"Investors often feel frustrated in the achievement of their return on investment objectives."

Maximising Hotel Profitability

The independent hotel sector can be unforgiving when it comes to achieving bottom line profits. Many hotels operate with high fixed costs and razor-thin margins, giving very little ‘wriggle-room’ in highly competitive markets. So we need to focus intently on maximising hotel profitability

It is easy for owners and the team to get caught up in day to day operational tasks, and experience tells us that the financial management of the hotel may not always receive the attention that it requires.

Investors often feel that they have no influence in the management and decision making process of the hotel and are frustrated in the achievement of their return on investment objectives.

But even if the management has strong financial skills and good procedures in place, this cannot solve the problems that will arise from inadequate sales!

The hotel sector has changed of late evolving from a situation where most hotels were independent and essentially competing a highly specific local market, to one in which hotel chains increasingly dominate and in a hyper competitive global market place.

Independent hotels find themselves in a situation where they work in a sector characterised by high operational and financial gearing, with the result that they need to pull out all the stops to maximise their revenue by selling every room every night at the optimum price. Thus, having effective and efficient distribution and revenue management is very important but very challenging, given the fast paced change in the sector.

The distribution revolution currently under way in the hotel sector presents hotels with incredible opportunities, if only they have the knowledge and understanding of how to best exploit them.

A whole new portfolio of distribution channels has developed to supplement – and in some cases even start to replace – traditional methods of driving demand. These forces are so powerful that today, they are starting to provide independent hotels with a viable alternative to signing up with a hotel chain for a franchise or management agreement.

Undoubtedly, the situation will continue to evolve, making managing hotel electronic distribution a challenging prospect. Understanding the rules of the game is absolutely essential and how to manage your hotel’s positioning in this increasingly complex network of roots to the customer, as well as optimising your distribution strategy to maximise revenue and profitability

So how can Hospitality Business Development help with maximising Hotel profitability?

Common revenue, productivity and profit optimizing activities include:-

  • Customer Relationship Management – effectively targeting, capturing and retaining customer groups that provide the highest return on investment
  • Channel and Inventory Management – effectively matching capacity to demand in order to maximise revenues.
  • Data management and benchmarking – ensuring that all relevant data is available to support effective and efficient day-to-day decision making.
  • Maximising team productivity – ensuring there is a happy, loyal and dedicated team that is aligned to the vision and goals of the business.
  • Effective strategic planning for the future – having an insightful and ongoing review to ensure that the business is consistently outperforming its competitor set and that it is keeping up with new trends and customer demands.
  • Maximising operational efficiency – ensuring that the whole team works to a flexible, but tight business model, that is fully aligned to the business goals, so that there is a razor sharp focus on profit maximising at all times.

Improvement in these areas helps independent hotels develop into true revenue generators, delivering healthy net operating income.

Without commitment, we would welcome the opportunity to discuss your hotel’s productivity and profitability in more detail and talk about how to maintain revenues.

Would you like to know more?

Download our latest White Paper entitled “Why Return on Hotel Investment Can Significantly Underperform” or contact me, Lucienne Mosquera (Managing Director) for an informal conversation about your Investment.