Written by Pradip Patel
While COVID-19 had a greater negative impact on the travel industry than either the 9/11 terror attacks or the Great Depression, global travel is back on the upswing. Hotels are staffing up, making new investments, and opening new properties. The burst of activity might overwhelm operators who want to make sure their properties return to high profitability in a lively, competitive environment. In addition to hard work, it takes operators who have a specific mind set to be in the best position to inspire their properties to deliver a great customer experience that helps them survive during lean times and thrive during high times.
Defining the “ideal” mindset
It’s been a rough few years and the future seems less predictable than ever. In fact, some have started to call this new era an era of the poly-crisis. To counteract the trend hospitality leaders need to create a different mindset—one that embraces relentless positivity. That doesn’t mean being naive or wearing rose-colored glasses. Instead, it means not panicking about external negative events. Hotel owners and operators with this “ideal” mindset don’t work from a reactive mindset. They focus on what they can control and have plans and systems already in place that guide them on how to address negative situations and take advantage of positive ones. These plans rest on the three pillars of the ideal mindset: revenue management; product clarity; and review management.
Pillar #1: Revenue management protects the cash flow
Investors are most concerned about revenue management. Profitability is a priority but maintaining cash flow is a baseline requirement to fiscally responsible management. A sound revenue management plan requires understanding where the hotel’s strongest demand is within its local market. It is important for owners and operators to conduct ongoing analysis to identify a property’s most profitable demand source and potentially overlooked demand.
This analysis includes regular investigation of booking data of the property and similar properties in the local market and identifying market trends that might shift demand or create new sources. Earlier analyses of market demand become inaccurate over time. With an accurate assessment of demand, hotel managers can set viable and in-market rate adjustments, up or down as circumstances dictate. Sales and marketing teams can put a laser focus on building campaigns around maximizing that demand, designing the types of rate adjustment, restriction policies, and discount strategies that will appeal to the targeted market.
Even when the market turns downwards and costs need to be cut, hotel owners and operators who have been approaching revenue management with an ideal mindset are well placed to maximize the revenue opportunity that does exist. When the market is strong, they can be confident that their ongoing attention to their revenue management is helping them maximize the property’s profitability.
Pillar #2: Product clarity to stand out from local competitors
Operating with product clarity about a property is closely related to understanding its most profitable sources of demand. An owner or operator with an ideal mindset leans into the property type to inform all decisions about the architecture, management, services, and amenities. There’s no reason for the owner of a seasonal property to stress about the zero revenue during the months the hotel is closed during the off-season. The owner already put in a revenue management plan during the on- and peak seasons to account for the off-season.
In addition to the product clarity’s impact on revenue management, the hotel team should use that clarity to design the services and amenities that will separate their property from their local competitors of the same product type. All extended-stay hotels will have a laundry room, so having one won’t make a property stand out. The location within the hotel or the size or cleanliness of the laundry room might. Beyond having expected services that are well-maintained, owners and operators should consider what other services would distinguish the property and be appreciated by their ideal guests. What if one extended stay property had a significantly larger exercise room with more equipment? Perhaps a cold-weather property could add an indoor pool.
Leaning into the hotel’s property type also provides guidance on what intangible extras its market would find most valuable. A hotel owner or operator with an ideal mindset embraces the property’s product type and offers value-add services that align with that type. This could include preferential early booking rates for a seasonal resort hotel, or a boutique hotel might offer late check-out with early booking. Providing better value to guests than local competitors charging similar rates is the best way to differentiate one’s property.
Pillar #3: Review management as a tool for growth
Reviews are the voices of the guests. They provide a quantitative and qualitative metric to measure the quality success of the property. Management and teams should go over recent reviews together. Daily reviews of recent ratings and online feedback can address micro-events. Weekly or monthly assessments of review and rating trends can reveal macro-trends that need attention. Examining the online reviews and star ratings of local competitors can also provide useful insights and set benchmarks to create and measure enhanced performance goals.
There is much to learn from positive reviews. They affirm what features, services, and amenities guests enjoy, which helps refine the process of deciding what new services and amenities to offer. They may even identify an aspect of the hotel’s facilities or services that guests appreciate more than hotel teams realized. With the ideal mindset, even bad reviews are considered “positive” information that uncovers opportunities for growth and improvement. Achieving high levels of quality service success is the property’s most effective sales tool. It is a key means to differentiate one property from another, which makes it a critical competitive advantage for the owner and operator who can leverage all the property’s reviews and business intelligence to keep pushing quality service upwards.
The ideal mindset requires a broad vision
By focusing on all three pillars of the ideal mindset, owners and operators take on the mentality of all the key stakeholders of the hotel. They aren’t just thinking like owners and operators. They’re also managing the hotel from the perspective of the investors and guests. A strong sales and marketing effort or heavy discounting campaign may return short-term results, but successful hotel operators think well beyond the short term. Working from the ideal mindset sets up the hotel for long-term viability and increased profitability.
About the Author:
Pradip Patel is the founder and owner of a hotel management company and has more than five years of experience in hotel management. He completed his Bachelor of Nursing degree from ACU North Sydney, Australia and established his career as a registered nurse in Australia. Always wanting to be a businessperson, he got involved in the hotel industry in 2016 and moved to the USA in 2018. His email address is ptlpradip@gmail.com.
