Adding to top-line revenue from non-rooms income is not a question of gouging, but knowing what it is hoteliers control and own and what emotional price guests attach to them.
NASHVILLE, Tennessee—Increasing non-rooms revenue must begin by searching for the lowest-hanging fruit after determining what guests are willing to pay for, according to sources.
Speaking on a panel titled “Scoring big with non-rooms revenue” at the Hotel Data Conference, Brian Tkac, SVP of marketing and sales at hotel management firm Hostmark Hospitality Group, said obvious sources of such income include ancillary rooms revenue, late check-out and pet fees.
Panelists added miscellaneous fees are potentially lucrative, with Tkac underlining the secret of success is to sell what people emotionally connect to and never to gouge.
“It is an opportunity for us to understand what is in the mind of the guest, the journey they are on,” he said. “We have to make sure we’re touching any need they have and to sell what we can based on what they love.”
Non-rooms revenue can be more challenging in select-service properties, but all hotels should look at the uniqueness of their destinations to push revenue through local foods, crafts and culture, panelists said.
There are also opportunities to earn non-rooms revenue from non-hotel guests.
Richard Niedbala, SVP of private equity company Lodging Capital Partners, said it was evident at one of his hotels that locals would use their parking lot for weekend parking at no cost. There is a goldmine in parking fees, he added.
Niedbala said sales saw a bargaining chip in offering free parking for groups booking rooms, while the hotel realized increased revenue from a large area that previously provided nothing to the top line.
“We were the only hotel for a four- or five-mile radius,” he said. “It cost approximately $250,000 to install parking gates. We have a beachfront hotel in Fort Lauderdale, and there is a lot of day travel. We can charge $25 a day (to park), and sometimes there’ll be 50 cars a day.
“It depends on where you are, how much you push it. We do not open (the lot) up if it is a full house. It’s a cherry on top.”
Steve Enselein, SVP of events, global operations center, Hyatt Hotels Corporation, said it was vital to listen to guests.
Hyatt is “a big believer in data tests across multiple hotels at the same time, and extensive (employee) training,” he said. “It comes down to what do guests want, how can we deliver this and how do you price it.”
Moderator Chuck Pinkowski, founder of Pinkowski & Company, said according to his most-recent numbers, year-to-date non-rooms revenue increased by 8.4%.
“It is not a huge number in terms of revenue, but the growth is pretty damn big,” Pinkowski said.
Despite it being a visible, obvious part of many hotels, panelists said that food and beverage is often undervalued. Enselein said that was a matter of data.
“You can recite your STR rooms’ data, but not that of F&B,” he said. (STR is the parent company of Hotel News Now.)
Enselein said he was charged by his bosses to jump in and be passionate about F&B and relevant data.
“It was a long year to get a consensus. For example, what is a cover?” Enselein said, who added precise data could show revenue opportunities arising out of a better understanding of F&B relevant to transient guests and group business.
“Understanding food revenue per square foot, beverage per square foot—perhaps (those charged with running F&B spaces) are not managing their space well,” he said, “maybe they are not targeting the right share of guests and, most notably, they are not pricing correctly. How many of you let your catering staff set your F&B pricing? Everyone.”
Niedbala said the real test regarding any non-rooms revenue is “are guests pushing back?”
“If it is successful, then you play around with it a bit,” he said. “We could be a little bit more mercenary, given our limited-time holds. … If you control something, how much are people willing to pay to get access to it?”
“Talk to your guests, and find out where their pain points are,” Tkac added.
The importance of pets
There might not be a more emotional subject in relation to guests’ hotel journeys than their pets, panelists said.
It is illegal to charge for service dogs or to ask if a guest’s dog is a service dog, panelists added, but they said most often all other pets are treated like any other guest—they pay to stay.
But consideration must be given to those guests who are not enamored by pets.
“Pet fees need to be kept reasonable so that guests say, yes, I am bringing a pet,” Tkac said.
Panelists said the admittance of pets brought up housekeeping and administrative considerations.
“Rooms are allocated to pets, and there are contingencies on how to maintain those rooms,” Tkac said. “Additional costs should still allow a profit. You need a policy, and if you do not, that can come back to hurt you.”
Other revenue pots run to business centers, roomservice, non-restaurant F&B and resort fees, which panelists said no longer goes into the rooms-revenue pot, but into “miscellaneous.”
Do not be afraid of testing and tweaking, panelists added.
“We do all we can to cut down on roomservice,” Niedbala said.