5 minute read
Thrive and Improve Asset Value: Business Growth Strategies for Accommodation Properties by Melissa Kalan
Accommodation properties operate in a highly competitive and dynamic industry, and it is essential for these businesses to maximise their revenue and profitability to thrive and improve asset value.
To achieve this goal, they need to adopt effective strategies that can help them increase their top-line revenue while managing costs. In this article, we will discuss some commercial strategies that properties should focus on to maximise their revenue and profitability.
Pricing Strategy: The first and most important strategy for maximising revenue is the pricing strategy. Accommodation properties should regularly evaluate their pricing structure and adjust it based on demand and seasonality. Implementing dynamic pricing strategies can help properties adjust their prices based on demand. A well designed pricing and distribution strategy also helps to increase revenue per available room (RevPAR), occupancy rates, ADR, and profit. Don't forget price is a reflection of value and value creation must rise in lockstep with price.
Marketing and Sales Strategy: A robust marketing and sales strategy can help properties increase their visibility and attract more guests. Properties can use a combination of digital marketing techniques, including SEO, social media marketing, and email marketing, to reach their target audience. They can also work with travel agents and a range of booking channels to increase their online presence and reach a wider audience. Costs of acquisition across all distribution channels and return on investment of all marketing campaigns must be measured and monitored.
Customer Experience: Providing an exceptional customer experience across all touch points is crucial for attracting and retaining guests. Accommodation properties can invest in training for their staff, focus on personalised guest experiences and offers, and analyse customer feedback and reviews to improve their guests’ experience. Customer reviews are powerful and influence property value perception which impacts your pricing power. More often now I see guest reviews flag that your property lacks value for money. Even if you think it does not, other customers searching are swayed heavily by this review, so take notice!
Revenue Management: Revenue management strategies involve optimising revenue streams by managing inventory availability, room rates and occupancy levels in real-time for all market segments across a range of distribution channels. Properties can implement techniques such as upselling and attribute based selling to maximise customer spend.
Allowing customers to curate their stay based on their needs and wants also enhances their experience and perceived value. Automated forecasting solutions that predict demand, draw on a broad range of data sources, and have the capability to re-forecast multiple times each day, detect opportunities and adjust pricing are beneficial for your best chance of success.
Forecasting with accuracy is a major driver of business growth, underpins the success of commercial strategies and the profitability of the entire property. Do not contribute to the shortfall in industry talent by overlooking the value skilled forecasters can bring to your business, and especially those that are excellent communicators and leaders too.
A great analyst constantly monitors, measures, and critically analyses a wide variety of data sources and trends to avoid ever having to claim "In-hindsight"....
While increasing revenue is important, managing costs is equally essential. Accommodation operators should regularly evaluate their costs and identify areas where they can reduce expenses. This can include implementing energy efficient systems, reducing food and beverage costs balanced with a focus on the contribution margin of menu items, outsourcing non-core activities and improving forecasting accuracy.
Diversification: Diversifying revenue streams can also help increase revenue and profitability. Accommodation properties can generate additional revenue by offering additional services they may not offer onsite by tapping into an eco-system of local providers. Adding services can also help to differentiate a property from its competitors and increase its value perception.
Emerging trends:
Sustainability: Guests are becoming increasingly conscious of their environmental impact and are seeking sustainable options. Properties can reduce their carbon footprint by implementing sustainable practices like energy-efficient systems, recycling programs, and sourcing local products. Those that embrace sustainability can differentiate themselves from competitors and appeal to eco-conscious guests. For corporate properties, the impact of sustainability targets on this segment, coupled with a forced and recent conditioning behaviour of servicing clients remotely, along with the cost saving benefits of lower travel spend is something to monitor closely.
Technology: Properties can use technology to improve the guest experience, streamline operations and increase revenue. Mobile check-in and keyless entry can enhance the guest experience, while data analytics and artificial intelligence can help operators better understand their guests and predict their needs. Skilled leaders capable of interpreting insights from numerous sources of data and with strong critical thinking skills and broad market knowledge know when and how to react and when not to, vastly improves your commercial capabilities.
Accommodation operators must continuously evaluate and adjust their revenue and profit generating levers to stay competitive and this requires a combination of strategies. Additionally, emerging trends like sustainability and technology, including artificial intelligence and economic pressures will impact and influence demand, and require properties to adapt to stay relevant, efficient and competitive.
