What is the right balance between rate and occupancy?
As the hotel industry begins to show signs of improvement, people are starting to ask questions that they have not asked in quite a while. Questions such as: What is the right balance between rate and occupancy? Here are three things to think about.
As demand begins to pick up, it is important to find the balance of rate versus occupancy. While different people have different ways they like to run their properties, there are some things that you should think about when it comes to your mix of occupancy versus rate.
1. One thing we know is that most hoteliers have cut back on staffing and may not increase to previous headcounts, but instead will rely on more efficiency. Keeping this is mind, taking in fewer guests at a higher rate can not only net the same revenue per available room, it can help your service scores because you did not spread more guests across your staff, therefore allowing for a better guest-service experience.
2. RevPAR is really what matters. It is time to quit undercutting each other on rate. It is time to focus on the rate part of the RevPAR equation, not to just focus on taking any business you can find. If you do the latter, you will not help the recovery.
3. Many properties have deferred maintenance or may not have had the renovations they would have had under normal circumstances. Focus can be put on using your best rooms or floors first. Some good operators know that this may mean taking inventory of your rooms, then borrowing “parts and pieces” like furniture, lamps, mirrors, etc. from some rooms to make others complete.
It is great that STR is reporting signs of improvement in rate and occupancy, but your recovery depends on how well you manage into the up cycle.
William Edmundson is a hospitality executive with more than 20 years experience in brand building, culture creation, innovative marketing and sales, operations, and franchise relations. He has worked on industry leading brands for Holiday, Promus, Hilton and Choice. William is currently consulting, speaking and writing for the hospitality/travel industry and can be reached at firstname.lastname@example.org or 301-653-0506.
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