What is the best hotel strategy to increase occupancy and revenue? How can we differentiate ourselves to compete with other big hotel competitors?
When I opened my first Boutique Hotel I did not have any prior experience in the hotel industry. The only experience I had with hotels came from being a guest in hotels myself. I did not study hospitality management neither. So what did I do to get rolling? I contacted a consultant and asked him for help. The consultant wanted to charge more than $10K for only three months, and so I decided to do all the marketing by myself.
Here is how I started:
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I contacted the Online Travel Agencies – HRS, Booking and Expedia. I put all the information about my hotel together: pictures, facilities, amenities, the hotel’s location, public transportation, distances to specific attractions from the hotel, normal prices and trade fares prices. I completed each mandatory OTA training and finalized the contracts. As soon as my hotel was available on the OTAs I immediately received reservations. That was pretty amazing. Therefore, I want to emphasize to hoteliers / apartment owners, that it is necessary to be bookable on the main OTAs on the net. I must admit that without being on these mentioned OTAs my team and I would not have served as many guests as we have in the last years. As soon as you get in touch with your guests, it depends on you if you can gain them as regular guests or not. That has to do with providing the best service you can imagine. (here is a post I wrote about service in the hotel industry) Your goal should be to make guests remember you for your service, quality, kindness, home-feeling, uniqueness and attentiveness. Make sure that your guests leave your accommodations satisfied. In addition, I am using a self-made “Guest Come Back Card” as a Honors / Point program. At Check-Out, I am providing guests a GCBC. If a guest has visited us ten different times, they receive some discount on their next stay. The “GCBC” is a cost-effective alternative to an expensive “Point-Program.” This GCBC is just an example; you can provide one free night as a gift as well. At Check-Out, we ask guests, most of the time, if an additional reservation is needed. This strategy leads to many repeating reservations. While you are asking this question, it is a good method to mention the advantages of booking at the very moment. (lower price than on OTAs, rooms availability, room-choice, etc.) If you notice that some of your regular guests are not coming back, then call them and ask them why. It is crucial that you find out what happened; so that you can immediately eliminate any issues. Tell them that you want to offer them the best service they can find in your town and that you are eager to make a change for good. Do not beg them to come back, but show them that you care and that you would love to see them again. Another strategy we like to use, is to contact companies that are close by. Many companies close to us have regular seminars or events. Sometimes, some companies are just not aware that a hotel is near them. Due to that fact, you need to get these companies’ attention. One common answer that you usually find to the question of this post is: Apply to more OTAs and your occupancy will increase automatically. Well, I do not agree with this answer. A couple of months ago, I applied to an additional OTA and after a few days my hotel has been available on the platform. Over some months I received 8 to 10 bookings via this channel. Therefore, adding new OTAs to your existing OTAs is not always the solution to more reservations. Of course, being on various OTA platforms has advantages, and it definitely increases your visibility. Having high visibility is key to your success. Nevertheless, have in mind that being on many OTAs means that you need to invest more time to maintain your extranets.
Having a channel manager is another way to boost your occupancy. In the first week my hotel opened I did not have a channel manager in place. That was stressful. I had to manually block rooms on various OTAs, because as soon as I received a reservation, let’s say from HRS; then, Booking. com and Expedia did not know about it; and so I had to log into the extranet of these two OTAs and block the room. As you can imagine, that is a lot of work and you have to be fast as well. If you do not block the rooms right away, you may have an overbooking after a period of time. I recommend each single person who is available on various OTAs to use a channel manager. Using the right channel manager eliminates a lot of stress. I can absolutely guarantee you that!
Attention: Do not drastically decrease your room prices; imagining that you will receive hundreds of reservations and always be fully booked from one day to another. First of all, if you love your accommodation and you want your guests to respect your facilities and take care of them as well, then be careful how low you set your prices. In my experience, the more I lowered my prices the stranger my guests were. When I offered low prices for two weeks, I had six very strange guests in my hotel. They were so weird to all other guests, that I had to take them aside and explain to them our house rules. Now I know what my rooms are worth and I will not sell them under that amount anymore. You do not need to offer low prices to increase your revenue. Besides, many guests will associate the price per room with the quality of the accommodation. That is another fact that you should have in the back of your mind.
Now let’s increase revenue.
The original question of this post was: What is the best strategy to increase revenue?
To answer this question, you first of all need to know what you’re selling. Therefore, if you are planning to increase your revenue, start making a list of all items that you are selling in and around your accommodation. For instance, I am selling: a room per night, mini-bar items, the option to check-in early and check-out late, extra beds, and a shuttle-service (sometimes). I could sell breakfast, Wi-Fi and parking (but they are included in the price).
As soon as you have your list handy, go to the next step: analyze each item and ask yourself “What do I have to do to increase the price or sell more of this item?” When I look at my item “room” and the number of sales in a week, I am actually satisfied and confident that slowly but surely I will gain more and more regular guests. Whereas, the price of this item still has adequate room for improvement. Nevertheless, if I increase my room-prices by 10€-15€, my regular guests will ask me why I did that. I may even lose some of my regular guests. I do not want to take that risk and so I ask myself what I have to do to increase the price of my room and make my guests appreciate change in price. Well, to increase the price of this item, I need to increase its value. Thus, I am going to put a pair of flip-flops, a bathrobe, a bedspread and a smartphone cleaning pad in their room. Now my regular guests will comprehend my price increase and even enjoy the upgrade.
Next, I look at my mini-bar. I sell 14 mini-bar items. Every day I need to refill a couple of mini-bars due to the moderate prices and selection of things that I offer my guests. The mini-bar can be seen as a cash-cow. Here you can do lot of try and error. In fact, I suggest to offer a new item every 6 months.
The next items on my list are early Check-In, late Check-Out and shuttle service. At the moment, I do not advertise these items anywhere, but when a guest is asking for them I try to make them available—and charge for it. I cannot guarantee that these items are always available; that is why I do not mention them everywhere. If you can guarantee some of these items to your guests, then market them on your website and on your booking button. In regard to a Corporate-Hotel, there is always a need for early Check-Ins!
An extra-bed is a nice item to sell as well. You always should have an extra-bed to spare. This item is a no-brainer.
I am using my free parking lot, free Wi-Fi and included breakfast as magnets to attract new guests. It is very difficult to get a parking space in the city free of charge. By offering my parking lot as a value added to my rooms, my hotel becomes more attractive to potential guests. In my opinion, Wi-Fi should always be free of charge. Nowadays, it just belongs to the ordinary service. Offering free Wi-Fi increases your attractiveness as well.
If you are offering a fabulous breakfast in which guests can find everything that they are looking for, then you should charge for it. Charging for breakfast increases revenue. It is not unusual to charge €10-20 for a culinary delight breakfast.
Unfortunately, I do not have enough space to set up many different showcases; otherwise, I would fill these showcases with leather wallets, belts, umbrellas, adapters for electric devices, souvenirs, gift-cards and self-branded sweets. I have been asked for these items a couple of times and so I know there is a need for them. If you have enough space, you should think about setting up at least one showcase to gain some experience.
Selling bundled products is another way to increase revenue. People love to hear about special deals and discounted items. If you combine different items together, put an attractive price tag on them and create scarcity through number of items available or time sensitivity (available until), you will make more sales. Look at all the items on your list and start combining them. I am sure your will come up with some interesting offers.
The last question of the posts title is: How can we differentiate ourselves to compete with other big hotel competitors?
Most of my big hotel competitors / chains have more rooms than I do. Thus, they probably earn more and have more money available to spend on facilities, new gadgets and fancy design. They can impress their guests with: useful tools in the rooms, a huge lobby, a pompous reception, a gorgeous breakfast / dinner room, a beautiful panorama view, a precious garden, a terrace balcony and so much more, that we as a boutique hotel dream of doing. However, we have advantages as well. Due to the fact that we do not serve hundreds of guests at once, we have the ability to be more personal with our guests. In our hotel, we are always trying to remember each of our guests’ names. Early in the morning we greet them with their name. We ask how they slept and if everything was fine. At breakfast we make sure that they have what they need. For example, if guests stay a couple of days in our hotel and they tell us after their first breakfast that they would love to have a special item, we try our best to make it available for the following days. Most of the time we are building guest-relationships. We start with small-talk, and sooner or later we have long lasting conversations going on. We are talking about everything: sports, politics, cars, restaurants, popular vacation destinations and so on. It is fun and by doing this we really get to know our guests. We give them the feeling of being at home and that we are there for them if they need someone to talk to. Actually, we are trying to give guests the feeling of being a part of our big family.
I believe that the biggest opportunity we have to score against the big hotel players is through our personality. Taking time off daily tasks to sit down with guests and drink a coffee is impressive and unique. Guests will remember that and even tell their family, friends and colleagues that they know the owner of the hotel personally. Your guests will be proud of the fact that they spent time with the owner and talked about various topics. Your guests will immediately realize that you care about them and that each guest is unique to you.
By and large, be yourself and see your guests as pure individuals and not as paying customers.