ preferences or past behavior, hotels can deliver a more personalized and memorable stay. This positive guest experience can lead to increased customer satisfaction, repeat bookings etc. all of which contribute to long-term ROI. Automated upselling lets users configure their stay on their terms – as opposed to a hard sell at the front desk after a long day of travel.
- Improve Operational Efficiency: Automated upselling streamlines the upselling process by eliminating manual efforts and reducing operational costs. It allows hotels to optimize staff time, minimize errors, and improve efficiency.
Springboard Hospitality, a California-based hotel management company, uses ROOMDEX across their portfolio and feel it is a factor in winning contracts. “It is about differentiation, said Brandon Standerfer, Corporate Director of Distribution. “As a management company, we looked at it [our tech stack] as building a curated journey based on a per room, per key cost. So, instead of saying to our current owners and potential new owners, “What is your cost of operations?” or, “Your technology is “x” thousand dollars”. We can say, “We can offer you all this technology at this per key, per month cost – and it will deliver specific ROI”.”
“Because that’s a big component, right?” continued Brandon. “Where owners of the hotels are like, Yeah, I don’t want to go with that PMS platform because it’s more expensive than the other. We’re saying to them, “All in, per key per month, you get X, Y, and Z and this is how we’ll generate an ROI for you. Instead of looking at individual costs, it’s about looking at the PMS combined with other tools, the entire tech stack, that delivers a revenue ROI.”
While automated upselling on its own can deliver high margin revenue, when included as part of your management services, it drives more overall ROI from your tech stack array – and ultimately it can be the difference between you and your nearest competitor.
