How To Increase Hotel Revenue

Gauge how to increase hotel revenue by justifiable factors. Amid the hospitality industry, two factors that influence a potential increase in hotel room value are expenses and profit. In the event that a particular lodging property is either not showing enough profit to warrant operation or fails to meet its expenditures, an increase in revenue can be justified. When justification in increasing a hotel’s revenue is proven, initially consider the room rates, accommodations and amenities of area competitors. Then shift consideration to the viewpoint of how potential, regular or repeat guests will perceive an increase in room rates. Appropriate research, assessment of a property’s provisions and guest traffic stability must balance proportionally to successfully increase hotel revenue.

To increase hotel revenue, you will need to:

  • Compare rates
  • Examine costs
  • Evaluate rooms
  • Determine amenities
  • Review services
  • Derive a revenue increase
  1. Conduct a thorough comparison of hotel room rates within the area. Reference local and adjacent telephone directories, and make a complete list of all other hotels. The list must include names and corresponding phone number of each hotel, along with ample adjacent space for notes. Use a phone that is not associated with the hotel’s listed or main numbers. Along the lines of what is known as a secret shopper, pose as an inquiring potential guest. Equipped with an appropriate phone, a detailed listing of competitive hotels, and a pencil or pen, contact the hospitality establishments, ask about various room rates, and note the prices. Compare researched rates to the hotel’s current price structure. Contemplate how an increase in hotel revenue would impact business.
  2. Take an accounting of the hotel’s expenses. Assemble a financial accounting of all hotel expenditures on a monthly basis. Accurate accountability will include any property and facility payments, utilities, maintenance, insurance premiums, hospitality affiliations, advertising, marketing, payroll, laundry, products, supplies, leases, taxes, amenities, services and features. Calculate the daily overhead cost on a per room basis. Deduct the calculated cost from an averaging of daily room income. Such calculation will either show a deficit or gain to use as an estimate towards the amount to increase hotel revenue by.
  3. Assess the hotel’s guest rooms. Evaluate the overall condition of the rooms. Such an evaluation will include the quality within structural appearance, surface treatment, furnishings, bedding, carpets, flooring, facilities, towels, electronics and appliances, fixtures and window treatments. The result of a room assessment will reveal if such guest accommodations will sustain an increase in hotel revenue, or will a raise in room rates require an upgrade.
  4. Determine the availability of amenities. Using a hotel room’s basics—bed, bath, chairs, table, lamp, dresser, phone and television—make a determination of conveniences and enhancements that are available. Appoint a representative to visit the competitive hotels in order to secure brochures. The collection of brochures will show and provide details as to what amenities and features are being offered at other area properties that provide similar lodging. A determination of what amenities the hotel has in comparison to its competitors will show if further embellishment is necessary. If the supplementation of one significant or several accessorizing amenities is needed to be competitive, an equitable increase in hotel room rates will be subliminally received by guests.
  5. Provide adequate guest service. Establish sufficient personnel coverage for the hotel’s front desk. When a front desk is amply staffed, the level of customer service raises. Housekeeping, as a supportive spine of the hotel, must be emphasized, in order to present rooms at their finest. Functional rooms are maintained rooms—a product of regular maintenance. Service that exceeds expectations warrants an increase of revenue for the hotel.  
  6. Estimate, validate and derive an increase for a hotel’s revenue. Accounting practices demonstrate an example for revenue expectations. Provisions of the hotel either meet or exceed overall standards in hospitality. In order to appropriately accommodate guest needs, a periodic increase of the rate structure is necessary. An area’s availability of hotels, and the need for lodging, allows for adjustments to a hotel’s revenue.


Evolution of Hotel Pricing

Harvard Business Review

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