Improving Hotel Profit

Business, Hotels, Trends

In this article, we explore improving Hotel Profit and Market Share: how hotels can recover profit and increase market share in a complex new market place.

The internet has turned local closed markets into vast global transparent markets. This has caused a seismic shift in our industry in the last 20 years.

Increased costs and competition and much savvier customers have forced the industry to transform the way that it has traditionally distributed, priced, marketed and operated. All of these factors present challenges to improving hotel profit

Technology has become a lot cheaper and data analysis more effective. Hotels are now better enabled to market and distribute via the internet themselves and work in a much more cost effective way.

Traditional hospitality managers are dealing with legacy systems and a workforce that was structured 15 years ago. New guys on the block now achieve better occupancies and rates with clearly focused overheads and smaller, but more effective and specialist teams.

Today, smaller modern companies are successful, because they aggressively compete with the traditional, very slow-moving, top-down machines where people don’t really understand what’s happening in real-time. They are very fast at making decisions and in adapting to the day-to-day market, leading to very profitable business models.

From a business perspective, it’s now important to ask: “How am I going to tap into this opportunity, while improving hotel profit?”

Despite the significant increase in distribution and payroll costs that are threatening the profitability of many hotels, traditional management teams have been slow to adapt to the new market place and modify their business models.

Companies such as CitizenM, Hoxton and 25hours know how to market and distribute a hotel effectively via the internet.  They know that traditional loyalty schemes have lost impact as a result of the transparent market place and they have adapted their segmentation strategies to effectively tune in into the right customer at the right time at the right price with the right product.

An excellent and consistent product is not enough any more and traditional approaches to budget, strategy, pricing, forecasting, marketing and data management should be completely revised so that all commercial silos work together and are in tune to the day-to-day market place.

Low understanding of the importance of investing in a functional website and SEO to attract direct bookings and the tactics involved from position optimization via OTAs to increase direct conversion (billboard impact) leaves a significant amount of easy profit on the table.

Challenging the status quo, organising your data, understanding what’s happening in real-time, and being able to act with agility and knowledge is critical in the transformation to a modern, sustainable and profitable hotel.

On this site we have additional articles relating to improving hospitality profit and market share, specifically in hotels and restaurants.

Lucienne Mosquera MIH is Managing Director at Hospitality Business Development

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.