Hotel Business Management to help you to boost your revenue

Hotel Business Management to help you to boost your revenue

Hotel Business Management

Hotel business management involves the management of all aspects of a hotel’s operations, including customer service, housekeeping, sales and marketing, financial management, and employee management. Effective hotel management requires a combination of strategic planning, attention to detail, and strong leadership skills.

What is hotel management?

Running a hotel comes with a series of responsibilities. You must be able to adapt to new challenges, help different departments and ensure that the hotel maintains a high level of excellence. As a Hotel Manager, you will be responsible for supervising and have a strong understanding of finance, planning, service and organization. While you have a team of managers working alongside you, as a hotel manager you need to lead rather than follow. You also need to make sure your employees are managing their time and services efficiently, whether that’s improving their working conditions or simply ensuring that customer expectations are exceeded.

You must pay close attention to detail, leadership and teamwork. In some hotels, depending on the size and type, you may have to deal with many more daily tasks than in a more prestigious place. You may also have less contact with customers, but you will spend time monitoring the business through regular meetings.

What AB Consulting can help you to booost your revenue?

We work on large and small projects from city hotel, boutique, design, resort, luxury, villa, youth, budget hotels. Our keyword is TRANSPARENCY !

1. Revenue Management

Yield & revenue strategies, online and offline distributions. We can help you develop and implement revenue management strategies that optimize pricing and inventory to increase revenue. This can include forecasting demand, analyzing pricing data, and implementing pricing strategies that maximize revenue.

2. Sales Representation Services

International presence and strong online & offline reach.
Personal sales visit to travel agencies, business travel management companies on a regular and consistent basis.

Create your  liason office, a foreign company a minimal presence in France and / Indonesia, allowing you to promote your products & services but not engage in direct sales or contracts.

3. Distribution Systems & Channels

Central reservation system, global distribution system (GDS), channel management system, website/mobile booking engine, meta-search distribution.

4. Online Internet Sales

Use Online Travel Agent (OTA), manage and process a large volume of bookings, which can be extremely helpful in improving occupancy in low or shoulder seasons.

5. Internet Marketing

Digital marketing and use of social media, e-mailing, banners… Adaptive marketing and campaign management.

6. Marketing and branding

We can help you develop and implement effective marketing and branding strategies that increase your hotel’s visibility and attract more customers. This can include creating a compelling brand identity, optimizing your website and online presence, and developing targeted marketing campaigns.

7. Operations and efficiency

We can help you identify and implement operational efficiencies that reduce costs and increase profitability. This can include analyzing staffing levels, streamlining processes, and identifying opportunities for cost savings.

8. Customer experience

We can help you enhance the customer experience to increase loyalty and repeat business. This can include evaluating guest feedback, identifying areas for improvement, and implementing strategies that enhance the guest experience.

9. Market analysis

We can provide valuable market insights and analysis to help you stay ahead of the competition. This can include analyzing market trends, identifying new opportunities for growth, and developing strategies to capitalize on these opportunities.

10. Hotel and Villa Management

Our professional hand will help you to choose the right hotel management company that suite you the best. We manage properties for private owners.

4 levers to increase the revenue of your hotel

Revenue management is a known and recognized method for maximizing your hotel’s turnover. This business covers several aspects including: pricing, inventory optimization, management of additional revenue (in addition to the room) and optimization of distribution channels. All of these points can contribute directly or indirectly to increasing the income generated by your activity.

I propose today to discuss more precisely 3 little-known levers to increase your turnover with revenue management. They are simple and accessible even without revenue management tools.

If you want to take your revenue management to the next level, you’ve come to the right place. Let’s go !

1- Optimize length of stay to increase your hotel’s turnover

The lengths of stay?

What is commonly called “duration of stay” is a revenue management lever, which aims to filter reservations according to the duration desired by the customer. In other words, if you configure in the system a length of stay of two nights on a date and a customer comes to your website for a stay of one night on this date: the system will indicate to him that there is no availability for that date.

Turning away customers? But you are crazy?

Why refusing customers can be a smart solution? Because for certain dates, you have a request that exceeds the capacity of your hotel (and even at the last minute you continue to receive calls at reception even though you have been full for several days). For these dates, it is in your best interest to “accept” only the requests that are most relevant to the performance of your hotel. which ones? those that allow you to also fill in the dates around which are less requested.

This situation can be observed, for example, for a hotel with a business clientele during the week: Tuesdays and Wednesdays are in high demand. It is therefore interesting to place a length of stay of 2 nights on Wednesday, to only take reservations departing on Wednesday who also wish to stay on Thursday. (Thursday being generally a weaker day which will hardly end up complete)

In this situation, it is even possible to consider a length of stay of 2 nights on Tuesday to obtain Tuesday & Wednesday or even a length of stay of 3 nights on Tuesday to obtain Tuesday, Wednesday, Thursday, if (and only) demand permits.

Concretely, what do I do for my hotel?

Concretely, if you want to use this lever in your activity, the first step is to identify those days on which you have a higher supply than demand. You probably already know them from your experience. If you still want to use a more academic method: ask your reception team to note the requests that cannot be served. That is to say, counting customer calls on dates that are already full. You will thus have a clearer view of your demand, which is called “relaxation” (total demand for your hotel). On these dates, assess the dates around which need to be assisted and apply a length of stay in your reservation system.

Points not to miss

Be careful however for your beginnings, here are my “safety” recommendations: never spread, the flower with the gun, all your planning of durations of stay. Instead, approach the “test and learn” method: choose a particular week, set a goal, test, harvest the result and learn from success or failure before renewing and potentially extending to other periods. I also advise you to start with short lengths of stay. Only apply 2-night stay lengths to start. Unless really, that you really have stays usually very long (more than 3 nights).

2 – Use overbooking to maximize occupancy

Overbooking is a frequently publicized subject and can be the subject of complaints. There is no denying it. But observe the common point between all of what you have heard: you will realize that this only concerns cases where the overbooking has been poorly executed operationally. To do it well, you must first bear in mind that it is not always possible to do it.

What benefit with overbooking?

Overbooking is a very profitable method to maximize the filling of your establishment. The method is as follows: accept by phone or online a number of reservations greater than the number of rooms you have in the hotel. The level of overbooking (oversold rooms) depends on the level of anticipated cancellations for the night concerned. So over time (or the same day) the overbook ends up eroding because cancellations happen. The goal is to end the evening with a “all-in-one” suit. If the exercise is well done, it is not necessary to dislodge customers (make them sleep with a competitor). This method can thus be completely invisible to your customers.

How to overbook?

First of all, you must follow an indicator throughout the year that you may not have yet in your statistics: the cancellation rate (or the number of rooms cancelled) per day. This indicator will allow you to estimate a volume of rooms to book in addition to the capacity of your hotel to increase your chances of finishing at 100% occupancy.

But unfortunately, this science is not an exact science and it can happen to be wrong or that the facts make us lie. For example: for 3 years you have always had at least 5 cancellations and this year, for no reason, on this date you have only received 3. In this case, it is obviously necessary to have planned a solution to accommodate these customers “too much”. You must therefore have entered into a partnership with a competing hotel of the same quality (see if possible with an additional star) at a very close distance from your establishment. Upon arrival, customers are therefore informed that they will be sleeping in another establishment.

This point of customer dislodging is one of the reasons why it is sometimes impossible to overbook: if you do not have any establishment of the same level or superior within a very close distance of you, overbooking seems relatively risky. You risk great customer dissatisfaction by relocating them away from your establishment.

Tips for managing the situation operationally

My trick, to manage overbooking in reception (it is never very easy) is:

on the one hand to relaunch all reservations the same day (which can make it possible to collect other cancellations and reduce the overbooking to be relocated) and
on the other hand, to announce to customers upon their arrival an exceptional possibility (following a problem with a few rooms) of sleeping at no additional cost in a neighboring hotel of better standing. Some will be happy to take advantage of the opportunity. And for those who are not, no problem you accommodate them. As you arrive, you will easily find the 3 or 4 customers happy to stay elsewhere. Your overbook is thus managed without major clashes.

3 – Better establish the price of a group

It is difficult when requesting a “quotation” for a leisure group to establish the right price. In some cases you even receive a take-it-or-leave-it budget. The question that can therefore be asked is: is there an ideal price? How do I know if the group proposal will help my hotel’s performance or reduce it? The most commonly accepted method in revenue management to answer this question is the displacement calculation.

Displacement calculation: what are we talking about?

The displacement calculation makes it possible to evaluate, on the basis of your usual performance (i.e. without the group in question), what turnover you would obtain from the requested rooms. Thus, the income offered by the group must be at least equal to or greater than this historical performance.

So by dividing this historical income by the number of rooms, you get a minimum price per room below which it is not worth selling your rooms to a group this year.

How to perform a displacement calculation?

To make this estimate, you need the sales day by day and by room type and mirror what the group asks you. Be careful if you end up with some empty rooms, these are the rooms you have to count first.

Here is an example:

on 12/01 you had sold last year 3 Deluxes (out of 5) at 100 € and 6 Standards (out of 10) at 80 €
the group request you received is 1 Deluxe & 10 Standard

To calculate your past performance on the rooms requested by the group
  • on the Standards: 4 unsold (0 €) + 6 sales at 80 € (480 €)
  • on the deluxe: 1 unsold (0 €)
  • In total on the standards (480 € / 10) = 48 €
  • In total on the deluxe: 0 €

On the Standard rooms, it is not interesting, for your performance, to let them go below 48 €. If the selling price of the group is lower, you run the risk of performing less well than last year (unless you compensate elsewhere). If the selling price of the group is higher you contribute to improving your performance compared to last year.

Strategies to Increase the Revenue of a Hotel or Accommodation

4. Manage your prices according to the duration

For hotels, length of stay poses a similar problem to that of airline hub-and-spoke networks.

Think of a popular weekend hotel. The decision of your request according to the length of stay that you accept on Saturday evening has an impact on the surrounding nights. If you sell too many overnight stays on Saturday night, you lock in demand that would have remained Friday and Saturday or Friday, Saturday and Sunday. This can have a significant impact on hotel revenue, particularly if the majority of Friday night demand is for two-night stays. If you fill the hotel on Saturday for one night, you leave the rooms empty on Friday. If you only accept reservations that want to arrive on Friday and stay two nights, you fill the hotel on Friday evening and Saturday evening.

Obviously, this is quite simplistic, but it illustrates the problem well. It is important to take into account the peak of the night with the surrounding nights, called shoulder periods, in order to really optimize the income.

Revenue management in hotels

Today, most hotels have an extensive revenue management organization, including corporate revenue management, regional resources, and property-level revenue managers responsible for setting rates and of the strategy. Many hotels use an automated analytical revenue management system.

The core function of revenue management is to price each product (rate, room type, length of stay) over the booking horizon.

Recently, revenue managers have begun to explore the possibility of applying revenue management to other revenue-generating assets within the hotel, such as reception areas or food outlets. They are also called upon to play a more strategic role, which requires an understanding of market dynamics, customer lifetime value, digital marketing and branding.

How does Yield Management work?

Revenue Management, also commonly referred to as Yield Management, is a specialized pricing discipline applied to industries with the following characteristics:

  • Relatively fixed capacity. For example, there are only 350 rooms in the hotel.
  • Stock perishable over time. If a room is not sold for tonight, you lose the opportunity to sell it.
  • Demand variable over time. There are peak times and low times, like a busy business hotel on weekdays and slow on weekends.
  • Low cost of sale compared to fixed costs. It costs relatively little to sell one more room compared to the operating costs of the hotel.

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