The hotelier’s guide to optimising revenue in 2023

The hotelier’s guide to optimising revenue in 2023

?Industry trends shaping commercial strategy

?As 2023 gets under way, there are new market forces at play. Consumer behaviours continue to evolve and shift, as do demand patterns, employee expectations and advancements in technology, all of which directly impact the hotel industry.

Analysing these trends should be a priority because they tell a story – of market opportunities that can steer a successful hotel commercial strategy.?

Here’s a round-up of trends hoteliers should consider as they craft their 2023 revenue optimisation action plan.

1. Be agile in the face of variable demand

Travel is back, with tourism and hotel performance exceeding 2019 levels and for some destinations such as Dubai breaking any record achieved previously for some hotels, which is expected to continue in 2023, according to both the UNWTO and STR forecasts. Leisure travel has stabilised, corporate travel is accelerating, and both ‘bleisure’ and ‘work-from-anywhere’ are now the norm. But, against a backdrop of multiple market crises globally, demand will be variable. Lead times for the more price sensitive segment will increase, so early bird specials should be back on the agenda. Hotels must layer in their base business to yield up, with the opening of the Chinese market for traveling a new layer of pent-up demand must be carefully managed to optimise the business.?

?2. Provide amazing experiences which create memories to command your price point

With demand stabilising and in some markets like the Middle East, supply growing at a healthy pace, competition is fierce. It’s been said before, but the cookie-cutter approach is no longer acceptable. Now, more than ever, hotels should focus on guests experiences – clear product and service differentiators. Experience and service is king, to command your price point and preserve your brand identity. In short, it will future-proof your business and build resilience to cyclical downturns.

In 2023, ensure you are ‘fit’ for purpose – consider new lifestyle trends, or how current movements are evolving, and adapt what you offer, from F&B to wellness. How can you develop healthy culinary experiences for the entire family, which are now in hot demand, or excite your guests with new fitness concepts such as the virtual workouts tipped for greatness in 2023? Some hotels are even morphing into ‘hospital-ity’, providing diagnostic services, medical treatments and more. It’s certainly one way to add another revenue stream and optimise space.

3. Adopt out-of-this-world thinking

Do you have a Metaverse strategy? Can your customers pay in Crypto? And how are you using NFTs to tap into new distribution and revenue channels and to build communities of loyal guests? These are all major considerations for 2023 as governments base future economic growth on leveraging the world of web3. The Dubai Metaverse Strategy, for example, is an invitation from the government to all key stakeholders, including hoteliers, to get on board. It has a Gross Metaverse Product (GMP) target of 5% by 2031 and so commercial leaders must not only consider ROI but ROE – Return on Engagement. When it comes to Cryptocurrencies, there is a global community of Crypto millionaires that hoteliers could be targeting. Will you jump on board and tap into this overseen opportunity?

?4. Evaluate your tech stack strategy

Tech stack is more important than ever – invest in technology infrastructure and solutions to make it easy for the customer to find you and to engage with you. And, make reporting automation a priority. Hotels are sitting on a goldmine of data, but often they don’t have the people or the systems to analyse the figures and the trends and communicate them to the right departments. Remember, that data tells a story – of what your guests want, when they want it and where they want it, opening the door to optimised revenue streams.

?5. Be an employer of choice

Attracting and retaining good talent is crucial – the future of your business depends on it. Provide flexible working conditions to meet the lifestyle needs of your workforce. Offer training and development opportunities, fair compensation and consider remote work options, as well as the evolving ethics of current and future talent who will expect employers to meet certain standards, policies and commitments spanning ESG, diversity, inclusion, and more. To unleash your profit potential, create a total revenue optimisation culture across all income streams. If you don’t have the in-house expertise, call a consultant to help plan and support this gamechanging transition.

?6. A top to bottom approach

In 2023, asset managers and operators should look beyond profit lines, optimising top line commercial strategies and taking a bottom-up profitability approach. For example, is the hotel sales and marketing budget spent so it has the most profitable cost per acquisition? Invest in systems to improve productivity and ensure those implemented are utilised to their full potential.

?7. Turn every space into a profit centre

For hotel inventory, don’t only consider RevPAR, but TrevPAR – total revenue per available room. It’s an insightful metric for measuring overall hotel performance because it takes into account revenue from all departments, including food and beverage sales, meeting space, spas, golf, parking, services like phone and Wi-Fi, and even miscellaneous income such as cancellation fees. Identify all the dead space in your hotel and convert it into revenue-driving centres – think revenue and profit per square metre, for every indoor and outdoor space you have, and get creative. Idle ballrooms are no longer acceptable, but there are so many ways to transform these spaces into revenue drivers.

8. Master the art of revenue optimisation

In 2023, revenue optimisation is more than a skill, it’s an art form. It takes a holistic approach, encompassing all the trends I have mentioned and more. Commercial leaders who master it will take hotel profitability to new heights. To find out more, drop me a line - [email protected]