Part 1 of 3
In today´s highly visible online market place we simply cannot stop with a friendly smile and helpful staff to continue to see profits rise. We must build a Revenue Centric Culture inside the hotel and ensure that the entire hotel staff understands the importance of running a profitable hotel and contributing to the success with the right hotel management strategy.
In part 1 of the series, How to Build a Revenue Centric Culture in Your Hotel, we will discuss 8 ways you can engage your entire staff to become Hotel Revenue Generators
“During my days of working directly with hotels on revenue optimization, I was always surprised by the lack of understanding from the staff on the overall sales and distribution strategy of the hotel. One time, I even heard a receptionist tell a guest to go directly to an OTA to book the room instead of taking the reservation over the phone! Immediately I understood that not only does the hotel need more overall knowledge about the strategy and online room distribution, but they must be involved in the revenue generation activities of the hotel.”
Due to the fact that most of the staff at independent hotels have a wide variety of tasks to perform, in depth training and including them in the hotel revenue generation activities can only be beneficial. Here´s how to start:
- Revenue Management 101: Giving the staff a basic training in Hotel Revenue Management is a good first step in helping them understand the sales strategy of the hotel. It´s a great idea to provide this training to all new staff or cover it in an employee meeting. Start with basic concepts like Supply and Demand, ADR, Occupancy and RevPar, Market Segmentation and Dynamic Pricing. This is a great start to educating your staff on the overall objectives of Hotel Revenue Management and why we practice it.
- Distribution 101: Most important here is to educate your staff on the cost of room distribution and role of channel manager. The story I mentioned above about the hotel reception staff telling the potential guest to book directly on the OTA can make a GM, Owner or Revenue Manager cringe. Its a good idea to give the staff a breakdown of overall 3rd party distribution costs and how much of that can be saved by helping to convert to direct guests. Its also a good idea to share with them how online distribution works and when inventory gets low and demand is high, the best idea is to sell the last rooms direct and commission free. If you do not have a dedicated hotel revenue manager, it can even be a great idea to start to involve the reception staff in online channel distribution activities such as using the channel manager, strategically opening and closing room types, LOS restrictions, and even finding new partners to work with.
- Educate the Staff – Along with the above 2 points, train your staff on the different types of guests and the purpose of their stay. This will help them to understand much better how to engage with them on points 4, 5, and 6 below. It can also be a good idea to share the general demographics of your customers with your staff to understand things like, where they are coming from, what distribution channel/OTAs they used to book your hotel, what is the purpose of their stay, and the general spend in the hotel (room + other). Understanding market segmentation and why it is important to have a good balance is critical for the reception staff to understand. This can also give the staff a good understanding of Why we collect this data and why it´s so important for us to have proper guest data. An example from my days of working with hotels directly on strategy, I understood that our market share of corporate business was very weak in the market where the hotel was located. Working at the reception was a young and motivated man that was interested to do more so I tasked him with finding corporate business. I agreed with the owners on a reasonable incentive plan for this particular employee and with a little training on reading GDS data and reports and giving him guidelines on how to find and negotiate corporate rates, in just 6 months the hotel was able to secure more than 15 negotiated accounts and shift this business from OTA to Corporate segment. This also allowed them to create a good base of repeat customers and balance the segmentation mix better. While the reported ADR was a bit lower in this segment, the hotel saw profits rise as most of these accounts were negotiated directly at the hotel where we did not have to pay any commission.
- Empower your Staff – Authorising your staff to offer discounts for direct bookings is also a good way to give them confidence in their impact on the hotel revenue. Load a rate plan that the staff has access to that offers a discount or value add for the customer. For example, free breakfast if they book directly with you or -10% off the published rates, this can help convert bookings as well as giving the consumer a sense of importance. Another great idea to offer repeat guests a discount on their future stays. Ensure that your entire staff is trained on this. It can be as simple as giving the staff a business card with a discount code on it to share with the guest for their next stay. You can give this to the restaurant staff to share at the breakfast time, or to the housekeeping staff to leave in the room or give to a guest as they see them leaving. This way you are including more than just the reception staff on these hotel revenue generating activities!
- Encourage Upselling – Upselling seems to be a missed opportunity for many hotels. Instead of trying to upsell into a room with more space, a nicer view, or a terrace many times hotels simply upgrade the guest for free. While at times this is also a nice gesture, there is a huge missed opportunity in upsells at the time of check in.Let´s look at an example here. Take for example Deluxe Room that has a normal supplement of +20€ to the standard room. In a hotel of 70 rooms you have 10 rooms in the Deluxe Category and on average you upgrade 6 of those 10 rooms per day at the same price of the Standard Category. The average annual occupancy % of Deluxe Room category is 85%. So let´s say that out of the average 8.5 Rooms per day that this category occupies you are able to upsell 2 of them at +10€ well that would amount to an additional 20€ per day or 7300€ per year! That is just for 2 rooms!
So the objective here is when you cannot capture the full 20€ at the time of booking, many guests are willing to pay a bit more during the time of check in if they are offered the options. Create an upsell program at the hotel that incentivizes the staff to partake in this important revenue generating activity!
- Promote Cross-Selling is different from upselling in that we are trying to sell the guest an additional product or service; for example breakfast or a meal at the hotel, spa treatment, retail products, any other concierge type of services that you can offer for the guests that can generate revenue for your hotel. Again, education here is the key where your entire staff knows of the options available. It can be something as simple as seeing a guest coming back from the hotel after a long day of meetings or exploring the city and letting them know that there is a spa on-site with treatment offerings, or even the option to order room service if they do not want to go out again. It´s definitely not rocket-science, however, it is about education and engagement!
- Set Goals and Incentives – Setting goals and incentive plans for staff are mandatory in order to create a revenue culture in your hotel. Start with goals that are small and relatively achievable. Once the hotel staff is comfortable with the revenue generation activities you can start to create some unique and challenging goals. Along with goals must also come rewards. This does not necessarily have to come in the form of a monetary reward. You can also do things like team pizza party, spa treatments, gift cards, or movie theatre tickets. Make sure you have a dedicated area in the hotel where the goals are displayed and the progress is tracked. Get creative and ensure that the staff is motivated, there is some friendly competition and they are having fun!
- Share and Celebrate – It is equally important to celebrate your success after hard work! Employees love the sense of being involved so ensure they feel like an important part of the hotel success. Share with them regularly the results of the hotel as well as results of their team or individual goals. When goals are met, celebrate and congratulate the staff on a job well done!
Once you have implemented the above steps into your hotel culture you are well on your way to seeing more money come in the door. Plus chances are you also have increased the morale of the employees….we all know the saying…happy employees lead to happy guests! At the end of the day, as hoteliers, our job is to take care of the guest so they leave happy.
Karen Pawlikowski has spent over 15 years working with global hospitality brands such as Starwood Hotels and Resorts, The Ritz-Carlton Hotel Company and Xotels in key Revenue Management roles. With her vast domain experience, Karen is currently working with RateGain in leading hotels through revenue and distribution optimization strategies to achieve more profitable business. Karen also acts as a liason between RateGain customer needs and the product development team to ensure that RateGain continues to exceed client expectations and remains leaders in hospitality technology.