Five Essentials for Present Day Hotel Operations
It has been one year since the historical COVID-19 pandemic made its debut, affecting the entire population and economies around the world. It is evident that out of all the industries negatively affected by this economic tsunami, the hospitality industry has been, and will most likely remain, the most impacted and the slowest to recover.
Those of us who have been in the industry for several decades will admit that our industry was already in need of a major shift in order to face a “new world of hospitality” that was slowly emerging. Dramatic events such as a global pandemic tend to accelerate change and bring about a lot of positive energy and creativity to address those trends.
Instead of thinking about “resets” or “new normal”, maybe we can examine and embrace these five essentials for present- and future-day hotel operations. With change comes opportunity and we’ve seen first-hand the benefits hotels reap when adopting and adapting to these forward-thinking practices.
If there is one thing the lack of revenues this past year has highlighted, it is that we can operate our hotels much more efficiently than we thought in the past. Improved profitability can be achieved through lower labor costs, improved technology and a laser focus on KPI metrics to truly evaluate our business success.
Outsourcing/Third Party/Shared Services – Focus on the things that you can do well and that can make a difference in your operation; outsource the rest. All “administrative” work at a property level can be either outsourced or combined as shared services, outside the operation. Examples include Balance Sheet Reconciliation, Accounts Payable processing (“procure to pay cycle”), Income Audit, Payroll processing, Revenue Management, IT, PBX, Concierge, PR & Marketing (digital marketing and SEO), etc.
Technology plays a major role in streamlining and automating daily/weekly/monthly reports and the delivery of the P&L statements. Automating the collection of data ensures consistency, accuracy and timeliness of financial data throughout the operation. It also allows centralized and job combinations, resulting in lower labor costs.
Consider hotel related KPI metrics for business success.
Traditional metrics such as RevPAR will no longer be enough to assess the business. Metrics such as Total Revenue Per Available Room (TRevPAR), Gross Operating Profits per Available Room (GOPAR), Labor Cost per Available Room (LPAR), etc. become essential for owners to understand the current and future health of the business. Becoming laser-focused on all expense and profit centers using different tools and KPI’s is key for long term success.
2. SALES, MARKETING, REVENUE MANAGEMENT
Role of the Revenue Director
Hotel sales have always benefited from an online presence, however, a face-to-face meeting with customers was deemed to be the only way to secure business. The pandemic has made the sales journey a lot more reliant on virtual and digital marketing, and the customers are now expecting to “feel” the brand, clearly understand the services and features of the property, and be able to easily book business directly and seamlessly online. This form of selling has important ramifications on the roles of the Sales and Marketing and Revenue Directors. In essence, the technologically savvy Revenue Director (or CMO) becomes the person relied upon the most to bringing in the largest percentage of total revenue, elevating the importance of those roles above the traditional Sales and Marketing Directors.
ROI – Digital Marketing
With the ever-changing consumer behavior and the increasing cost of customer acquisition, traditional metrics such as RevPAR will no longer be enough to develop a winning digital marketing strategy. Understanding the profit contribution of each market segment and benchmarking it against the competition is now essential in ensuring that the ROI on all marketing dollars spent is constantly measured and adjusted accordingly.
Domestic local travel is here to stay
Well before the pandemic even started, local travel had become trendy, especially among the younger generations. Its supporters praised the reduced environmental impact and lower cost of the practice, as well as the contribution to the domestic economy, all matters critical to both Millennials and Gen Z.
Business travel might never fully recover
Bill Gates believes that more than 50% of business travel would disappear in the post-COVID world. If your hotel used to rely mainly on business travelers, you definitely should consider branching into a different niche market to adapt to this new environment. new markets will emerge such as the longevity market and the so-called digital nomads, able to work from anywhere, staying weeks – if not months – at a time. Both of those markets will combine business and pleasure and will be looking for a loyalty program that will maximize their loyalty program benefits.
3. GUEST SATISFACTION
Make someone’s day every day!
Knowing your customers and developing unique and tailored service offerings is no longer found exclusively in 5-star hotel brands but is expected at all levels of the hotel brand spectrum. Authentic, genuine, flexible and thoughtful service delivery will ensure long term guest loyalty in an environment of limited demand.
Health & Safety
As part of an Amadeus survey, 2 out of 3 travelers agree that COVID-19 prevention measures are very important to know before choosing a hotel and can be more influential in their decision to book than price alone. Hygiene has become the new fashion! The rise of the “Generation Clean” traveler – a new travel segment valuing cleanliness protocols above all else – necessitates a new approach from hoteliers about the way they communicate, market, and implement sanitization safeguards. At the property level, the role of the housekeeping team member will require to be more visible. Now more than ever, this important “heart of the house” and often invisible department is the backbone of your hotel’s guest perception and its overall success.
Guest attraction and retention
Our guests will approach travel in a more purposeful way and will be looking for meaningful experiences, innovative wellness programs, healthy and creative food and beverage offerings, all with a visible sensitivity to sustainability. Generating new revenue streams by attracting guests with curated and unique personalized experiences will likely provide the most opportunities for a successful recovery during and post pandemic.
The ideal technology plan allows hotel ownership/management companies to be more transparent, seamless, and profitable with a breakthrough, tech-enabled platform that elevates the guest experience. Ideally,
- All different systems integrate with each other’s through one middleware software.
- Revenue management systems connect with third party reports (CBRE/STR) and have the capabilities to forecast demand.
- Finance systems connect directly with all revenue generating outlets and generates automated reports for easy analysis, forecasting and budgeting.
- Guest communication (pre arrival, inhouse and post departure) is made easy.
- Guest data collection should be automated (connected to the POS) and integrated in order to ensure accurate reports and analysis.
- Touchless check-ins, check-outs, payments, must become standard in order to deliver custom and seamless experiences.
- Use of AI technology and Chatbots for personalization
5. HUMAN CAPITAL
Let’s not forget that in the past year, additional major events have also been reverberating around the globe, bringing to the forefront subject matters such as racial and gender equalities, as well as diversity. Our team members and management talent must always be the primary focus for any hospitality firm to succeed. The loss of a number of talented people to other industries must be addressed aggressively. With regards to diversity and the tragedy of social injustice, focusing on the explicit and implicit company culture must have a greater importance.
Training and Development
Commit to providing continuous resources in order to allow your team members to stay current with the latest industry changes. A good training and career development program not only will attract the best of the best, but it will ensure that your company innovates and lead rather than copy and follow. Nurture and invest in your most important asset, your human capital, and you will see a significant ROI in your bottom line!
From the consumer side, guests will continue to see, and expect changes in the way all industries cater to post-Covid operations. Buyer behavior has changed permanently and the ultimate desire for guests to feel safe when traveling is impossible to ignore. From contactless check-ins and check-outs to added emphasis on hygiene, diversity and sustainability, now is the time to implement a new and improved approach for present-day hotel operations.
Antoine is a former member of Cayuga Hospitality Consultants.
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