Revisiting the Guest Journey to Combat Softening Revenue

Here’s a piece of advice for hotel operators struggling with a slowdown in revenue growth: Rethink your definition of your guests’ journeys.

By that we don’t mean their specific travel itinerary—though that does come into it. Instead, we’re referring to a metaphorical journey—the story of why the guest came to your doorstep and what their travel objective is.

If you understand that story, you’ll understand the full range of the guest’s needs. And once you understand those needs and how they are not the same for every guest, you can start to create add-on services to better meet them.

With base rates under pressure, the most powerful strategy available to hotels at all price points is to create an array of add-on services targeted at the needs of different customer segments.

As indicators point to an end to the boom years, it’s time to look for new revenue streams from the guests you already have.

The hospitality industry has enjoyed years of unprecedented growth. But now times are turning tougher. In 2016, there has been a slowdown in the growth of revenue per available room. Some critical markets like New York have even seen declines. At the same time, many properties that started construction during the boom are coming online, adding to oversupply and putting still more pressure on prices.

The industry is indeed being proactive—for example, aggressively steering traffic from online travel agents to direct bookings in the biggest effort yet to cut commissions. The trouble is that this likely won’t be sufficient, especially in a market already under downward price pressure.

The best growth opportunities often lie at the “edge” of your core business.

We have observed countless examples of success when businesses take a fresh look at what permission they have from their customers to do more for them and what more can be squeezed out of existing resources and capabilities.

Hospitality companies, too, can find new value by taking a closer look at, and perhaps modifying, intersections of their existing offers and the differing needs of the customer segments that they have already engaged.

Every customer segment is a bit different in its needs, so necessarily any branded experience will be incomplete in meeting all these needs, and there is value to be harvested by exploiting this very fact.

Continually doing this leads to what we call an “edge mindset,” which creates opportunities for new revenue and profit with a relatively low-risk profile.

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