Meeting the wants and needs of millennial guests is perhaps the biggest factor to consider when revenue managing for boutiques.
It’s no surprise that millennials now make up the largest share of traveler demographics and are the biggest factor in why independent hoteliers will work to perform better than in previous years. Having a full grasp where and who your business comes from is the first step in building proper revenue management.
Millennials, in general, have remained neutral with their opinions on branded hotels, and prefer seeking out a unique experience to staying loyal to one particular chain. Factors that attract a millennial traveler include urban renewals and adaptive reuse for that one-of-a-kind stay.
Remember that technology also plays an important role in their day-to-day lives, so ensure your Wi-Fi systems have enough bandwidth to meet their demands. This technology is not only required in each guestroom, but also in any large social gathering area that promotes a work/play environment.
Here are some other factors to consider in revenue managing for boutique hotels.
Distribution of rooms
With an established buyer persona, we can now look at your ideal revenue mix.
Direct bookings are by far the most cost-effective business for boutique hotels so it is always the goal to drive business to our own booking channels. Identifying what percent of business you need from group sales, global distribution systems and online travel agencies is important to a successful revenue strategy. Understanding the cost of all of your booking channels allows for you to properly layer in business by evaluating the effective average daily rate and adjusting your available rates accordingly.
Set occupancy thresholds for your hotel as key indicators of when to increase your rates. The further out a guest books a stay, the better deal they should obtain—in most cases. The worst thing you can do is to train your guests to book last minute by reducing rates or making last-minute deals available.
Without the power of a brand sales team and the tools that they provide, your independent hotel’s sales efforts need to ensure that they are utilizing the right channels to be effective.
Identify your hotel’s ideal rooms-to-space ratio to maximize profits on any piece of group business and to ensure your revenue manager and sales team are on the same page.
Food and beverage
Events are another important pillar to your team’s strategy.
While events generally do not provide a large amount of room nights, they do get people in the door of your hotel and help with your marketing efforts. If your hotel has an in-house food and beverage department, then capitalizing on these events is even more important to achieving financial success and should be incorporated into your revenue strategies.
Attractions, accommodations and amenities
Remember that destination is a high contributing factor in the decision-making process. Your sales team should be highlighting all the aspects of the area that are attractive. Does your hotel have a great bar where guests could grab a happy hour drink after their meeting? Make sure to emphasize any amenity that promotes your hotel as a destination, even if you think it is not relevant to the meeting or event. If your hotel is limited on amenities, then provide information on your local area and everything that could be attractive to a first-time visitor.
The work hard, play hard mentality has taken the market by storm so even if a client is looking to host a business meeting, they will also be exploring what to do once their meeting is finished.
Willingness to adapt
While spending on marketing may be a disadvantage for boutique hotels compared to their branded counterparts, their ability to adapt quickly to changes is quite the advantage and should be a part of any good revenue strategy.
Take some of the money saved by not having franchise fees and invest it in your marketing efforts. As Google frequently adjusts the algorithms behind its search results, boutique hotels can react quickly and gain better placement on search engine results pages. The higher placement directly correlates to more bookings.
Revenue management should never be on the back burner, especially for boutique hotels.
Strategies need to be monitored constantly and questioned so that they can evolve with the market. Pay attention to your rates daily and check them multiple times a day during peak demand periods. Schedule weekly revenue meetings with your hotel’s key managers to keep everyone in the loop of current strategies. Independent hotels can adapt quickly to changes in the market, so use this to your advantage.
The “set it and forget it” mentality needs to be removed from your thinking to achieve revenue success. It may require lots of dedication from your entire team, but the results are extremely rewarding.
Robert Rauch is an internationally-recognized hotelier, CEO, and founder of RAR Hospitality, a leading hotel management and consulting firm based in San Diego, California. RAR Hospitality’s hotel collection includes independent, boutique and branded properties throughout North America.
The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.